Within weeks, thousands of prospectors from around the world flocked to South Africa in search of diamonds and instant wealth. Within twenty years, South Africa was producing 3 million carats per year of diamonds.

While the initial finds were alluvial, tracing the source upriver led to the discovery of the first kimberlite pipes: the source of the diamonds. A single one of these, the Big Hole in Kimberly, South Africa (and for which the rock kimberlite is named), produced 14 million carats of diamonds in the 42 years of production. Note that 25 million tons of kimberlite were excavated - barely a half-carat of diamond was found in an average ton of ore. Still, this qualifies as an exceptionally rich diamond ore.

No history of the diamond industry would be complete without a description of the man who founded a diamond empire: Cecil Rhodes. From his home in England, he joined his older brother Herbert in South Africa at the age of 17 to help establish a cotton farm. Herbert, however, had gotten the diamond bug and purchased 3 claims in the Kimberly pit. Cecil turned out to be adept at managing the Zulu workers, and Herbert soon sold him his claims and headed off in search of gold. Within two years, Cecil had amassed a small fortune of £10,000 and headed back to England to complete his education at Oxford while leaving the management of his claims to a trusted friend.

Eventually, he returned, and his timing was excellent. There was a world-wide financial panic in 1873 which depressed the prices of diamonds, and at the same time the miners felt their mines were petering out. The yellow ground (weathered kimberlite) which had readily yielded its store of diamonds was underlain by a hard rock, called blue ground (also kimberlite), and most miners believed that they were finished when they reached the hard blue ground. Many went bankrupt, and others sold their claims for a song. Cecil Rhodes believed that the blue ground also held diamonds and that the market would return, so he bought as many claims as he could afford, especially in the De Beers pipe. He named his holdings the De Beers Mining Company, Limited.

He expanded his holdings at every opportunity, including establishing excellent partnerships and outsmarting his greatest rival, Barney Barnato, the man who sank the first deep shaft into the Kimberly pipe. By 1889, Cecil Rhodes had wrested control of 90% of the world's diamond production. He used that position to establish price and distribution controls, and the power of De Beers in the diamond market was essentially unchallenged until the recent rise of Russian diamond mines. It is rumored that De Beers holds tens of millions of carats of diamonds in their vaults to insure that oversupply doesn't quench the market for the stones. However, the new mines in Russia, Australia, and Canada are largely distributed outside of the De Beers control, and consequently they only control perhaps 40% of the world supply. However, they are more profitable than ever.

Note that De Beers established policies and practices to guarantee that De Beers diamonds were conflict-free. The last of his wills established the Rhodes Scholarships for students from the British Colonies, United States, and Germany, regardless of race or religion. He died in 1902 near Cape Town, South Africa.