That's because the mines for it are flooded. Last I checked, all attempts to fix them have failed miserably, usually with death tolls for whatever divers were invovled.
<read above for first point>
As for the second...I'll sum it up in one word: TRADITION!
I tried telling my sister that if/when I ever got married, I didn't wanna get my wife to be a diamond engagement and wedding ring. That there's a monopoly on diamonds, and the monopolizers abuse the African nations they get most of their diamonds from to keep their monopoly, and then sell their diamonds to different US companies, because they CAN'T sell directly here because it's ILLEGAL. She said "Good luck ever getting married then." More true than you'd think...many gals wanna have the standard, 'picture perfect wedding'. White dress, fancy diamond ring. F**king conformity!