Introduction
The Modern South African history owes its origins to the discovery of diamonds back in the 1870s and 1880s. At this time Africa was a magnet of European investment. Generally mining was said to have predated the arrival of Europeans by several centuries as is reflected by the current administrative regimes policy statements of 1994 and 1995.
The discovery of diamonds as well as other minerals such as gold began with earnest the process of urbanization. It saw people come from all over the world to evaluate the investment opportunity that had been discovered. It saw the growth of villages into towns and towns into cities. (Gardner pp 56)
History
Diamond mining can be traced back to 1867 when the first discovery of deposits was made at a place near Kimberley North of Cape Town.Other fields were latter discovered in Guateng, The Atlantic Coast and The Free State.These were considered sources of gem diamonds and saw South Africa into the chart of the greatest producer of diamonds in the mid twentieth century.
South Africa continued to exploit only five of its mines until 1992 when a sixth mine was opened at Venetia north of Cape Town. The sixth mine was expected to sustain high production for the next decade.
Undoubtedly the long and winding history of capitalism that had downplayed and influenced the agricultural sector for the longest period had set into the diamond mining industry. The British capitalist ideas and concepts began to take shape in the management and control of the mining activities.
Evidently the perception of South Africa as an overseas investment saw the exclusion of the locals in the participation of the mining business. The investors were mainly white and have only bowed down to modern trends of the twentieth and twenty first centuries of democracy and self governance to allow local ownership.
In recent times organizations such as the ANC Youth League have called for government ownership of ar least 60 percent of all the mines. They refer to countries such as Botswana where the government and the market leader control an equal share of the mines.
The De Beers company rose to become a monopoly in the control of the diamond mining venture. The company was able to build investor confidence and generate vast influence in the diamond market through a cartel that brought together all diamond producers. It gave them a greater bargaining power in the determination of product prices and kept them above the competition.
The objective of the cartel was to stimulate marketing strategies that would see their product reach out beyond the African and British markets. They adopted a combative approach that involved increasing the supply of the product beyond the markets capacity to choke the competitors product prices.
The mining sector took advantage of the monopoly to accumulate command and influence. It grew tremendously reaching out to new markets and developing mechanisms to curb the market barriers of the 1980s such as fluctuating prices due to the revolutions and civil wars as well as the introduction of diamond-like cubic zirconia.
Diamond dollar prices took a positive upward trend in 1985 only to turn back in the fall of 1987, prompting De Beers the market leader to motivate the market by withholding for some time the supply of diamonds from sellers.
This was reflected in the drop in annual production from 10 million carats in 1985 to 9.1 million in 1988and 1989. Even so the market would then recover in 1994 to an output 10.8 million carats of Gem and industrial diamond forming up to 11 % of the world market at the time. (Brown pp 7)
The Soviet Union would then join the capitalist race for interest in 1990 by acknowledging the market share held by DeBeers that had a net value of close to R13 billion stretched over a five year period.
It agreed to sell its product through DeBeers making it the first ever attempt by the Soviet Union to deal with South Africa in trade. It would see the birth of trade relations between the trade partners and the granting of a loan by the South African company to the Soviet Union on security of diamonds.
The Impact of Diamond Mining
Financial Impact
undeniably the diamond mining business has generated an avenue for investment and economic growth. It saw investors from all over the globe come to invest their capital in the diamond market trade earning the region an approximate of 8.5 billion US dollars in revenue. Today the African continent boasts of producing up to 65% of the world’s supply of diamonds.
Each year South Africa produces up to 1.5 billion US dollars worth of diamonds. Of this amount R 28 million has been invested in the various corporate social development needs of the society. In Kimberley for instance up to R 50 million has been set aside for the rehabilitation of the mine into a tourist facility and in the creation of jobs and business opportunities.
There also is in existence a fund that specifically invests resources and factors of production into community development projects that empower and sustain the people’s initiatives and ideas. Since its inauguration in 1994 it has received funding to the tune of R255 million. (Yakovleva pp83).
Employment
The discovery of diamonds presented a vast and viable solution to the problem of unemployment. As it were the industry provides paid employment to 28 000 south Africans in the various departments in the mining sorting, valuing, cutting, polishing, retail as well as manufacturing segments.
Most of these employees have been educated trained and qualified by institutions set up by the mining industry as a whole. The continued availability of employment in the mines has offered better social standards for the people living near them.
Infrastructure
The diamond mining industry has invested heavily in the improvement development and maintenance of the infrastructure in South Africa. This has gone a long way in ensuring that those factors of production are transported easily and in effect stimulating economic growth.
Consequences of the diamond discovery
Agriculture
South Africa boasts of a diverse and well-motivated agricultural sector and is a net food exporter in most years. The agricultural sector in South Africa has been built from ancient subsistence based agriculture to the modern day mechanized commercial agriculture. It has grown alongside the mining and manufacturing industries which have been seen to expand at a more rapid pace.
For a long period of time agriculture was considered the greatest contributor to the growth of the South African economy taking up 20% of the country’s GDP in the early 1930s. The onset of the diamond mining caused a drop in this figure to 12 percent in 1960 (World Diamond Council pp4). This is due to the growing concentration on mining as an alternative revenue source.
Even so, the country enjoys varying climatic zones that support various kinds of crops, down from herbs to fragrances fibers and medicines. The agricultural sector has been able to meet the local needs with the help of and support from the diamond mining industry that has provided institutions of training healthcare facilities and appropriate infrastructure.
Gainers and losers
Undeniably the discovery of diamonds colonized the marginalized population from the whims of poverty. It offered a better alternative through better health care and housing. It offered secure employment opportunity for the people as well as equitable access to finances. This to a great extent improved the lifestyle of the people who worked at the mines.
On the other hand however there was a conflict of interest in their societies to the companies that influenced the lifestyles of the people. They also lost control of the mines in their localities to the foreign investors and their representatives.
Agriculture had been for a long time the sole and greatest income earner of the South African people. The discovery of diamonds transformed the country’s economy to one that relies on mining as its greatest source of income. This means that the agricultural sector received partial attention which crippled the sectors growth. It was also denied access to factors of production such as labor which was channeled to the mining industry.
Conclusion
Like all others the diamond mining industry continues to aim at striking a balance between the economic, social and environmental concerns of the modern day, while still making a positive and long term contribution to the society, community and environment in which it transacts its business. The discovery of diamonds brought a new done for South Africa. It refreshed the peoples hope for a better country and an opportunity to eradicate poverty.
Works Cited
Brown, Joshua. History from South Africa; Alternative Visions and Practices. New York: Temple University Press, 1991. pp 7.
Gardner ,Williams.The Diamond mines of South Africa.New York: B. F. Buck & company, 1906. pp56.
World Diamond Council. Diamond Mining and the Environment Fact Sheet; 2011 Retrieved from http://www.diamondfacts.org/pdfs/media/media_resources/fact_sheets/Diamond_Mining_Environment_Fact_Sheet.pdf pp4.
Yakovleva, Natalia.Corporate Social Responsibility In The Mining Industries. U.K: Ashgate Publishing Ltd, 2005. Pp 83.