The Big Question: What makes diamonds valuable, and why do we revere them so much?

Why are we asking this now?

They are the ultimate in glitz and have been described as fragments of stars, or like tears of the gods. For thousands of years, mankind has been besotted by the beauty of the diamond. It is no surprise then that the discovery of what could turn out to be one of the largest examples of the gem has re-ignited our love affair with the stone. A 478-carat diamond, described by its finders as a "near-flawless" example, has been unearthed at a mine in Lesotho. It is now being pored over by experts in Antwerp, but it is already being touted as one of the biggest polished gems in history.

How big is this diamond, and how does it compare with others?

The stone was discovered earlier this month at the Letseng mine in Lesotho, by the mining firm Gem Diamonds. The company has said its value is hard to gauge before it has been cut and fitted to a piece of jewellery. But a similar-sized stone of lesser quality went for £6m recently. If it is cut and fitted in the right way, the new discovery could make millions more. Clifford Elphick, chief executive of Gem Diamonds, said: "Preliminary examination of this remarkable diamond indicates that it will yield a record-breaking polished stone of the very best colour and clarity."

Is Lesotho a key source of diamonds?

South Africa may be better known as a source of diamonds, but Lesotho, a country with a population of 2million and completely surrounded by South Africa, is a key exporter of the gem. (Its other main export is wool). The Letseng mine has developed something of a reputation for housing mammoth diamonds. The latest find is only the fourth largest diamond to be found there. The biggest, Lesotho Promise, weighed in at 603 carats. Originally, India was the principle source of diamonds, but that switched to Brazil and then to several African nations, including South Africa and Lesotho.

What exactly is a diamond?

For all its beauty, a diamond is actually an extremely simple material. It is made of pure carbon and is the hardest naturally occurring mineral. In fact, the only thing separating the precious stone from coal is its molecular structure (it's all in the isometric-hexoctahedral crystal lattice). Though the classic colour for a diamond is a dazzling white, they also naturally occur in shades of pink, cognac, blue, yellow and green.

Have diamonds always been so popular?

Yes, though diamonds have meant different things to different societies. Until the 15th century, they were seen by leaders as symbols of supreme strength. The name itself comes from the Greek word "adamas", meaning indestructible. The Greeks were a romantic sort, and for them the dancing sparkle of the diamond was the sign of the extinguishable flame of love.

Many have seen diamonds as having a magical quality – fuelled by the fact that many glow in the dark. As a result, they have been used as a cure for madness, to ward off evil spirits and devils, and even as a cure for nightmares. The Greek philosopher Plato was said to share the belief that diamonds were living spirits. Diamond "powder" has also been used as a potent poison – apparently one favoured by Catherine de Medici in the 16th century.

So why do we use them for engagement rings?

We have a particularly romantically-minded Austrian aristocrat to thank for that innovation. Archduke Maximilian decided to give his fiancée, Mary of Burgundy, a diamond ring when he proposed to her in 1477. It caught on, though the custom of wearing the ring on the third finger of the left hand (thought to contain a vein that led straight to the heart) has been around since the ancient Egyptians.

What happens to the biggest diamonds?

Unsurprisingly, most of the big ones have ended up in the hands of royalty or other members of the international elite. The biggest of all can be found at the Tower of London among our very own Crown Jewels. The Cullinan diamond, which at 3,106 carats is the biggest rough diamond ever discovered, was handed to King Edward VII after being mined in South Africa in 1905. It was then cut into three pieces – a risky business at the time. The largest slab was named Cullinan 1, or the Great Star of Africa, and can be found mounted in the head of the Sceptre with the Cross. The second largest piece, the Lesser Star of Africa, forms part of the Imperial State Crown.

But the British royals are not he only ones to end up with weighty diamonds. The Orlov, a 189.6 carat cut diamond found in India, resides in the Kremlin, while the 108-carat Taj-Imah forms part of the crown jewels of Iran. Another, the 137-carat Regent diamond, which has a blue tinge, is housed in the Louvre, Paris.

Don't diamonds help fund wars?

After acquiring associations with conflicts in Africa, exploitation and even child labour, the glitz of the diamond trade was looking increasingly tarnished and, crucially, consumers began to become wary. By 2004, the industry was beginning to feel the pinch with a 20 per cent fall in sales. The pursuit of diamonds has exacerbated political instability in places such as Angola and Sierra Leone in the past, where the funds raised through the illegal trading of the gem have ended up buying weapons for warring parties.

But in recent years, the diamond trade has made moves to stamp out the practice, using fair-trade logos to help consumers spot the ethically sourced examples from the so-called blood diamonds. They are proving popular again and making big bucks at auction. Last year, auction house Sotheby's sold a stone it described as "the largest, purest, white flawless brilliant-cut diamond ever bought at auction" for £7.9m. It was the second highest price ever paid for a diamond at auction. The 84.37 gem sold for £93,000 a carat.

Who are the most famous diamond-wearers?

Anyone who wants to give the impression of total decadence, so they are popular with the bling merchants of Hollywood. Stars from Kiera Knightly to Jade Jagger have been snapped wearing diamonds worth hundreds of thousands of pounds at premieres. Elizabeth Taylor is often seen donning the 33 carat Krupp Diamond, set in a ring. She was the proud owner of an even larger stone, the pear-shaped Taylor Burton diamond – a 40th birthday gift from her then husband Richard Burton in 1972. It was a whopping 69 carats after it had been cut. After the pair divorced, the actress auctioned off the diamond in 1978 for $5m. She used the money to fund the building of a hospital in Botswana.

Any prospect of diamonds running out?

The coloured varieties are in short supply – some of the main providers say they might run out within a decade. But as demand for the gems increases with the growing ranks of the middle classes in China and India, demand could be met by diamonds manufactured in the laboratory. They are chemically identical to mined diamonds, but the practice has started a debate over whether the man-made examples can honestly be certified as the real deal. In many people's eyes, the real romance of the gem lies in the discoveries of big, naturally occurring diamonds.

Is the diamond's cachet as powerful as ever?

Yes...

* We have been fascinated by the mineral for thousands of years. We're not about to stop now.

* If Napoleon, Queen Victoria and Catherine the Great all loved them, they must be hard to beat.

* Demand for the stone is expected to grow even more as the Chinese and Indian middle classes swell.

No...

* All the biggest ones just end up in the Tower of London or the Louvre, rather than on someone's finger.

* Blood diamonds have funded militias and civil wars in the past – there's nothing glamorous in that.

* The romance of discovering a huge diamond may be over – perfect diamonds can now be created in the lab.