Oppenheimers to keep De Beers stake

South Africa’s Oppenheimer family is not keen to sell its 40% stake in De Beers after a buoyant year for the world’s top diamond miner, Nicky Oppenheimer said, dampening speculation about a divestment.

“As things stand at the moment, we are absolutely happy ... we think it is a good business and will give us a proper return on that investment,” Oppenheimer, chairperson of De Beers, told Reuters in an exclusive interview on Monday.

According to an unsourced media report last month, mining group Anglo American, which owns 45% of De Beers, was considering buying out the Oppenheimer holding.

“When I saw that headline ... it came as complete surprise to me.
And I was pleased to say that when I rang up Anglo and said, ‘Is there something going on?’... they were as surprised as I was,” he said after flying by helicopter to De Beers headquarters in London’s financial centre.

“I would be a fool to say ... that such a thing will never happen ... But it seems to me an unlikely event.”

The shareholders, which also include the Botswana government with the remaining 15%, seemed to be happy with the current situation, he added on the sidelines of the launch of De Beers’s first sales event of 2011, where clients will buy about half-a-billion dollars worth of gems.

The Oppenheimer family, which founded diversified miner Anglo about 90 years ago, ranked 154th on the 2010 Forbes list of billionaires, with an estimated fortune of $5-billion.

2010 better than expected
Oppenheimer, also a board member of Anglo, echoed previous comments by De Beers and Anglo executives denying talk that a relisting of De Beers was on the cards, at least in the near-term.

“I am certainly not going to say never, but it seems to me De Beers lends itself to being a private company.”

De Beers, which accounts for about 40% of global diamond supply, was delisted and went private in 2001.

“The market at the time certainly did not appreciate the value we, the shareholders, saw in De Beers. Diamonds are a very long-term business and I am not sure today’s public market is long term,” he said.

“If De Beers had to answer to analysts on a quarterly basis about how it is doing, I think that does not strike me as something that is necessarily in the best interests of the long-term nature of the business.”

De Beers had a very strong year in 2010, said Oppenheimer, who could not give details ahead of annual results next month.

“Last year was better than any of us could have expected ... we were extraordinarily pleased and I think surprised.”

The strong results were on the back of a rationalisation programme spurred by the global downturn during which the group slashed costs by 50%.

De Beers was hit hard during the recession as consumers shied away from luxury goods, forcing it to temporarily close mines in the early part of 2009.

De Beers has previously said production in 2010 was expected to rebound to about 30-million to 31-million carats, up nearly 30% from 24,6-million carats the year before. The group was targeting about 40-million carats this year, Oppenheimer said.

Production is unlikely to ever match peak levels before the global financial crisis of about 50-million carats partly due to the focus on keeping costs down, Oppenheimer added.

De Beers was close to announcing a new chief executive following the resignation of Gareth Penny last July, he added.

“Obviously it is an unsatisfactory situation ... so [the appointment will be] as soon as possible.”

When asked if it might be later this month, Oppenheimer said that was probably over-ambitious.

The Oppenheimers, who also own just under 2% of Anglo American, have been heavily involved in South Africa’s business life since grandfather Ernest won control of a diamond operation formed by magnate Cecil Rhodes.—Reuters

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