Burne has set up diamond cutting and polishing facilities in Africa for De Beers. A director of De Beers, he has also served on the London executive of company's marketing mechanism, the Central Selling Organization.

Burne made the comments at the NWT Chamber of Commerce's quarterly meeting Sunday in Hay River.

He also spoke at a Yellowknife Chamber of Commerce luncheon Monday at the Explorer.

Burne also said in 1997 world rough diamond production was $7 billion US. The largest producer is Botswana at $2 billion. Russia, it is believed, is next at $1.5 billion.

Burne said there is a misconception that $7 billion translates into product worth $52 million at the retail level.

The retail value of the diamonds in the final product is actually $12 billion, not $52 billion, he said.

The perceived benefits of value added are overrated, he said.

As an example, Burne said, a single rough stone with a $20 US value is worth $25.20 when polished. At retail, this stone's value is $50, of which, $5.20 is added value due to manufacturing. The $5.20 is known as the manufacturing pipeline cost.

The $5.20 is made up of various costs and also includes about four per cent profit.

Burne based his figures on a 500 person factory in Africa where average earnings are $135 per person per month (77 cents per hour).

"You believe there is a much greater profit than I've said," he told NWT chamber members.

India dominates the world's manufacturing industry employing several hundred thousand people.

Diamond manufacturing tends to occur in jurisdictions where expertise is highest and labor costs are lowest, Burne said.

Village-based factories in India pay laborers $50 a month. In Bombay it's $85, Burne said.

On supply and demand, De Beers predicts supply over the next few years will be greater than demand. Turmoil in the Asian markets may lower demand more.

To promote diamonds, De Beers spent $200 million on marketing last year.

The company even managed to get Baywatch characters to promote De Beers' "two months salary" ad campaign.

For diamond producers, Burne warned that if companies "force goods onto the market," they will "destroy the market."

Historically, De Beers has taken dramatic steps to protect the market and keep the value of diamonds high.

One of the biggest moves occurred after diamonds were found in South Africa in 1866. De Beers bought out diamond company Kimberley Central for 5.3 million British pounds. That's $300 million US in 1997 dollars.

De Beers felt that one channel was the only way to market diamonds.

"In the long run, we will market all the goods. Force those goods onto the market and you will destroy the market. We regard ourselves as guardians of the diamond business."