The hub-and-spoke model is a distribution structure in which rough diamonds flow outward from a single controlling centre — the hub — to a fixed roster of approved buyers, the spokes, who then manufacture and sell polished goods into the broader market. The term is borrowed from logistics and network theory, but in the gemstone trade it refers almost exclusively to the system developed and refined by De Beers' Diamond Trading Company (DTC) across the twentieth century. Though De Beers' dominance has contracted sharply since the early 2000s, the phrase remains current as a descriptor for any centralised rough-allocation mechanism in the diamond industry.

The Historical Model

At its height, De Beers controlled an estimated 80–90 per cent of the world's rough-diamond supply by value, aggregating production from its own mines as well as purchases from external producers through its Central Selling Organisation (CSO), later reorganised as the DTC. The hub was initially based in London, where ten times per year — at events known as sights — a select group of sightholders were invited to purchase pre-sorted boxes of rough at prices set unilaterally by De Beers. Sightholders were not permitted to negotiate the contents or the price of a box; acceptance was effectively mandatory for those who wished to retain their place in the system. This structure gave De Beers extraordinary leverage over both supply and pricing throughout the pipeline.

The geographic hub later shifted in significant part to Gaborone, Botswana, reflecting that country's status as the world's largest diamond producer by value and the terms of its partnership with De Beers through the Debswana joint venture. The relocation was also a response to political and regulatory pressure to ensure that more of the value generated by Botswana's diamonds remained within the country.

Function and Effect on the Market

The hub-and-spoke architecture served several interlocking purposes. By controlling the rate at which rough entered the market, De Beers could dampen the price volatility that would otherwise follow the cyclical nature of mining output and consumer demand. When demand softened, the CSO accumulated stockpiles rather than allowing prices to fall; when demand strengthened, stockpiles were drawn down in a managed fashion. The system also allowed De Beers to direct specific categories of rough — gem-quality versus industrial, large stones versus smalls — to sightholders best equipped to manufacture them efficiently.

For sightholders, inclusion in the system conferred significant commercial advantages: reliable access to a broad assortment of rough, the implicit endorsement of De Beers' brand, and a degree of insulation from spot-market volatility. The obligations were correspondingly substantial, including minimum purchase commitments, reporting requirements, and adherence to De Beers' evolving Best Practice Principles on ethical sourcing and labour standards.

Decline and Legacy

The hub-and-spoke model began to erode in the late 1990s and accelerated through the 2000s. Antitrust scrutiny in the United States and the European Union constrained De Beers' ability to operate its stockpiling and price-support mechanisms as before. The emergence of significant independent producers — most notably the Argyle mine in Western Australia (Rio Tinto) and the Ekati and Diavik mines in Canada — created substantial volumes of rough that moved outside the DTC entirely. By the early 2010s, De Beers' share of global rough supply had fallen to roughly 35–40 per cent by value, fundamentally altering the competitive landscape.

Today, rough diamonds from major producers such as ALROSA (Russia) and Rio Tinto are sold through their own tender and term-contract systems, each of which replicates elements of the hub-and-spoke logic — a central seller, a vetted buyer list, periodic allocation events — without the near-monopoly conditions that made De Beers' original version so powerful. The term thus retains descriptive utility in trade journalism and gemmological literature as shorthand for any producer-controlled, allocation-based distribution structure, as distinguished from open-market or auction-based trading.

In the Trade Today

Practitioners in the diamond trade use "hub-and-spoke" both historically, when discussing De Beers' twentieth-century dominance, and analytically, when comparing different producers' sales methodologies. The phrase appears in industry publications such as Rapaport Diamond Report and in academic treatments of commodity-market structure. For gemmologists and jewellery professionals, understanding the model is essential context for interpreting how rough prices are set, why polished prices can diverge from rough-market movements, and how the provenance and traceability programmes now demanded by consumers fit — or do not fit — within inherited distribution architectures designed for opacity rather than transparency.