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intelligence memorandumcia/hr
world production and trade in industrial diamonds with particular reference to the us and the ussr
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CENTRAL INTELLIGENCE AGENCY
INTELLIGENCE MEMORANDUM NO.CIA/RR
WORLD PRODUCTION AND TRADE IN INDUSTRIAL DIAMONDS WITH PARTICULAR REFERENCE TO THE US AND THE USSR
1
Nole:
. It contains information available lo CIA as ol
. TABLE OF CONTENTS
Summary
Applications
c
Production and
of
of All
and Reserves of Industrial
and
Consumption by
of Control for Strategic
during World War
d. Probable Effects on the Soviet 11
Appendix. Tables
Tableorld Production of Rough Diamonds (Gem and7 and
Tablostimated World Production of Industrial
7 14
Tableeclared Exports of Industrial
Diamonds from Belgium and the
Netherlands to the Soviet Bloc,
15
Tableeclared Exports of IndustrialSwitzerland from Belgium 16
Tableotal Estimated Exports of Industrial
Diamonds to the Soviet. 16
ET
WORLD PRODUCTION AND TRADE IN INDUSTRIAL DIAMONDS WITH PARTICULAR REFERENCE TO THE US AND THE USSR
Summary
Industrial diamonds have become increasingly essential to mass production in modern industry. The small size and light weight of diamonds are out of all proportion to their importance but also make It very difficult to control their shipment. The greatest demand for diamonds began during World War II In the manufacture of war material and has continued unabated. Since the principal source is limited largely to areas in Africa, far removed from the US and the USSR, industrial diamonds arc of particular strategic importance to both countries. Annual US requirements areillionr about one-half of the total world output The UK and Canada are the next largest consumers. The needs of the Soviet Bloc are relativelyf which tho USSR consumes about two-thirds.mall part of the US stockpile objectives had been secured ashe present Soviet stockpile wmld probablyear.
. The US, because of its highly mechanized industry, would beaffected by any interruption in the supply of industrial diamonds. Although there is some hope of reducing the need for diamond crushing bortubstitute process, the industrial diamond requirements of modern industry .ire expected to continue essentially the same.
The production and sale of industrial diamonds are largely controlled by the West, but the location of most of the African diamond-producing areas makes them strategically vulnerable in case of war.
he carat is the unit by which most gems are weighed. Themetric carat (CM) is equivalentram,arats being equivalentroy ounce).
I. Introduction.
Diamonds, because of their hardness, which is greater than that of any other natural or artificial substance, are the most Important gem stones used in modern Industry, and they have become essential in the development of precision machinery. Without diamondwheels and other diamond tools, the mass production of machine tools and precision instruments would be impossible.
The small size and light weight of diamonds are out of allto tholr importance but also make It very difficult to control their shipment. For example, the total world output of all types of diamonds0 weighed only slightly morehortuarterillion carats of industrial stones thus weighounds. The weight limit in the diplomatic pouch Is usuallyounds, and therefore the quantity of diamonds that could be shipped by diplomatic pouch assumes considerable Importance.
All types of diamonds, including gem-grade, may bo classified as industrial. However, there arc three general kinds of industrial diamonds: bort, industrial stones, and waste from the cutting and polishing of gem stones. Bortrade name for flawed, off-color, or broken fragments of diamonds unsuitable for gems. This material is fragmented to specific grain sizes and is marketed as crushing bort. Industrial stones include off-color, colorless, and somestones unsuitable for gems; carbonadoes, or blackery hard and extremely tough aggregate of very small diamond crystals; andery hard and tough globular mass of diamond crystals radiatingommon center.
Applications.
Industrial diamonds are classified by use as tool stones, die stones, crushing bort, and diamond powder. Tool stor.es include industrial diamonds used ir. drill bits utilized by the mining, petroleum, and heavy construction industries; ir. boring and turning tools, where the diamond is mounteduitable tool and used to produce finishes of one-thousandth-of-an-inch tolerance; and in dressing and truing tools, In which the diamond is used to true other types of abrasive wheels and toigh finish to automotive and aircraft parts. Die stones, or diamond wire-drawing dies, are pierced sound stones of
arat which are used to draw wire uniformly to extremely fine sizes. Crushing bort, which is graded to size and embedded or bonded with metal or resins, is utilized in making diamond drill bits and diamond abrasive wheels. The latter are used to sharpen drilling tools and to true other types of abrasive wheels. Diamond powder Is fragmented bort crushed to micron sizes and is used to finish carbido dies, jewel bearings, glass lenses, and other glass products and toigh and rapid finish on many mechanical products.
c. Substitutes.
Much time and work have been spent in efforts to make diamonds synthetically or toatisfactory substitute for industrial diamonds. Until recently, however, little hope of success has been obtained. Boron carbide and silicon carbide powder have been substituted for diamond powder in some uses, and boron carbide molded Into dies has been utilized In wire-drawing where tolerance requirements are not too rigid. Tests by the US Bureau of Mines on the substitution of tungsten carbide drill bits for diamond bits have shown that, without resharpen-ing, four tungsten carbido bits are required to drill tho same footage obtained with one diamond drill bit. Recently, however, the Soviets have discovered an electro-mechanical method for sharpening cutting tools which does not require the use of diamond abrasive wheels or diamond powder. Experimental work in the US with the Sovietas confirmed its feasibility and has resulted in some advancements and technical improvements in the method.
The utilization of this electro-mechanical method of tool-sharpening should reduce both the cost of sharpening tools and the quantity of industrial diamonds required by industry. This last factor is of particular Importance to the US, as it is entirely dependent on imports for its supplies of industrial diamonds. Crushing bort, the
he Soviet process employs direct currentpecial electrolyte. The tool to be ground and the grindingopper disk,irect-cur rent circuit so that the tool forms the anode and the grinding wheel the cathode. By the action of the direct current in theilm of insoluble compounds is formed on the anode (therotecting i* from further electrolytic action. Removal of this film by the cathode (the rotating grinding wheel)resh surface of the metal to the action of the electrolyte and thus assures the continuous removal of metal from the anode. The equipmentto set up this process is relatively cheap,igh degree of skill is not required to operate It
bulk of which is used in the manufacture of abrasive wheels now employed to sharpen tools, makes upercent of the US stockpile objective of industrial diamonds. If the major use for bort could be eliminated or drastically reduced, large sums of money could be saved and US dependence on an overseas source could be avoided.
2. World Production and Reserves.
ew minor exceptions, reasonably accurate statistics are now available for total world production of diamonds of all types. Accurate figures for world reserves of diamonds, however, are not available.
a. Production of All Types.
Diamonds have been found In all continents, but commercial production at present Is confined largely to Africa, with South America and Asia providing the remainder. Africa accounts for aboutercent of the annual world output; Southoercent; andercent. South American and Indian mines have not been explored and developed on the same scale as In Africa, and production comes entirely from placer deposits. Various diamond fields produce stones of different quality, and the percentage of fine stones per mine also varies.mall part of the annual world production is suitable for cutting into fine gemsarat or moreut stones outotal ofillion caratsbout one-quarter of the total is off-color gem material, and the remainder, oroercent, is suitable only for industrial purposes. (The annual output of all types of diamonds by countries7 and ineriod is given in Tableefiniteon the production of diamonds in the USSR is negligible, but the annual output is very small. The only known deposits are In the gold and platinum mining areas west of the Urals in the Chkalov district and in the Kama Valley near Cherdin, whichew diamonds, and In the placer mines on the east slope of the Middle Urals near Neoganskoi, Sverdlovsk, and Troitsk.
b. Reserves of All Types.
The known reserves of all types of diamonds are not very large and at the present rate of consumption are believed lo be sufficient for
aboutoears. The African fields contain the major known reserves of diamonds. India is the oldest known diamond field but, like Borneo, is largely worked out. Brazil, British Guiana, and Venezuela produce from placer deposits alone and are regarded as minor sources.
The underground mines in South Africa (known as pipeormally have reserves plottedears ahead, and the large mines undoubtedly have reserves for several years, but, as they get deeper, the pipes decrease in size, as docs the average diamond content. Many of the South African alluvial fields have been exhausted. Thc fields in South-Wost Africa, thc Congo, and the old Coast have reserves blocked out for aboutoears in the future and are believed to have reserves forears'perations. In Tanganyika, only one diamond pipe has been discovered and operations to date have been limited to the area surroundingipe. However, estimates of the quantity of diamonds both in the surrounding area and ln thc pipe itself are not available. Mining lnrench Equatorial Africa until recently has beenmallnd only now is being mechanized.
and Reserves of Industrial Diamonds.
he quantity of diamonds used industrially was relatively small, and interest ln the annual output was comparatively slight. Therefore, no breakdown of Ihe world production of diamonds showing the quantity of industrial diamonds mined was published. At the beginning of World War II, large supplies of bort had beenbecause of lackarket. The war brought on industrial demands for mineral raw materials, machine tools, and precision Instruments that provided an outlet for the surplus bort and for larger quantities of diamond tools and die stones. This wartime demand has continued unabated. (For an estimate of the annual production of industrial diamonds, see Tableppendix.)
o-called from the pipelike form of the vertical cylindrical masses of igneous rock in which diamonds are found.
Industrial diamonds make up aboutoercent of the total annual production of diamonds by weight and account for aboutercent of the total value. Total figures for the production of diamonds in the Belgian Congo are broken down to show the quantities of gem and industrial stones recovered. However, figures for other producing countries show only the total quantity of dUmonds producedough percentage estimate of the part of the total output that may be Industrial.
0> Production Trends.
The annual world production of industrial diamonds foreriod averagedarats (see Tableppendix). Outputeak0 carats5 and then declinedowarats8 the trend has been upward,harp increaset Is believed, will be slightly higher thanhe increased output Is expected to come largely from the mines in the Belgian Congo, with smaller contributions from French Equatorial Africa and the Gold Coast. The mines in the Belgian Congo, which account for aboutercent of the total annual output of industrial diamonds, are being mechanized,ystematic program for development and mechanization is also being introduced at the diamond fields in French Equatorial Africa.
. eserves.
Borty-product of all diamond mining except in the Belgian Congo, where industrial diamonds make up more thanercent of the output. Reserves of industrial diamonds, therefore, are included in the total diamond reserves. Exact figures on industrial diamonds, most of which come from the large gravel deposits of the Belgian Congo, the Gold Coast, Sierra Leone, and Angola, are not available, but it Is believed that reserves of this type in the known diamond deposits will be adequate for aboutears at0 rate of consumption.
arketing.
As already stated, the principal diamond deposits, both gem and industrial, are found in Africa. The production and sale of the African output of gem and industrial diamonds, with tho exception of French Equatorial Africa, is controlledartel.
Control.
The diamond cartel, which is variously referred to as the "Diamond Corporation" or "Theas its headquarters in London and is made up of the following companies, all of which are British: Tho Do Beers Consolidated Mines, Limited; itsthe Consolidated Diamond Mines of South-West Africa, Limited, and Its wholly-owned subsidiary, the South-West Finance Corporation, Limited. These organizations own all the shares of the Diamond Corporation, Limited, which has contracts for the purchase of the diamond production from the Belgian Congo, Sierra Leone, Angola, thc Gold Coast, and Tanganyika, all of which, with the exception of the Belgian Congo, are under British control. The cartel also controls the sale of rough diamonds of gem and industrial grade. The Diamond Trading Company, Limited, Is the sales agent for gem stones, and Industrialimited, is the sales agent for industrial diamonds.
French Equatorial Africa is the only potentially large source of diamonds in Africa which is outside the control of the cartel. Thc diamond mining industry in this area is controlled by the International Mining Company, the East Ubangi Mining Company, and the Diamond Prospecting and Exploitation Company, an affiliate of the East Ubangi Mining Company. The International Minine Company also controls the Ogooni-Lobaze Mining Company, which engages in both gold and diamond mining.
and distribution.
The run-of-mine diamond production controlled by thc Diamond Corporation is shipped from Africa to London for classification into industrial- or gem-grade material. Then all material classified as bort is shipped back from London to Johannesburg, South Africa, for
fragmentation. Thisomparatively recent one, was starteduring World War II, some dealers purchased bort, sorted the material, "peeled" some of the larger stones to obtain gem-grade diamonds, and sold themuch higher price. In order to stop this leak of gem-grade material, the Diamond Corporation instituted the practice of fragmenting the bort before sale. The fragmented bort (crushing bort) is then returned to London for marketing.
Industrial diamonds, like gem-grade material, are sold by series and purchased by lot number from samples shown by Industrialimited. The opportunity to purchase industrial diamonds is made availableew times each year, and the quantity that may be purchased by one countryalendar year is limited. There are no direct sales of gem or industrial diamonds by the Diamond Corporation to the Soviet Bloc.
orld Consumption by Countries.
Diamonds are one of several mineral commodities of which the major consuming countries are not the producers. By far the largest consumer Is the US, followed by the UK and Canada. Statistics on the annual consumption, however, are not available.
US. industryillion carats of industrial diamonds annuaily, or about half the total world output. These requirements, however, are not filled, and consumption isoillion carats, aboutoercent of which is crushing bort. Aboutf the crushing bort consumed is utilized in the manufacture of abrasive wheels. Annual consumption by the UK is believed to beillion carats, and that by Canadaillion carats.
Information on the postwar consumption of industrial diamonds by the USSR can be expressed only in terms of the available supply of imported stones. This supply Is obtained largely from Belgium, the Netherlands, and Switzerland and through black-market and smuggling activities. (Declared exports by Belgium and the Netherlands to Soviet Bloc countries foreriod are shown in Tablewiss imports of industrial diamonds from Belgium9 increased through each quarter and for the year amounted toercent of the total exports from Belgium, as compared9 percentercentowever, Swiss imports of industrial
diamonds from Belgium decreasedercent of the total exports from that country. It has been reported by reliable sources that up toercent of the Swiss imports were for transshipment to the Soviet Bloc. (Declared exports from Belgium and the Netherlands to Switzerland foreriod are shown in Tablehe reduction in direct exports of industrial diamonds from Belgium and the Netherlands to Switzerland0 is attributed to theof open licenses for export of this material to Switzerland. An exporter of industrial diamonds to Switzerland must now apply for an individual license.
The USSR also purchases Industrial diamonds directly through the Soviet Legations in many of the diamond-producing or processing countries. Purchasesegation are regarded as localand export licenses arc not required. Thus these sales do not appear in export statistics.
It is reported that Czechoslovakiaarats of industrial diamonds from Brazil in05 carats of diamonds of all types from French Equatorial Africa in theonths of that year.reakdown showing the type of diamonds received in the latter shipment Is not available, it seems probable, in view of their relatively low dollar value, that most were of industrial grade.
Most of the industrial diamonds imported by Germany are from Belgium and totaledarats8 caratsaratslthough Belgian export statistics do not differentiate between East Germany and West Germany, the major portion probably was utilized in the Soviet Zone, as there are few industries in West Germany that use Industrial diamonds. It is assumed that the Zeiss wire-drawing plant at Jena, reported toarats of die stones per month, has been the principal ultimate consumer of imports from Belgium.
It is estimated thatarats of industrial diamonds were exported to the Soviet Bloc9 andarats0 (see Tablehe apparent reduction in imports by the Soviet Blocowever, is not real and reflects rather the increased amount of black-marketing, smuggling, and direct shipments by diplomatic pouch. The total annual supply of industrial diamonds
available to the Soviet Bloc is estimated to bearats. Annual consumption by the USSR is estimated to bearats, and by the European Satellites0arats,otal ofarats for the Soviet Bloc. The remainder of the supply,arats, is believed to be stockpiled.
ossibilities of Control for Strategic Purposes.
In the event of war the output and marketing of industrial diamonds would obviously rest with the Wost, as the UK, Belgium, and France control the production of diamonds in Africa, and the Diamondwith headquarters in London, controls the sale of the majority of them. However, because of the location of most of the African diamond-producing areas, they would be strategically vulnerable. At present, the greatest danger is labor unrest resulting from Communistof labor organizations in the Gold Coast, French West Africa, and Sierra Leone.
a. Controls during World War II.
The Diamond Corporation retained almost complete control of the diamond Industry in the World War II period, only the method of distribution being altered for some countries. The USSR obtained most,of its industrial diamond supplies from the Corporation in London or through trade agreements with Belgium and the Netherlands. German and its satellites obtained their supplies largely from collaborators in Belgium and the Netherlands and from stocks confiscated when the Germans overran those countries. Smaller quantities were obtained from South America through smuggling and black-market operations.
Distribution and control of imported industrial diamonds in the US0 and up to1 were effected through the British Ministry of Supply, which notified the British Consulate In New York of the quantity and type of diamonds that It had available for shipment each month. By collaboration between the Consulate and the War Productionistz^button list was forwarded to London
authorizing the shipment of specific ipantities to designated companies in the US. General Import3 of1 placed all
imported industrial diamonds under Government control. Onar Production Board Conservationrovided for quarterly reports of inventories and sales and reports of transfers and imports of rough diamonds both unset and in tools not in use.for all transactions was subject to approval of the War Production Board.as revised, and ailand tltleholders of lessarats were excluded from reporting. Authorization was not required for sales or transfers of crushing bort in amounts lessarats or of rough diamonds totalling less thanarats.as revoked on
Stockpiling of industrial diamonds is feasible and relatively simple. Diamonds do not deteriorate, and the only requirementafe place for storage. The difficulty so far in building up ais, for the mosthortage of mined stones. Asnly7 carats) of the US stockpile objective for industrial stones and5 carats) for crushing bort had been obtained.
Buying.
Cartel control of the industrial diamond industry should present an ideal means to prevent the sale of diamonds to aaggressor nation. However, any attempt to setreclusive buying contract under which the present cartel, the Diamondwould restrict its sales to countries not trading with the Soviet Bloc is believed to have little chance of success. Through the cartel program, the mining companies areixed gross income per year which in turn is reflected in the well-being of the people and the stability of the local governments. Diamonds in European and African countries represent notrofitable industry but also, at least In some ofedge against inflation.
Effects on the Soviet Bloc.
A drastic reduction in shipments of industrial diamonds to the Soviet Bloc would reduce greatly the efficiency of the fabricated metal
industry in that area, because the Dloc countries are almost entirely dependent on imports for their supply of industrial diamonds. The USSR isarge metal-production and machine-manufacturing programart of its long-range plan to Increaso industrial capacity for peacetime as well as for armament requirements. Thus Soviet demands for metal-cutting tools, wire-drawing dies, and other precision instruments are large. The supplies now available are believed toadequate for peacetime operations, but In case of war the USSR would be faced with the difficult problem of maintaining even the present level of imports. At the present rate of consumption the Soviet stocks, estimatedarats, would lastear. The USSR would therefore probably bet least in the Initial stagesarto ration the available supply, which would result in an Immediate shortage In that country and the rest of the Soviet Bloc. Although thc electro-mechanical method of sharpening tools pioneered by the USSR should reduce somewhat the quantities of industrial diamonds required, no reduction in efforts to obtain them is apparent, and requirements are expected to continue essentially the same. Without sufficient industrial diamonds, mass production methods in the industries of the Bloc countries would be severely hampered.
-SJprtBT
ess-
B8SIESSKSISIH
SKI*
Betimeted Vorld Production of Induetrial7 and 1
o
19b5
0
0
0
0
.
CO0
0
0
Too figurei ehovn wo based on tho percentage figure reported by the producing couatriea. The quantity and quality of dinsonda produced annually,
ilka other ninerel raw asterlale, very fron year to year, and thus tho percentage flguree given in tho firat coluano table nay vary about
5 percent.
b/ Sot available.
ej Actual figure reported by the Belgian Congo.
- ib -
ol.faQO 0 blf000 b5
Declared Sxports of Industrial
3
ads from Belgium and the Setherlands to the'Soviet
Balglom
ti'ocherlaada Co:
Germany (Soviet
Ql.it2
Grand Total
Carats
SfiGHET
8
Me trip-Carats '0 -
Declared Exports.of Industrial DiamoncfetbVwltzS^nd rom Belgium and.the Neiherlahiis ' .';
Country
0
Netherlands. 0
/
0 6 0
ParUy estimated; .
5
Total Estimated Exports of Industrial Diamonds"he
hi fcTj
Bloc Metric'Carats
from Belgium and the Netherlands
to the
ercent of Imports by Switzerland .
Imports by Hungary
ercent of Imports from Belgium by Germany a/
Total
Q
Belgian export figures do not differentiate between EastWest Germany, but.it is estimated thatercent of BelgianGermany go eventually to East
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Original document.
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