De Beers, the most famous name in diamonds, will on Tuesday unveil the biggest shake-up in its 117-year history when it hands over part of its South African mining arm to black investors.
The company — established by Cecil Rhodes — is reacting to pressure from the South African government to increase black representation and reverse years of marginalisation started under apartheid.
De Beers Consolidated Mines (DBCM) appointed David Noko as its first black MD designate two months ago, but it will now go much further with more than 15% of the company expected to be put in the hands of a new black investment group.
The details will be revealed by DBCM’s chairperson, Nicky Oppenheimer, and his MD and younger brother, Jonathan Oppenheimer, in the presence of Lindiwe Hendricks, Minister of Minerals and Energy.
On Monday night, the company declined to give details of a restructuring that will cause waves across the mining sector but could improve De Beers’ image. This has been damaged by claims of exploiting the Bushmen in Botswana, which it denies.
”I can confirm to you that we are making an announcement on the ownership structure but we are not saying anything else until tomorrow,” said a spokesperson for De Beers in Johannesburg.
DBCM is a subsidiary of the De Beers SA group, which is 45% owned by Anglo American mining company with a smaller stake held by the Oppenheimer family. DBCM controls seven mines, including the Kimberley facilities where Rhodes made most of his wealth. It employs 10 000 in South Africa and produces 13,7-million carats, 90% of the country’s total.
South Africa is the fourth-largest diamond producer after Botswana, Russia and Canada.
A London-based mining analyst, who asked not to be named, said an ownership change at De Beers is another sign that the company could lose its grip on the sector.
”This should be good news for smaller diamond-mining firms,” he said.
Last Friday, a diamond-polishing plant was opened in neighbouring Angola, which is also seen as a threat to the De Beers group and its London trading arm. De Beers sends its rough stones to Britain and then on to India for polishing.
The plant in Luanda has been started by the Israel-based but Uzbekistan-born Lev Leviev, who says he also wants to open a plant in Botswana. The South African government has already told De Beers that it should bring back its London-based sales arm to its home country.
Under the terms of the black economic empowerment charter, South African mining firms must hand over 15% of their local assets to the black community by 2009, while up to 26% must go by 2014.
Financial firms such as Old Mutual and Absa — part-owned by Barclays — have led the field in this area as their higher public profile in the country has increased the pressure on them for change.
Critics of the system, including some black entrepreneurs, have complained that only a handful of well-educated and connected black businessmen are benefiting from these transactions. The real victims of South Africa’s very high unemployment get little benefit from these ownership changes or parallel moves to bring more black faces into senior management positions and the boardroom.
In a recent Guardian interview, Nicky Oppenheimer insisted he could see a black African running the whole of De Beers one day.
”It would be great. I have no problem whether they be black, blue or Martian, male or female, as long as they can do the job properly,” he said. — Guardian Unlimited Â