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Diamonds and Apartheid

Apr 6, 2005 11:18 AM   By Sheryl Katz
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South Africa’s racist colonial history left black people disenfranchised, landless and vulnerable, a situation that was exploited by mine owners after the discovery of diamonds. Each act and law passed in the interest of mine owners and white laborers sowed the seeds for apartheid. It could be said that the discovery of rough diamonds polished racism into apartheid.

Early Days

In December 1866, the first authenticated diamond was discovered on the banks of the Orange River by Erasmus Jacobs. The 21.25-carat Eureka diamond was identified and evaluated by Dr. W.G. Atherstone of Grahamstown, one of the few people in the Cape Colony with knowledge of minerals and gems.

Early signs of apartheid surfaced during the first major diamond discovery in 1869 when a black shepherd found the 83.50-carat Star of South Africa near the Orange River. He sold it to a farmer for 500 sheep, ten head of cattle and a horse! The Earl of Dudley in London later bought it for 25,000 pounds ($125,000).

In June 1893, the 971-carat Excelsior diamond was discovered in the Jagersfontein Mine (the second pipe mine after Koffiefontein) by a laborer who received 500 pounds ($2,500) and a horse and was released from his contract by the mine overseer.

Meanwhile, on the Vooruitzicht farm owned by the De Beers brothers, a Dutch digger found diamonds. Word spread and the biggest diamond rush to date ensued. The brothers sold the farm in October 1871 for 6,300 pounds ($8,300). Diggings to the west of the farm became known as the Kimberley Mine and finally the Big Hole of Kimberley, which was mined until 1914.

Social Deconstruction

The government imposed taxes that had to be paid in money in order to force black farmers to seek wages at the mines, turning them into a pool of cheap labor for mine owners. White farmers also wanted to seize black farmers’ land and in 1913 the government passed the Natives Land Act, officially dividing land on racial grounds. Black areas were called “Reserves” and comprised less than a tenth of the land in South Africa.

Migrant Workers

At first these “migrant workers” who went to the mines were young, unmarried men. However, eventually married men also left for the mines, destroying the family unit and social structure of the chiefdom. Black miners could not take their families as their wages were too low, there was no housing for them, mine owners did not want to support black families and the Chamber of Mines did not want to invest in schools and hospitals. Without men working the land, the Reserves became poorer.

In 1856, the Master and Servants Act introduced the contract system. Miners could not work without a contract nor break a contract. They became the property of the mine owners and faced no improvements in wages or conditions. Eventually mine owners demanded longer contracts, continuing to keep miners away from their families.

Pass Laws

The movement of workers was also controlled by the pass laws introduced in 1911 under the Native Labor Regulations Act, which banned migrant workers from settling in towns with their families.

Conditions at the mines were deplorable and black workers were dying from diseases in “compounds” where they were housed. Loneliness and despair led them to spend money on alcohol and prostitutes, leaving nothing for their families back home.

The Chamber of Mines, which was founded in 1889 to protect mine owners’ interests, cut the wages of black miners in 1897, a year after even stricter pass laws were introduced. In 1903, 5,022 black workers died at the mines.

Exploitation was justified by many racist arguments. In 1912, responding to early drafts of the Land Act, John L. Dube founded the African Native National Congress, which later became the African National Congress (ANC).

White vs. Black Workers

Racial tension also existed between black miners and white miners and in 1907, white miners held strikes against labor conditions and the threat of black competition. In 1911, with Jan Smuts as the first mines minister, the Mines and Works Act legitimized the long-term mining practice of reserving skilled jobs for whites and semiskilled and unskilled jobs for blacks.

The situation peaked when the 1953 Bantu Education Act decreed that blacks have separate education facilities. Hendrik F. Verwoerd, then minister of native affairs, explained that blacks should be trained “in accordance with their opportunities in life which did not reach above the level of certain forms of labor.”

Black miners finally began to organize resistance. The most significant organizations formed were the Industrial and Commercial Worker’s Union (ICU) in 1919 by Clements Kadalie, the African Mineworkers’ Union (AMWU) in 1941 by J.B. Marks and the National Union of Mineworkers (NUM) in 1982 by Thokoana Motlatsi. Resistance was spurred in 1948 with Daniel Francois Malan’s election as president on an apartheid platform — the first time the term “apartheid” was used. Apartheid, from the Afrikaans word for “separation” or “apartness,” was the social and political policy of racial segregation and discrimination enforced by white minority governments in South Africa from 1948 to 1994.

The Magnates

Prospectors continued to chase diamond finds. In 1870, one person could work two claims of 30 feet, but in 1874 the number was increased to ten as difficulties grew for individual diggers in the pipe mines. In 1876, the restriction was removed, which made amalgamations possible.

The first diamond law in 1871 caused a stir. Owners of property where diamonds were found had to declare the areas as public diggings or the land would be confiscated. All diamond finds had to be reported and the government took half of the earnings from claim licenses. Individual diggers eventually gave way to big mining companies.

A major turning point was the arrival of Cecil John Rhodes to South Africa in 1870. After a rocky start as a prospector, Rhodes bought a claim in the De Beers Mine in 1873.

Barney Barnato arrived in South Africa in 1873 and a power struggle began that started with Barnato buying claims in the Kimberley Mine while Rhodes gradually took over the De Beers Mine. As Rhodes formed De Beers Mining Co. Ltd., Barnato established Barnato Diamond Mining Co., which he merged with his Kimberley Central Mining Co. Rhodes gained complete control of the De Beers Mine in 1887 and formed De Beers Consolidated Mines Ltd. in 1888. Barnato was a major shareholder and Life Governor, but sold out to Rhodes in 1889.

In February 1890, the newly formed London Diamond Syndicate agreed to purchase all rough produced by De Beers. Ernest Oppenheimer, who arrived in Kimberley in 1902 as an agent for the diamond buying company A. Dunkelsbuhler & Co., later modeled the Anglo American Corporation after the London Diamond Syndicate.

De Beers

In 1919, Oppenheimer founded Consolidated Diamond Mines (CDM). The same year, the Diamond Cutting Act was introduced to protect the local industry by raising an existing rough diamond export tax from 10 percent to 15 percent. However, the tax was ineffective and abused and, not surprisingly, has since become the focus of the present government’s efforts to ensure beneficiation in the local diamond industry and to redress past imbalances.

In 1931, Oppenheimer as De Beers chairman formed a producers’ cooperative, which included all major non-De Beers producers, based on his belief that “only by limiting the quantity of diamonds put on the market, in accordance with the demand, and by selling through one channel, can the stability of the diamond trade be maintained.”

This new single-channel marketing structure, which eventually became known as the Central Selling Organization (CSO), was tested during the Great Depression when supply outweighed demand. De Beers closed all of its Kimberley mines and CDM, but kept outside producers’ operations intact and purchased their stones to ensure the industry’s survival.

To secure an income stream, Oppenheimer formed the Diamond Trading Company (DTC) in 1934. In the late 1930s, his son Harry visited the U.S. to investigate the possibility of a consumer advertising campaign to stimulate weak demand. The first diamond advertising campaign was run by N.W. Ayer in 1939 and in 1947 Frances Gerety, a young copywriter at N.W. Ayer, penned the famous slogan “A Diamond is Forever.”

Post-Apartheid Reconstruction

South Africa’s diamond history brought great suffering; however, it also brought a strong black leadership that miraculously ended apartheid rule with a peaceful election in April 1994. These leaders — most of whom launched their political careers in labor unions — transformed diamonds into a powerful tool for the development of the very people who suffered most after the discovery of diamonds in South Africa.

SOUTH AFRICA TIMELINE

1866- Eureka diamond (21.25 carats) discovered south of Orange River. Dr. W.G. Atherstone of Grahamstown first unofficial evaluator.

1869- Star of South Africa (83.50 carats) discovered on banks of Orange River. Great diamond rush follows.

November: Bultfontein Mine discovered near Kimberley.

1870- July: Koffiefontein — the first pipe mine — discovered in Orange Free State.

August: Jagersfontein Mine discovered nearby.

September: Dutoitspan Mine discovered in Kimberley.

1871- First diamond law instructs diamond property owners to declare areas as public diggings.

May: Cecil John Rhodes arrives at the diamond fields.

May: De Beers Mine discovered on Vooruitzicht farm near Bultfontein.

July: Kimberley Mine discovered on Vooruitzicht.

1873- Rhodes buys claim in the De Beers Mine.

Barney Barnato arrives at the diamond fields.

1876- Prospector claim restrictions dropped. Chaos of 3,600 individual claims reduced to 98 syndicated holdings by 1880.

Barnato buys four claims in Kimberley Mine.

1880- Rhodes forms the De Beers Mining Co. Ltd.

Barnato Diamond Mining Co. established.

1883-1884- Barnato merges his company with Kimberley Central. Rhodes gets 20 percent share.

Kimberley Central Mining Co., controlled by Barnato, first to sink shafts into the mine center.

1887- Rhodes gains complete control of De Beers Mine.

1888- March: De Beers Consolidated Mines Ltd. established in Kimberley with Rhodes as founding chairman. Barnato a major shareholder and Life Governor.

1889- Barnato sells out to Rhodes for 5,338,650 pounds ($25,000,000).

Mine owners’ association, the SA Chamber of Mines, formed.

1890- February: London Diamond Syndicate agrees to purchase all De Beers rough.

1891- December: Premier Mine found in Pretoria.

1902- Ernest Oppenheimer arrives in Kimberley.

1905- January: Cullinan diamond found (3,106 carats) at the Premier Mine.

1908- Diamonds found near Luderitz.

1910- Jan Smuts first minister in charge of mines.

1911- Native Labor Regulation Act forbids black miners from breaking a labor contract.

Mines and Works Act restricts black miners to semiskilled and unskilled labor.

1912- John L. Dube founds African Native National Congress [later the African National Congress (ANC)].

1913- Natives Land Act restricts blacks to 7.5 percent of South African land.

1914- Mining all but stops with outbreak of World War I.

1917- Oppenheimer sets up Anglo American Corporation (AAC).

1919- Oppenheimer founds Consolidated Diamond Mines (CDM).

1921- Oppenheimer gains control of the South West African (now Namibia) deposits and forms CDM of SWA.

1922- Postwar depression leads mine owners to propose wage reductions and dismissal of thousands of white semiskilled laborers.

1924- Industrial Conciliation Act adopted by Prime Minister Hertzog to protect white labor.

1925- Wage Act forces employers to give preference to hire white workers.

1926- Oppenheimer appointed to De Beers board.

Mines and Works Amendment Act reinforces the color bar in the mining industry.

1927- November: Precious Stones Act gives government share in prospecting finds and control of all mining in Namaqualand.

1929- Great Depression starts.

Oppenheimer appointed De Beers chairman.

1930- Oppenheimer forms producers’ cooperative and single-channel marketing structure.

1933- Diamond Producers Association formed to provide quotas for all producers, including the State Alluvial Diggings as well as a single-channel for rough sales.

1934- Oppenheimer forms the Diamond Trading Company (DTC).

1936- Native Trust and Land Act increases black land to 13 percent, but confirms racial segregation.

1941- African Mineworkers’ Union (AMWU) formed.

1948- First use of term apartheid by Daniel Francois Malan’s election campaign.

1950- Group Areas Act further separates white/black areas and allows forcible removal.

1953- Bantu Education Act decrees blacks have separate education facilities.

1956- Industrial Conciliation Act allows labor minister to reserve categories of work for specified racial groups.

1957- Ernest Oppenheimer dies. Son Harry assumes control of De Beers.

1961- Finsch Mine discovered in Northern Cape, bought by De Beers.

1976- Soweto and countrywide uprisings.

1979- Government recognizes black labor unions.

1980- Venetia Mine discovered south of the Limpopo River.

1982- National Union of Mineworkers (NUM) formed.

1985- Harry Oppenheimer succeeded by Julian Ogilvie Thompson. Nicky Oppenheimer appointed deputy chairman.

1988- State of Emergency declared. De Beers registers all non-South African assets in Switzerland.

1990- The unbanning of the ANC.

1991- June: Repeal of Population Registration Act, Land Acts, Group Areas Act and release of political prisoners.

1994- April: Elections. Peaceful transition to a nonracial democracy.

1996- Mine Health and Safety Act becomes law. Major victory for NUM.

1998- De Beers breaks from Anglo American, Nicky Oppenheimer becomes chairman with Gary Ralfe as the first managing director.
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Tags: Anglo American, Banks, De Beers, DTC, Government, Mining Companies, Namibia, National Union of Mineworkers (NUM), Regulation, South Africa
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