De Beers sale signals end of an empire

First founded by Cecil Rhodes, De Beers' sale to Anglo American puts the diamond miner back in British hands

After ruling the diamond industry for close to a century, South Africa's unofficial Royal family, the Oppenheimer's, have signalled the end of an era by selling out of De Beers.

The descendents of Ernest Oppenheimer, the swashbuckling diamond trader who wrested control of De Beers in 1927, sold their remaining 40 per cent stake in the world's biggest diamond producer to Anglo America for $5.1bn (£3.2bn).

The deal will hand control of De Beers to Anglo American by hiking its stake in the private company to 85 per cent. It will mark a new era for the family, which has not only played a key role in De Beers for more than eight decades but also founded Anglo American.

It also represents the new stage for De Beers, a company inextricably linked with Britain's colonial past that this year recorded record interim sales, and for Anglo American, with diamond sales set to accelerate in the coming years.

Des Kilalea, an analyst at RBC Capital Markets in London, said: "It is the end of an era because the Oppenheimers are intrinsically associated with De Beers and Anglo American."

Ernest's 65-year grandson, Nicky, studied at Harrow and Oxford before spending 43 years at De Beers. He will step down as chairman after the deal goes through. Nicky's departure from De Beers comes eight months after he retired as a non-executive director of Anglo American after nearly four decades, leaving the mining company without a founding family member on its board for the first time.

The family has also sold down its stake in Anglo to 1.9 per cent over the years. It said yesterday it had no intention of selling its remaining shares in Anglo American, leaving it with a symbolic tie to the industry.

"This is a logical conclusion because Nicky can't go on running the business forever and there is not a natural successor to move into a senior management position. And even if there was, I'm not sure corporate governance rules would allow it these days," Mr Kilalea said.

"It is time for the younger generation to reinvent itself rather than sitting on a legal holding," he added.

The family said yesterday that it would invest much of the proceeds from the sale in Tana Africa Capital, a joint venture with Temasek, the Singapore state-owned private equity firm that invests mainly in consumer and agricultural businesses in Africa.

For Anglo American, the deal is also likely to be transformational. Cynthia Carroll, Anglo's chief executive, rejected suggestions that she might spin off De Beers in answer to shareholder complaints that its holding in De Beers is not fully reflected in Anglo's share price.

"This transaction is a unique opportunity for Anglo American to consolidate control of the world's leading diamond company – De Beers," she said.

Although the diamond price can see-saw, they are up 40 per cent this year and Anglo is essentially operating in a dream market for a player which now has pretty much all the cards – severe constraints on supply with aging mines and no major discoveries for a decade.

Furthermore, demand from emerging market economies such is soaring, with half the weddings in Beijing and Shaghai involving a diamond, compared to virtually none a decade ago and five successive years of 30 per cent growth in India.

With China, India and the Gulf expected to equal the biggest present diamond consumer – the US, with a 40 per cent global share – by 2015, it is quite clear where Anglo's attentions will lie.

While De Beers may be targeting the rising financial imperial powers of the East, its beginnings were very much associated with colonial Britain.

The Oppenheimers may have ruled the roost for decades, but the company began with Cecil Rhodes, the English-born politician and entrepreneur who went on to found Rhodesia, which was renamed Zimbabwe in 1979 and the Rhodes scholarship scheme to Oxford University.

Mr Rhodes headed to South Africa at the beginning of the diamond rush that began in 1871, following the discovery of an 83.5 carat diamond on Colesburg Kopje, a hill situated by Kimberley, the city that rapidly formed around it as all manner of dealers and entrepreneurs flooded into the area.

Mr Rhodes, a vicar's son, began by renting water pumps to miners and, with the help of some cash from NM Rothschild & Sons, quickly established himself as king pin, merging his operation with that of his arch rival, Barney Barnato to form De Beers in 1888.

Mr Rhodes, who influenced the Second Boer War to protect his interests and exerted an iron grip on South Africa's diamond industry, later met his match in the form of Ernest Oppenheimer, a German Jewish immigrant, who became his arch rival through his fledgling operation, Anglo American.

Mr Rhodes died in 1902 and Mr Oppenheimer assumed control of De Beers a quarter of a century later.

Over the years, De Beers has been frequently attacked as operating an anticompetitive, secretive cartel – a system that De Beers referred to as a "producers' cooperative.

Given the Wld West environment that surrounded the early days of the diamond rush, it is not surprising that Messrs Rhodes and Oppenheimer fostered a business culture that is highly protective of its patch. And if Ms Carroll's talk of consolidating control are anything to go by, its new owners won't be any less protective.

History: The Owners


In 1888 by Cecil Rhodes, who was born in Bishop's Stortford, the son of a vicar.

Ownership change 1:

Control wrested by Edward Oppenheimer, the German son of a cigar merchant, in 1927.

Ownership change 2:

Anglo American assumes control of the company with the $5.1bn acquisition of the Oppenheimers' 40 per cent stake.

Start your day with The Independent, sign up for daily news emails
Life and Style
Steve Shaw shows Kate how to get wet behind the ears and how to align her neck
healthSteven Shaw - the 'Buddha of Breaststroke' - applies Alexander Technique to the watery sport
A poster by Durham Constabulary
Cameron Jerome
footballCanaries beat Boro to gain promotion to the Premier League
Arts and Entertainment
Performers drink tea at the Glastonbury festival in 2010
ebookA unique anthology of reporting and analysis of a crucial period of history
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Guru Careers: Software Developer / C# Developer

£40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...

Neil Pavier: Management Accountant

£45,000 - £55,000: Neil Pavier: Are you looking for your next opportunity for ...

Sheridan Maine: Commercial Accountant

£45,000 - £55,000: Sheridan Maine: Are you a newly qualified ACA/ACCA/ACMA qua...

Laura Norton: Project Accountant

£50,000 - £60,000: Laura Norton: Are you looking for an opportunity within a w...

Day In a Page

Abuse - and the hell that came afterwards

Abuse - and the hell that follows

James Rhodes on the extraordinary legal battle to publish his memoir
Why we need a 'tranquility map' of England, according to campaigners

It's oh so quiet!

The case for a 'tranquility map' of England
'Timeless fashion': It may be a paradox, but the industry loves it

'Timeless fashion'

It may be a paradox, but the industry loves it
If the West needs a bridge to the 'moderates' inside Isis, maybe we could have done with Osama bin Laden staying alive after all

Could have done with Osama bin Laden staying alive?

Robert Fisk on the Fountainheads of World Evil in 2011 - and 2015
New exhibition celebrates the evolution of swimwear

Evolution of swimwear

From bathing dresses in the twenties to modern bikinis
Sun, sex and an anthropological study: One British academic's summer of hell in Magaluf

Sun, sex and an anthropological study

One academic’s summer of hell in Magaluf
From Shakespeare to Rising Damp... to Vicious

Frances de la Tour's 50-year triumph

'Rising Damp' brought De la Tour such recognition that she could be forgiven if she'd never been able to move on. But at 70, she continues to flourish - and to beguile
'That Whitsun, I was late getting away...'

Ian McMillan on the Whitsun Weddings

This weekend is Whitsun, and while the festival may no longer resonate, Larkin's best-loved poem, lives on - along with the train journey at the heart of it
Kathryn Williams explores the works and influences of Sylvia Plath in a new light

Songs from the bell jar

Kathryn Williams explores the works and influences of Sylvia Plath
How one man's day in high heels showed him that Cannes must change its 'no flats' policy

One man's day in high heels

...showed him that Cannes must change its 'flats' policy
Is a quiet crusade to reform executive pay bearing fruit?

Is a quiet crusade to reform executive pay bearing fruit?

Dominic Rossi of Fidelity says his pressure on business to control rewards is working. But why aren’t other fund managers helping?
The King David Hotel gives precious work to Palestinians - unless peace talks are on

King David Hotel: Palestinians not included

The King David is special to Jerusalem. Nick Kochan checked in and discovered it has some special arrangements, too
More people moving from Australia to New Zealand than in the other direction for first time in 24 years

End of the Aussie brain drain

More people moving from Australia to New Zealand than in the other direction for first time in 24 years
Meditation is touted as a cure for mental instability but can it actually be bad for you?

Can meditation be bad for you?

Researching a mass murder, Dr Miguel Farias discovered that, far from bringing inner peace, meditation can leave devotees in pieces
Eurovision 2015: Australians will be cheering on their first-ever entrant this Saturday

Australia's first-ever Eurovision entrant

Australia, a nation of kitsch-worshippers, has always loved the Eurovision Song Contest. Maggie Alderson says it'll fit in fine