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

Founded:

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
News
Young Winstone: His ‘tough-guy’ image is a misconception
people
Sport
Adnan Januzaj and Gareth Bale
footballManchester United set to loan out Januzaj to make room for Bale - if a move for the Welshman firms up
Arts and Entertainment
British actor Idris Elba is also a DJ and rapper who played Ibiza last summer
filmIdris Elba responds to James Bond rumours on Twitter
Arts and Entertainment
Ellie Levenson’s The Election book demystifies politics for children
bookNew children's book primes the next generation for politics
PROMOTED VIDEO
Sport
Wayne Rooney warms up ahead of the English Premier League football match between Tottenham Hotspur and Manchester United at White Hart Lane
football
News
Outspoken: Alexander Fury, John Rentoul, Ellen E Jones and Katy Guest
newsFrom the Scottish referendum to the Ice Bucket Challenge, our writers voice their opinions
Arts and Entertainment
Lena Headey as Cersei Lannister in Game of Thrones
film
News
i100
Sport
Yaya Sanogo, Mats Hummels, Troy Deeney and Adnan Januzaj
footballMost Premier League sides are after a striker, but here's a full run down of the ins and outs that could happen over the next month
News
Nigel Farage celebrates with a pint after early local election results in the Hoy and Helmet pub in South Benfleet in Essex
peopleHe has shaped British politics 'for good or ill'
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Sport
Tim Sherwood raises his hand after the 1-0 victory over Stoke
footballFormer Tottenham boss leads list of candidates to replace Neil Warnock
Voices
Strictly Come Dancing was watched by 6.9m viewers
voicesIt has been hard to form generally accepted cultural standards since the middle of the 19th century – and the disintegration is only going to accelerate, says DJ Taylor
Arts and Entertainment
Roffey says: 'All of us carry shame and taboo around about our sexuality. But I was determined not to let shame stop me writing my memoir.'
books
News
Danielle George is both science professor and presenter
people
News
i100
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

Selby Jennings: VP/SVP Credit Quant- NY- Investment Bank

Not specified: Selby Jennings: VP/SVP Credit Quant Top tier investment bank i...

Selby Jennings: Quantitative Research | Equity | New York

Not specified: Selby Jennings: Quantitative Research | Global Equity | New Yor...

Selby Jennings: SVP Model Validation

Not specified: Selby Jennings: SVP Model Validation This top tiered investment...

Selby Jennings: Oil Operations

Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...

Day In a Page

War with Isis: The West needs more than a White Knight

The West needs more than a White Knight

Despite billions spent on weapons, the US has not been able to counter Isis's gruesome tactics, says Patrick Cockburn
Return to Helmand: Private Davey Graham recalls the day he was shot by the Taliban

'The day I was shot by the Taliban'

Private Davey Graham was shot five times during an ambush in 2007 - it was the first, controversial photograph to show the dangers our soldiers faced in Helmand province
Revealed: the best and worst airlines for delays

Revealed: the best and worst airlines for delays

Many flyers are failing to claim compensation to which they are entitled, a new survey has found
The stories that defined 2014: From the Scottish independence referendum to the Ice Bucket Challenge, our writers voice their opinions

The stories that defined 2014

From the Scottish independence referendum to the Ice Bucket Challenge, our writers voice their opinions
Stoke-on-Trent becomes first British city to be classified as 'disaster resilient' by the United Nations

Disaster looming? Now you know where to head...

Which British city has become the first to be awarded special 'resilience' status by the UN?
Finally, a diet that works: Californian pastor's wildly popular Daniel Plan has seen his congregation greatly reduced

Finally, a diet that works

Californian pastor's wildly popular Daniel Plan has seen his congregation greatly reduced
Say it with... lyrics: The power of song was never greater, according to our internet searches

Say it with... lyrics

The power of song was never greater, according to our internet searches
Professor Danielle George: On a mission to bring back the art of 'thinkering'

The joys of 'thinkering'

Professor Danielle George on why we have to nurture tomorrow's scientists today
Monique Roffey: The author on father figures, the nation's narcissism and New Year reflections

Monique Roffey interview

The author on father figures, the nation's narcissism and New Year reflections
Introducing my anti-heroes of 2014

Introducing my anti-heroes of 2014

Their outrageousness and originality makes the world a bit more interesting, says Ellen E Jones
DJ Taylor: Good taste? It's all a matter of timing...

Good taste? It's all a matter of timing...

It has been hard to form generally accepted cultural standards since the middle of the 19th century – and the disintegration is only going to accelerate, says DJ Taylor
Olivia Jacobs & Ben Caplan: 'Ben thought the play was called 'Christian Love'. It was 'Christie in Love' - about a necrophiliac serial killer'

How we met

Olivia Jacobs and Ben Caplan
Bill Granger recipes: Our chef's breakfasts will revitalise you in time for the New Year

Bill Granger's healthy breakfasts

Our chef's healthy recipes are perfect if you've overindulged during the festive season
Transfer guide: From Arsenal to West Ham - what does your club need in the January transfer window?

Who does your club need in the transfer window?

Most Premier League sides are after a striker, but here's a full run down of the ins and outs that could happen over the next month
The Last Word: From aliens at FA to yak’s milk in the Tour, here’s to 2015

Michael Calvin's Last Word

From aliens at FA to yak’s milk in the Tour, here’s to 2015