Call for De Beers chief to step aside – by Allan Seccombe (Business Day Live – November 26, 2015)

A PROMINENT diamond industry player has called for De Beers CEO Philippe Mellier to step down and make way for someone who better understands the business.

Martin Rapaport, chairman of the Rapaport Group, has also demanded that De Beers and others drop prices for rough diamonds by up to 50% to save the ailing industry.

The global diamond sector has run into severe problems after years of poor decisions in financing the purchasing of rough diamonds by banks, pricing and production by mining companies, and the way the industry treated easy and abundant finance.

Taking specific aim at De Beers, Mr Rapaport, who analysts describe as highly regarded and influential in the polished segment, said the company, 85%-owned by Anglo American, was inflicting damage on the industry.

De Beers is the largest producer of rough diamonds by value and second behind Russia’s Alrosa in carat output.

He said De Beers had to cut rough diamond prices considerably to widen thin profit margins in the cutting, polishing and trade segments that face a “cascade of bankruptcies”, threatening the viability of the industry.

“Destroying long-term client trust relationships — the essence of the De Beers brand — while bankrupting the diamond trade for the sake of short-term balance sheet profits is poor leadership at its worst,” Mr Rapaport wrote in an article in a Rapaport publication on Tuesday.

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