FOR years, the image of the De Beers Group, the producer of diamonds based in South Africa, suffered because it effectively controlled the world’s diamond supply through its Central Selling Organization in London. More recently, diamonds became associated with conflicts in Africa, where rival armies shed blood to control diamond production and finance their military operations.

Gareth Penny

But De Beers has stopped trying to control the supply of diamonds to world markets, partly because of regulatory challenges but also because of the rise of new competition. And the managing director of De Beers, Gareth Penny, 45, says the Kimberley Process, which tracks diamonds from discovery to retailers’ shelves, means that consumers can be assured that the gems they are considering have not propelled conflict. The group recorded $6.8 billion in sales in 2007 and employs 22,000, mostly in Africa. Here are excerpts from a recent conversation:

Q. What will happen to diamond sales in the United States and the world in this economic crisis?

A. The first point to make is that 80 percent of diamonds are given as gifts, mostly in the fourth quarter of the year. These are difficult times, but in the research we’re doing with consumers now, the desire for our product has never been greater. One of the reasons is that people are looking for fewer, better things. Women are telling us they would rather have one meaningful product that will last.

Q. Have diamonds been one of these commodities whose prices have been inflated and then crashed?

A. The volatility of diamonds is only a fraction of that of other commodities. A lot of commodities screamed up in price, quadrupling in value. Diamonds haven’t done that. And the downward pressure that diamonds have experienced is minimal as a consequence.

Q. What has your company and your industry done to assure consumers that they are not buying “blood diamonds,” as the movie of the same name suggested?

A. Every single one of the diamonds that De Beers produces and sells comes with a Kimberley certificate. This chain of warranties means that from the place where it is mined to the time at which it’s sold, it’s watched over by international organizations that have signed up for the Kimberley Process. That process governs 99.8 percent of all diamonds. Diamonds are probably the most regulated mineral anywhere on earth.

Q. Aren’t diamonds still at the center of conflict in some countries?

A. The countries where there was conflict are now almost entirely at peace, countries like Sierra Leone and Liberia. Recently, there have been issues in Congo, but that has not been in diamond-producing areas. So diamonds are not caught up in conflict in Africa.

Q. Your whole model of trying to control the supply of diamonds from your stockpiles to the world has been stood on its head, right?

A. Our business model has changed dramatically in the past few years. We are a demand-driven organization. De Beers doesn’t control the supply of diamonds. We have around 40 percent market share today. We have very small stocks, measured in a few months of production, from the time we mine the stone to the time we sell it. Our business model is an absolutely normal one, and as a result of these profound changes, we now find ourselves on the right side of regulators all around the world.

Q. So through what channels do you sell your diamonds?

A. The Central Selling Organization closed down. We have a wholly owned trading company called the Diamond Trading Company, which has a considerable number of customers around the world. And we have a secondary channel that sells to many hundreds of small companies through a tender process.

Q. Who has the other 60 percent of the market?

A. The Russians have a major share of it, and then there are major mining companies, such as Rio Tinto and BHP, and many, many smaller ones.

Q. In view of Barack Obama’s assuming the presidency, which will probably heighten interest in Africa, should American business be doing anything differently?

A. We’ve developed a program that has a number of steps to guide us in how we conduct our business in Africa. One is that you need to form strong partnerships. Business relationships in Africa require those partnerships. So De Beers is in partnership with the Botswana government and the Namibian government, and we have a consortium of black business people we’re involved with in South Africa.

A second element is sustainability and everything that goes with that. Making sure that our work force is well educated and addressing issues like the H.I.V.-AIDS pandemic are all part of the way you operate in an African environment. That gives you legitimacy and the social contract to do business.

Q. H.I.V.-AIDS is prevalent among your miners in South Africa, right?

A. It is. But there is a lot of work that’s being done. Our company is providing antiretroviral drugs to our employees and their partners, which we do at our cost. We have extensive testing mechanisms. We want everybody to know their status. That’s really the first step in this battle. It’s just something that’s going to require constant vigilance.

Q. Can American business do more in Africa?

A. Yes, American business can. If you look at natural resources and minerals and trading opportunities and tourism, I think Africa represents a very interesting and long-term strategic trading partner for the United States.

It goes without saying that Mr. Obama’s election has been unbelievably well received right across the entire African continent

A version of this article appeared in print on December 13, 2008, on page B2 of the New York edition