The Rise and Fall of Diamonds

by Edward Jay Epstein

  Oppenheimer also gave little credence to the fear that De Beers might be running out of quality diamonds. He pointed out that De Beers was developing vast new mines in the Botswana desert, which he planned to visit the next day. These Botswana mines would provide the world with an ample supply of diamonds well into the I 99os.

  I asked Oppenheimer whether this move into the independent country of Botswana was meant to make De Beers less dependent on South Africa for its diamonds.

  According to the development plan that he had outlined, Botswana would soon be producing more diamonds than South Africa. He scoffed at the idea that the mining of diamonds in Botswana would have "any significant effect in divorcing De Beers policies from political and social problems in South Africa." He emphasized, "We are, and will remain, a South African company.

  It was clear, however, that in the 198os De Beers would come increasingly dependent for its diamonds on African countries. In light of the continuing and intensifying confrontation between South Africa and Black Africa, it seemed questionable how effectively De Beers could operate mines in these independent countries with hostile regimes. Oppenheimer insisted that the black-white confrontation in Africa would not present a problem for De Beers. He termed the arrangement between De Beers and Black African nations "Mutually advantageous." He further suggested that it might be useful for me to inspect at first hand some of De Beers' mining operations in independent nations to more fully understand how the "arrangement" works. He offered to provide me air transportation and access to the mines in Botswana, Lesotho and other independent nations.

  I accepted his offer.

  [2]

  Botswana

  The small Cessna Air King took off from Jan Smuts in Johannesburg promptly at 7 A.m. for the two-hour flight to the Orapa mine in Botswana. On board the plane with me were four De Beers engineers who called themselves "the flying circus." Their job was to periodically inspect and evaluate the operations at all of De Beers' diamond mines, and then report back to Oppenheimer's headquarters in Johannesburg.

  We flew directly over the eastern edge of the Kalahari Desert, which cut through Botswana in a swath of brown barren earth. There were few signs of life anywhere below except for scattered clumps of twisted thorn trees and an occasional herd of oryx. By 9 A.M., the sun, was baking down on the parched earth which was partially concealed by a nimbus of dust. Suddenly, appearing like some desert mirage out of this haze, was a modern city. "Orapa," the pilot announced, as he began circling for a landing.

  Except for the fact that Orapa is in the middle of nowhere, it might have been any suburban city. I could see ranch houses with green lawns and rectangular swimming pools laid out along a cross-grid of paved streets. There were also a shopping center, football fields, parks and high rise apartment houses.

  The De Beers engineer sitting next to me explained that most of the city of Orapa had in fact been prefabricated in Johannesburg in 1971, and then, piece by piece, reassembled on this stretch of desert. It had been an enormous undertaking. A road had to be bulldozed through the trackless wasteland so that trucks could move the mining equipment in, an artificial lake and a pipeline had to be constructed to bring water into Orapa, power lines had to be strung some 16o miles to the South African border, and an airstrip had to be built so that diamonds could be flown out. "This was the first mine I)c Beers ever developed outside of South Africa," he continued.

  At the Orapa airstrip, it took only a moment to go through Botswana customs. Oppenheimer's headquarters had telexed ahead that I was arriving, and I was immediately issued a red badge. Without such a badge, not even a citizen of' Botswana is allowed into Orapa. I remarked to the engineer about how quickly we were admitted into Botswana, considering that we did not have visas and that he was a South African citizen.

  "No problem," he laughed, "Harry Oppenheimer owns Botswana lock, stock and barrel." I later found out that he wasn't far wrong. Botswana, a republic with some 6 million citizens, most nomadic tribesmen, derives more than 50 percent of it s national income from diamond, manganese and copper mines controlled by Harry Oppenheimer. The Botswana government is dependent on these mines for almost all its revenues and foreign exchange.

  Jim Gibson, a lanky Scotsman in his early forties, met me at the airport. He was De Beers' chief geologist at Orapa, and he had been asked to show me around the mine. He explained as we drove back to Orapa that he had been at the mine since it went into production in 1971.

  When we arrived at the mine, he handed me a steel helmet. As a safety regulation, De Beers requires that everyone wear one at all its mines.. "You're looking at the second largest diamond mine in the world," Gibson said, pointing to a long, oval-shaped depression in front of us. (The largest was the De Beers mine in Tanzania.)

  I had imagined a mine deep underground honeycombed with labyrinthine tunnels. Instead I saw an open pit that looked like an excavation site for a skyscraper. A number of dirt roads wound their way down to the bottom of the pit, which was no more than 69o feet below the surface of the earth at its deepest point. On the floor of the mine I could see about fifty Botswana workers. They were dressed in khaki jumpsuits and yellow helmets, and most of them were operating steam shovels and other mechanized equipment.

  Every few minutes, a large yellow truck driven by a Botswana would drive down the winding road to the bottom of the mine. A power shovel would then load it with a pile of bluish earth. When the truck returned to the surface, it would dump the bluish earth on a moving conveyor belt. The entire process was highly mechanized and required relatively few workers.

  "It is simply an earth-moving operation," Gibson explained, "every afternoon at 4 P.M., a number of dynamite charges are detonated to loosen up the ground, then the power shovels simply scoop up the kimberlite."

  Kimberlite is the blue ore in the mine. "What you are looking down into is a kimberlite pipe. If all the kimberlite was scooped out of that pit, it would look something like this." He drew a sketch in the ground of something that looked like a funnel with an extremely long stem. "Millions of years ago there were underground explosions that sent lava shooting up to the surface. When the lava cooled, it hardened into these pipe-like formations." The kimberlite, containing the diamonds, had come gushing up with the lava.

  I picked up a handful of the kimberlite ore and crumbled it into a loose mixture of stones and bluish dust. "Where are the diamonds?" I asked.

  "Finding a diamond in kimberlite is like finding a very small needle In a haystack," he responded. It is necessary to slit through more than two tons of kimberlite to find just one carat of diamonds.

  A carat is a very minute measure. It is based on the remarkably uniform weight of the ancient carob seed, and weighs only 1/2000th of a pound. Separating the diamonds from this mass of bluish ore seemed a herculean task. I asked Gibson who separated out the diamonds.

  "The diamonds are never touched by a human hand," he explained, as we walked along a path parallel to the conveyor belt toward a glimmering structure about one-quarter of a mile away. "That's the separation plant," he said, pointing, to the building ahead. It towered about twenty stories above the desert and looked like some medieval fortress. As we approached it, I could see that it was constructed of giant slabs of metal and surrounded by a barbwire fence.

  I had heard a number of stories about natives stealing diamonds from mines by concealing them on their bodies. I wondered whether this fortress like building was part of some draconian security system. I inquired whether they conducted body searches.

  Gibson smiled and replied that there was no need for anything like that. He explained that the fully automated sorting machines kept the diamonds from tempting anyone.

  The conveyor belt carries about one thousand tons of ore an hour into a plant. Inside the separation plant, the conveyor belt dumps the ore between two giant wheels-the ' 'crushers "-which are large enough to pulverize automobiles. The kimberlite must be broken into small fragments in order to be automatically proces
sed. The tiny particles, mainly sand, are screened out by a series of sieves. The kimberlite then moves on a conveyor belt into huge vats of swirling liquid that resemble enormous whirlpool baths. These "cyclone baths" were designed by Dc Beers to take advantage of the heavy density of diamonds in separating them out from lighter-density materials. Gibson explained, "They work on the same centrifugal principle as dairy creamers: at high speeds, lighter materials rise and are skimmed off." More than 99 percent of the ore is removed in the vats; what remains is a concentrate of diamonds and other heavy minerals.

  Back on the conveyor belt, the concentrate is channeled into a battery of large, five-foot-high black boxes called “sortexes." These machines take advantage of one of the natural characteristics of diamonds: the fact that they, unlike most minerals, phosphoresce under X-rays. As the concentrate passed, the machines bombarded it with X-rays. Whenever a diamond passes through, it glimmers, activating a photoelectric cell inside the sortex. The photoelectric triggers a Jet of air that blows the diamond and the stones on either side of it off the conveyor belt and down a chute that leads to the sorting room.

  We went next to the sorting room, which is the most heavily guarded inner sanctum in the entire diamond mining complex. Three different guards were required to put their keys into separate locks before the door could be opened. The windowless room had in its center a row of large glass boxes, which were all connected by pipes to the ceiling. "Not even the sorters have the opportunity to lay a hand on the diamonds in this system," Gibson explained.

  On closer inspection, I could see that each box had a pair of rubber gloves, called "evening gloves," fastened to the glass wall of the box. Inside the box was a set of tweezers.

  Suddenly, a stream of small stones came clattering through the pipe in the ceiling and spilled into the glass sorting box I was watching. A Botswana sorter immediately went to work. He thrust his hands inside the evening gloves, which protruded into the sealed glass container, and through these gloves, he picked up the tweezers. He quickly separated the stones into two piles-diamonds and non-diamonds. The chief sorter then came over to double-check the sorting. The sorter then pushed the non-diamonds down a hole in one side of the box, where they clanked through a pipe. "Those stones will be fed back onto the conveyor belt just in case the sorter missed any diamonds," Gibson explained.

  The diamonds left in the glass box were then released through a trap door in the bottom into a steel container. This container is continually guarded by two Botswana soldiers with shotguns.

  The chief sorter allowed me to examine the day's catch of diamonds through a window in the steel container. The vast preponderance of the diamonds were black chips resembling tiny fragments of coal. "What are black diamonds used for?" I asked.

  "They're industrial diamonds," Gibson answered. "Most of them are ground down into abrasive grit and used to grind tools and precision parts." "They will probably bring about $2 a carat, which is only a hundredth of what good gem diamonds will fetch in today's market," he added. It still is financially rewarding since the mine produces about 1.7 million carats of industrial grade diamonds in a year. The mix is roughly 8o percent industrial diamonds and 20 percent gems. The income from the industrial diamonds-even at a mere $2 a carat-is sufficient to pay the day-to-day operating costs of the mine.

  I peered again into the box and saw that the whitish diamonds, which looked like tiny pieces of broken glass, had a wide variety of shapes. Some were flat chips, others were twisted triangles, and many were no larger than a grain of sand. It seemed difficult to see how this batch of uncut diamonds could ever be converted into fine jewels.

  According to the chief sorter, there were between 1,000 and i,5oo carats of gems in the day's take. He explained that the exact determination of the number of gem stones, and their value, was made by an official appraiser in the Botswana capital of Gaborone. The diamonds were then flown to London.

  "How many of those diamonds are large enough to cut into a one-carat engagement stone?" I asked, recalling the concern about dwindling supplies of the large diamonds.

  "You might find only two or three of that size here," he said. In light of this low ratio in Botswana, it seemed that the concern was well founded.

  When we left the separation plant, I looked at the huge mountain of kimberlite waste behind it. Each day the plant processed and spewed out some 20,000 tons of ore. It seemed to be an incredible undertaking for a mere handful of gem diamonds.

  "Gem diamonds can be worth anywhere between $1,000 and $5,000 a carat depending on their quality," said Gibson, adding, "and quality is, for all practical purposes, what the official appraisers say it is." He explained that appraisers had to take into account such nebulous factors as the shade of color, shape, and the cutability of the uncut diamond in making their evaluation. This evaluation was of considerable importance to the Botswana government, for it derived most of its revenue from the 50 percent share of the profits it received on the diamonds.

  Diamond mines, unlike most other kinds of mining operations, could not measure, or even reasonably estimate the value of their own product. Gold mines can calculate how many ounces they produce each day, and copper mines can estimate their tonnage, but the Orapa mine could not immediately determine whether its production of gem diamonds that day was worth $100,000 or a million dollars. Both the diamond mine and the Botswana government had to await the outcome of the official evaluation by the De Beers-trained appraisers.

  We had lunch that afternoon at the Orapa Club. During the meal, Gibson told the story of how he and another De Beers geologist named Gavin Lamont discovered the Botswana diamonds.

  It began in 1962 when Harry Oppenheimer decided to acquire the prospecting rights in Botswana (which was then the British protectorate of Bechuana land). Prospectors had already discovered three diamonds on the banks of the Moutlouse River, but unable to find the source of the diamonds they had abandoned the search. For nearly four years, Gibson and Lamont scoured the headwaters of the Moutlouse without finding a trace of diamonds-or any of the minerals associated with them. At this point, Lamont came up with a highly speculative geological theory. Since there had been enormous upheavals of the earth's crust in southern Africa in prehistoric times, he suggested that the Moutlouse river may have been truncated by the rising earth; its previous source might have been on the other side of the mountains. Even though there was no corroborative evidence for this theory, Lamont and Gibson believed it was worth the gamble to explore it. They moved their prospecting team north to the edge of the Kalahari desert.

  Sand proved to be an immediate problem for the prospectors. If there was a rich kimberlite pipe in the desert, it would be buried under hundreds of feet of sand and gravel. How could they sample the minerals under the desert?

  White ants, which had built towering mounds on the desert, provided the solution. Gibson and Lamont realized that these ants had tunneled hundreds of feet below the surface of the desert in searching for humid earth for their nest, and with the mud they retrieved they also brought up traces of minerals from below the surface. By analyzing samples from these ant colonies, Gibson and Lamont found traces of two other minerals-garnets and ilmenites. Since both these minerals frequently occurred in kimberlite, they had reason to hope they were on the right track.

  Finally, in March 1967, Gibson narrowed the search to a spot located a few miles away from a cattle trading camp called "Orapa" by the natives. Here he began drilling for core samples with equipment that De Beers had flown up from its Kimberley headquarters. "Those diamonds literally poured out of the small rotary pan," Gibson recalled. "We realized that we were on to something very big indeed." Gibson next ordered a series of aerial photographs taken of the area. Examining them, he delineated a depression more than a half mile in diameter. It was, in fact, the mouth of the Orapa pipe. "It was quite unbelievable that the whole area could in fact be kimberlite," he remembered thinking then.

  From that moment on, De Beers moved quickly to br
ing the mine into production. It cost some $ 3.3 million. Four years later, it went into production, and it was officially opened on May 26, 1971, by President Seretse Khania. Oppenheimer, indeed, had the entire Botswana government flown in for the ceremony. "It was, after all, the first diamond mine that De Beers had ever found," Gibson added.

  According to Gibson, De Beers had completely missed the 44-acre Finsch pipe in South Africa, and the 36o-acre Mwadui pipe in Tanzania, the largest pipe mine ever found, even though both sites had been explored by its geologists several years before the respective discoveries. In every instance, up to discoveries of Botswana, De Beers simply bought out the others. De Beers presumably had been purposely avoiding unnecessarily expanding the supply of diamonds by uncovering new mines.

  The scarcity of diamonds one carat or larger in Botswana raised the question of how De Beers intended to meet the demand for these stones. The answer suggested to me was a mine on a mountaintop in the kingdom of Lesotho, which was my next step.

  [3]

  Shangri-La

  Diamonds can be profitably mined in some of the most inaccessible locations in the world precisely because the operation does not require the construction of a vast transportation infrastructure to remove the final product. Almost all other mining enterprises, such as iron, copper, lead, zinc and potash, need to build railroad, pipelines or ports to bulk ship thousands of tons of ore a day. Most precious metals, such as gold, silver and platinum, must be chemically separated from the surrounding matrix of ore in a smelter that in turn usually requires massive daily shipments of coal and other materials. A diamond, however, requires only a primitive landing strip and a light plane to transport its final product which, though it may be worth tens of millions of dollars, seldom amounts to more than a few pounds of stones a day. Perhaps the best example of this phenomenon is the Letseng-La-Teral mine in the Kingdom of Lesotho.