The continuing strength of the rand poses a serious and immediate challenge to De Beers — the world’s largest diamond miner — which reports its earnings in United States dollars, managing director Gary Ralfe said on Wednesday.
“The current financial climate dictates a critical review of all our overheads, particularly those of corporate headquarters in Johannesburg, to ensure that costs are reduced and value added to the business,” he said in a statement.
A reduction of staffing levels will be necessary and every reasonable effort will be made to minimise any adverse effects on employees.
“I am keenly aware of the impact on employees and on morale, and I assure you that, throughout the process, we will examine all avenues reasonably open to us to avoid, wherever possible, redundancy and retrenchment,” Ralfe said.
These avenues will include redeployment of staff; a freeze on all recruitment; and consideration of voluntary separation combined with early retirement where appropriate.
“It is unfortunate that the impact of the rand exchange rate has overshadowed the project that has been under way for several months to review the current organisational and corporate structure of De Beers Consolidated Mines Limited [DBCM]. Project Rainbow, as it is known, heralds a new and exciting chapter in the Company’s history,” he added.
The so-called Project Rainbow was given impetus by the Minerals and Petroleum Development Act of 2002, which will regulate the South African mining industry when it comes into effect.
In meeting its objectives the project team has been guided by a vision to redefine DBCM as a standalone De Beers group company in South Africa.
The recommendations of the project team will be presented to the De Beers executive committee and then to the De Beers board for final approval in November. — I-Net Bridge