Johan Dippenaar: Diamonds are also a man's best friend

The Business Interview: The chief executive of Petra Diamonds tells Alistair Dawber how the world's most famous mine just keeps on giving

Johan Dippenaar took the precaution of sitting down before picking up the phone in his office on 24 September last year. It was a public holiday in South Africa and the man on the other end of the line, the manager of Petra Diamonds' biggest mine, was supposed to be on holiday with his family.

"His name comes up on the screen, and you're thinking, 'this guy is on holiday, so why's he ringing?' It could only have been very good news, or very bad news," says the miner's chief executive.

On this occasion it was very good news indeed. The manager said that a huge diamond had been dug out of the ground at Petra's Cullinan mine. It would later be called the Cullinan Heritage and would be sold to a jeweller in Hong Kong for $35.3m (£23m). Tests would reveal that at 507 carats, the "virtually flawless" stone was the 19th biggest diamond ever mined.

Almost a year on, and despite the monumental find, the chartered accountant seems rather unphased by the discovery.

The reason, perhaps, is that the group's Cullinan mine, found to the north-east of Johannesburg, has a glorious history of producing diamonds. Possibly the world's most famous rock, the Cullinan, was itself found close to last year's discovery, in 1905. At 3,016 carats, it is the biggest ever found and was bought by the Transvaal government and given as a gift to Edward VII.

"Er, no," is Mr Dippenaar's response when asked if another big find would ever be donated to the British Royal Family. More than a century on, and the £220m London-listed company owns 74 per cent of the mine, testimony, perhaps to Mr Dippenaar's acumen and ability in spotting a bargain.

The group was formed in 2005 when Petra, then a pre-production diamond explorer with assets in Angola, merged with Crown Diamonds, where Mr Dippenaar was already chief executive, a miner with projects in Sierra Leone.

The new company got its timing just right. Back in 2005, diamond mining giant De Beers was under pressure to sell assets and was looking to offload a stake in Cullinan, which despite its glorious history, was producing fewer landmark stones. "De Beers is a world leading mining company, but we do things differently," says Mr Dippenaar. "When you have a $6bn turnover, you might be looking for a $1bn profit, but when a mine may only be worth $10m to $20m, a group of our size can give it a different level of attention. Because we're not vying to overtake De Beers' volumes, we are less fixated with volumes, and more on the quality of the production."

So far, the business plan seems to the working. In its first year, the company turned over $17m. Now it is up to $177m. Petra says production will hit 2 million carats by next year, rising to 3 million thereafter.

"I think people were sceptical back in 2005. It was odd because this business model has been followed successfully in gold mining, oil and other resources sectors," says Mr Dippenaar. "You see hundreds of this type of company taking on end-of-life mines and oil wells from the majors and keep on producing for 10 or 15 years. It's a proven business model to step in after a major and extend the life of a mine or a well by many, many years. Cullinan has a resource of nearly 200 million carats. So there's lots of life left."

While the Cullinan Heritage captured the headlines, and helped to push up revenues by 88 per cent in the 12 months to June, trends in the wider market have also helped.

The stone was sold to Chow Tai Fook Jewellery, a Hong Kong-based group that has more than 1,000 outlets in China. Mr Dippenaar is coy about what the jeweller plans to do with the diamond, beyond saying that he has been in touch with the buyer, and that it will be turned into "something very special".

But he says that Chinese interest in the diamond market is indicative of where the power now lies in the world economy. "Nothing prepares you for visiting China," he says. "People have all sorts of misconceptions about it, especially saying that the Chinese are not great at protecting intellectual property and things like that, but they are not sitting around and waiting for Westerners to come and tell them what to do. They are just getting on with it."

The growth of markets like China, and of other markets in Asia, has all been factored into the equation. Mr Dippenaar points out that 20 years ago, 75 per cent of diamond sales came in the United States. Asian growth now means that fewer than half of all diamonds go to US buyers.

Petra's immediate focus is on increasing capacity to help meet the extra demand. As well as Cullinan, the group has a number of assets in their infancy, not least in Tanzania where it has a site in what Mr Dippenaar describes as the largest kimberlite asset in the country.

"We make long-range plans," says Mr Dippenaar. "We've got plans in place that go out for the next nine years. If no acquisition opportunities come forward, we will remain, albeit smaller than the majors, an important producer of rough diamonds.

"If our predictions are right then the market we're supplying will be so much bigger than it is today. And that will mean healthy pricing and very good returns."

And while not all the calls he gets in his office will be as exciting as the one he took last September, he will continue to sit down to take them in the hope that he gets more "very good news".

Johan Dippenaar

At leisure: Like many South Africans, Johan Dippenaar, 52, is a keen sportsman, although these days limits himself to games of squash and watching other sports from the comfort of the sofa.

Travel is also a priority during time away from the office, and a recent family trip to China encouraged his keen interest in learning about other cultures.

Unlike a number of chief executives, Mr Dippenaar is not a gadget freak. Indeed, one of his most treasured possessions is his family's tropical fish tank.

At work A chartered accountant by training, Mr Dippenaar has been a mining executive for more than 20 years.

Mr Dippenaar served as the chief executive of Crown Diamonds before it merged with Petra in 2005.

Start your day with The Independent, sign up for daily news emails
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 People

Ashdown Group: HR Manager - West London - £50,000

£40000 - £50000 per annum + bonus: Ashdown Group: HR Manager - West London - £...

Recruitment Genius: Recruitment & HR Administrator

£17000 - £18000 per annum: Recruitment Genius: This is an exciting opportunity...

Guru Careers: HR Manager / HR Business Partner

£55 - 65k (DOE) + Benefits: Guru Careers: A HR Manager / HR Business Partner i...

Recruitment Genius: Senior HR Assistant

£23000 - £25000 per annum: Recruitment Genius: The Company's vision is to be t...

Day In a Page

Greece debt crisis: EU 'family' needs to forgive rather than punish an impoverished state

EU 'family' needs to forgive rather than punish an impoverished state

An outbreak of malaria in Greece four years ago helps us understand the crisis, says Robert Fisk
Gaza, a year on from Operation Protective Edge: The traumatised kibbutz on Israel's front line, still recovering from last summer's war with Hamas

Gaza, a year on from Operation Protective Edge

The traumatised kibbutz on Israel's front line, still recovering from last summer's war with Hamas
How to survive electrical storms: What are the chances of being hit by lightning?

Heavy weather

What are the chances of being hit by lightning?
World Bodypainting Festival 2015: Bizarre and brilliant photos celebrate 'the body as art'

World Bodypainting Festival 2015

Bizarre and brilliant photos celebrate 'the body as art'
alt-j: A private jet, a Mercury Prize and Latitude headliners

Don't call us nerds

Craig Mclean meets alt-j - the math-folk act who are flying high
How to find gold: The Californian badlands, digging out crevasses and sifting sludge

How to find gold

Steve Boggan finds himself in the Californian badlands, digging out crevasses and sifting sludge
Singing accents: From Herman's Hermits and David Bowie to Alesha Dixon

Not born in the USA

Lay off Alesha Dixon: songs sound better in US accents, even our national anthem
10 best balsamic vinegars

10 best balsamic vinegars

Drizzle it over salad, enjoy it with ciabatta, marinate vegetables, or use it to add depth to a sauce - this versatile staple is a cook's best friend
Wimbledon 2015: Brief glimpses of the old Venus but Williams sisters' epic wars belong to history

Brief glimpses of the old Venus but Williams sisters' epic wars belong to history

Serena dispatched her elder sister 6-4, 6-3 in eight minutes more than an hour
Greece says 'No': A night of huge celebrations in Athens as voters decisively back Tsipras and his anti-austerity stance in historic referendum

Greece referendum

Greeks say 'No' to austerity and plunge Europe into crisis
Ten years after the 7/7 terror attacks, is Britain an altered state?

7/7 bombings anniversary

Ten years after the terror attacks, is Britain an altered state?
Beautiful evening dresses are some of the loveliest Donatella has created

Versace haute couture review

Beautiful evening dresses are some of the loveliest Donatella has ever created
No hope and no jobs, so Gaza's young risk their lives, climb the fence and run for it

No hope and no jobs in Gaza

So the young risk their lives and run for it
Fashion apps: Retailers roll together shopping and social networking for mobile customers

Fashion apps

Retailers roll together shopping and social networking for mobile customers
The Greek referendum exposes a gaping hole at the heart of the European Union – its distinct lack of any genuine popular legitimacy

Gaping hole at the heart of the European Union

Treatment of Greece has shown up a lack of genuine legitimacy