26 November 2015

Africa: Traders Want De Beers Chief Fired

Diamond traders worldwide launched an online petition yesterday calling for De Beers chief executive Philippe Mellier, to resign.

"Essentially, our trade cannot make money if rough prices are consistently higher than polished prices," a petition said yesterday. The petition was addressed to Mark Cutifani, the chairman of Anglo American Corporation.

The petition, circulated by Martin Rapaport, chairman of Rapaport, which publishes diamond prices, talked about "the intolerable situation regarding profits and liquidity in the diamond trade."

Prices of diamonds are important to Namibia because the gems are the country's biggest foreign currency earner. De Beers are equal partners in Namdeb Holdings with the Namibia Diamond Trading Company.

Traders have accused De Beers of manipulating 'rough (diamonds) prices to artificially high levels and this is having a negative impact on the profitability, liquidity and viability of the diamond trade.'

Apart from Mellier's resignation, traders want disclosure from De Beers that second half rough diamond sales will be down by at least 60%. Traders also want De Beers to drop rough prices by between 30 and 50% to inject profits and liquidity into the trade.

"Please note that we do not expect polished prices to decline due to a fall in rough diamond prices. Increased trade profits and liquidity will support polished diamond prices and expand demand as downstream distributors invest in marketing and sales," the petition said.

It said the greatest threat to the diamond industry is that mining companies will continue to ignore the needs of the trade.

"One wonders how long the Botswana government and Gokhran, the Russian treasury, want to play monopoly with their diamonds and our lives. Botswana makes a good case for beneficiation, the idea that the people of Africa should benefit fairly from their diamond resources."

It said Botswana must understand that others also have rights to benefit from diamonds.Traders expect De Beers first half sales to drop by at least 60% or more to about US$1 billion as opposed to US$2,9 billion of last year.

"Frankly, De Beers CEO, Philippe Mellier's brand of trade expoitation and cannibalisation is no longer tolerable. It is time for Mellier to go. If De Beers wants to survive in the diamond distribution business they must urgently appoint a leader who is a diamantaire, someone who is knowledgeable and passionate about the diamond business and the future of the diamond trade," it said.

Minister of mines and energy, Obeth Kandjoze told the International Diamond Conference held in Windhoek this week that Namibia has also suffered from the downturn in the diamond industry.

"At some point we used to employ up to 2 000 people in the diamond beneficiation sector in Namibia, but today only between 600 and 700 people are employed in the sector," he said.

"Diamonds continue to play a pivotal role and remain a major pillar in the Namibian economy. Therefore their strategic importance to our country cannot be overstated. Since independence, we have been doing our best to diversify the economy away from just the export of raw materials," he said.

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