De Beers appoints new chief executive
“De Beers has ended a prolonged leadership search by hiring a French engineering executive with no experience in diamonds, mining or South Africa. The South Africa-based diamond miner appointed Philippe Mellier as chief executive on Monday. Mr Mellier pursued a career at Ford Motor and Volvo before becoming president of Alstom Transport, the train-making division of the French engineering group.
Nicky Oppenheimer, De Beers’ chairman and guardian of his family’s 40 per cent stake in the company, told the Financial Times that experience in the diamond industry was not an important part of the selection process. ‘We have plenty of experts at running mines. We have plenty of experts in marketing diamonds,” he said. “The key thing is that Philippe has run world-class operations and substantial capital projects, and has experience dealing with joint venture partners.'”
Source: Financial Times, May 16 2011
- De Beers is the world’s second largest diamond miner, with operations mainly in Botswana and Canada. It mined 33mln carats last year. Anglo American holds 45% of De Beers shares.
- In Mellier’s previous job he was president of Alstom’s transport division with €5.8bln annual sales. Joining Alstom in 2003 his key activities in the first years were to divest non-core businesses, while the company had to be bailed out by the French government. In later years he achieved success in winning government contracts for transport systems and buying into a Russian producer.
- The fact that an industry-outsider with experience in partnerships has been recruited indicates the board’s strategic priority for the next 5 years: strengthening ties with the Botswana government and probably setting up other partnerships to expand.
- A key challenge for Mellier and Anglo’s Cynthia Carroll will be to decide on potential simplification of the ownership structure of De Beers. A potential buyout by Anglo American or flotation of the company to provide funds for expansion have been discussed for years. Whatever decision made, it will have to be aligned with Botswana’s government, which holds 15% of the company but receives a large part of the profits.
©2011 | Wilfred Visser | thebusinessofmining.com