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The History of Diamonds in South Africa

In 1859 the first diamond discovery was made in South Africa; however South Africa’s diamond heritage stems from a pretty little pebble picked up on the bank of the Orange River in 1867, not far from Hopetown. Erasmus Jacobs, fifteen years old and the son of a poor laborer, took it home as a plaything. The stone was then given to a neighboring farmer, Schalk van Niekerk, a casual collector of unusual stones. He in turn entrusted it to the trader John O’Reilly, who sent it (in an unsealed envelope!) to Dr. G. W. Atherstone, a Grahamstown physician and one of the few people in the Cape Colony who knew anything about minerals. The stone was judged a ‘veritable diamond’ of 21.25 carats and valued at £500. Once cut, the stone weighing 10.73 carats was called The Eureka and is now kept at the Library of Parliament in Cape Town.

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The news triggered a flurry of excitement in the Hopetown area, but eager prospectors found only a few small stones to reward their efforts and drifted away disillusioned. The discovery must have been a hoax, it was suggested: everyone knew diamonds came only from India and Brazil! Almost three years later in March 1869, a Griqua shepherd named Booi, from the farm Zandfontein, picked up a pebble that caught his eye, he first tried to barter the stone for a place to sleep, then for breakfast – everyone turned him down. He ultimately found his way to Schalk van Niekerk. By now Schalk had learned something of precious stones and bought it for virtually all that he possessed: 10 oxen, a horse and 500 sheep. The discovery of this stone set off the diamond rush that transformed South Africa from a struggling agricultural state to a leading industrial nation. Van Niekerk, in turn, sold it to a firm of local jewellers for £11200. The 83.50 carat diamond, to be named ‘The Star of Africa’ found its way to England, where it was bought by the Earl of Dudley for the then princely sum of £25000. Said Colonel Secretary Sir Richard Southey to his political colleagues, “Gentleman, this is the rock on which the future success of South Africa will be built.” How right he was, without the diamond finds there would be no Kimberley; without Kimberley there would have been no capital to finance the gold mines of the Reef; and without the Reef and its industries there would be no South Africa as we know it.

Diggers flocked to the area and staked their claims along the banks of the Orange and then the Vaal River and its tributaries to the north. They lived in tent communities in very harsh conditions; blistering heat during the day followed by icy cold nights. Most made little for their efforts, some made modest fortunes. It was only 30km’s from the Vaal River where the first significant finds were made, dry diggings on three farms, one of which was called Vooruitzicht. This farm was bought ten years prior for only £50 by two De Beer’s brothers who found themselves beleaguered by a swarm of gem-hungry diggers. They hurriedly sold it for £6300, a good profit but a drop in the ocean compared to the £90 million it would yield over the following years. Nearby was the discovery of ‘Colesburg Kopje’, site of the future Kimberley and the richest treasure house of high quality gem diamonds the world had ever known. The year was 1871 and the ‘New Rush’ had begun.

Photo of a Premier Diamond Mine, South Africa, between 1890 and 1923.

The diggings attracted hordes of fortune seekers who came from all walks of life and many countries. By 1872 some 50000 men had encamped in the area. Soon the tents were replaced by corrugated iron and mud-brick houses and rudimentary hotels, bars, brothels, banks, stores, a church, a school, the famed Kimberly Club and the stock exchange. The haphazard nature of the diggings were dangerous and could not be worked at all during the rainy season until an enterprising 19 year old Englishman named Cecil John Rhodes imported a steam operated pump to keep the diggings dry. That inspiration in turn set him on the road to fortune; Rhodes became a well known, high powered businessman and more famously an explorer who funded some of his expeditions through his involvement in the diamond industry. Some time later, Rhodes had decided that consolidation was the key to the success of the diamond fields. Along with his associates he linked hands with a hard-headed diamond buyer called Alfred Beit, and so the monopolisation process began. By 1885, with Rhodes as chairman, the De Beers Mining Company was the major claimholder in the De Beers mine (named after the original owners of the farm Zandfontein) and had complete control by 1887. Barney Isaacs better known as Barney Barnato had successfully plied his trade as a ‘kopje-walloper’ (under-the-counter middleman between buyer and digger) and a claim-dealing entrepreneur. Like Rhodes, showing remarkable business acumen Barnato became a multi-millionaire, and within five years of arriving in Kimberley he controlled Kimberley Mine. Kimberley Mine has been closed for decades but is now a popular tourist attraction known as ‘The Big Hole’.

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By 1889, the future of the diamond world depended on the outcome of a battle for total control between Rhodes’ De Beers and Barnato’s Kimberley Mines, each backed by powerful overseas interests. Rhodes emerged the victor, a cheque for £5 338 650 changed hands and the two mines were brought under the control of a new company, De Beers Consolidated Mines, the company which today, almost 110 years later still has its registered office in Stockdale Street, Kimberley. With Rhodes as chairman and Barnato and Alfred Beit as life governors De Beers Consolidate Mines won control of the other two major mines in the area and soon after a recently discovered fifth mine. Virtually the entire industry was united and the near monopoly was complete.

In 1902 a young German-born diamond buyer arrived at Kimberley as the representative of a London diamond broking firm. Ernest Oppenheimer’s family had been involved in South Africa’s diamond industry for many years. He decided to settle in South Africa and soon became mayor of Kimberley. In 1917, he moved to Johannesburg and was chiefly instrumental in founding Anglo American, initially a gold mining house but planned from the outset as a power in the diamond world. After the First World War, South Africa was granted a League of Nations mandate over German South West Africa (now Namibia), whose alluvial deposits now began to attract serious attention. A syndicate, led by Anglo American, formed Consolidated Diamond Mines (CDM) in 1919 to exploit the deposits, and amalgamated eleven mines north of the Orange River. Later, when diamond discoveries were made in the Belgian Congo (formerly Zaire, now the Democratic Republic of Congo) and Angola, De Beers underestimated the significance of these developments, while Anglo American moved in. When huge deposits of alluvial diamonds were located in Namaqualand on South Africa’s west coast and, in 1927, near Lichtenburg in the western Transvaal, Oppenheimer’s Anglo American again made its claim.

Oppenheimer was soon becoming the leading light in the diamond world, and in spite of opposition from De Beers directors who resented his swift progress was soon elevated to the board. As if to confirm his supremacy, Anglo American geologists working north of the Orange River found new deposits of gemstones even richer than those of Namaqualand. It was only a matter of three years before Oppenheimer was elected chairman of De Beers. Ernest Oppenheimer remained at the helm until his death in 1957, when his son, Harry, took over to run the giant conglomerate with outstanding success for the next quarter of a century. Today it is run by Nicky Oppenheimer, who became chairman of De Beers on the 1st of January 1998.