Monday, January 14, 2013

Why The West Is Killing and Plundering in Africa: (Part Two) Oppenheimer and The De Beers Family of Companies

Nicky Oppenheimer

De Beers was established in 1888. It is the world’s leading diamond company, with unrivalled expertise in the exploration, mining and marketing of diamonds. 2011 was an exceptional year for De Beers with a 21 percent increase in EBITDA to US$1.7 billion (2010: US$1.4 billion), and free cash flow of US$734 million (2010: US$943 million). Strong DTC price growth of 29 percent from 1 January to 31 December 2011 drove their second highest level of sales ever (US$6.5 billion), a 27 percent increase over 2010 (US$5.08 billion). At the same time, De Beers’ third-party debt reduced to US$1.3 billion (December 2010: US$1.8 billion), and third-party gearing to 20.9 percent (December 2010: 29.5 percent).

De Beers Canada, a wholly-owned subsidiary of De Beers, operates Snap Lake Mine in the Northwest Territories and Victor Mine in northern Ontario, and has a targeted exploration strategy. Both mines opened in July 2008. De Beers Canada is also a
joint venture partner with Mountain Province Diamonds in the Gahcho Kué Project in the Northwest Territories, currently in the permitting phase.

De Beers Consolidated Mines (DBCM) has been an empowered South African company since 2006, with 26 percent owned by broad-based Black Economic Empowerment partner, Ponahalo Holdings. DBCM operates Venetia, Voorspoed and Kimberley diamond mines, owns Namaqualand Mines (completion of sale pending at close of 2011), and undertakes exploration on land and off the Atlantic coastline. DBCM produced 5.44 million carats in 2011 (2010: 7.56 million carats). The sale of Finsch Mine, high rainfall, a skills shortage in South Africa, slope stability at Voorspoed, and the unavailability of earthmoving equipment at both Voorspoed and Venetia, together with 14 days of industrial action, all contributed to the drop in production in 2011.

Debswana is a 50/50 joint venture partnership between the Government of the Republic of Botswana and De Beers. Debswana operates the Orapa, Letlhakane, Jwaneng and Damtshaa diamond mines, and the Morupule Coal Mine, the only operating coal mine in Botswana. Debswana produced 22.9 million carats in 2011, an increase of 0.7 million carats (2010: 22.2 million carats). Production was, however, hampered due to a number of factors, including a maintenance backlog at Jwaneng Mine incurred during the global recession in 2008.

Namdeb Holdings (Pty) Limited is a 50/50 joint venture partnership between the Government of the Republic of Namibia and De Beers. Namdeb Holdings’ core business is diamond exploration and mining along the south-western coast and inland areas of the
Karas Region. Overall production for the year 2011 nearly equalled 2010 output at 1.3 million carats (2010: 1.5 million) despite land-based production disruptions on a number of occasions, shutdown at all operations for a complete safety review following two fatalities, a breach of the seawall, and a month of industrial action which approximated three months of lost production.

The Diamond Trading Company (DTC) is De Beers’ rough diamond distribution arm and the world’s largest supplier of rough diamonds, by value. With activities in sorting, valuing, sales and diamond beneficiation, the DTC has operations in the UK and South Africa, and 50/50 joint venture operations in Botswana and Namibia with those respective governments. 2011 was a successful year, with the DTC recording its second highest annual rough diamond sales figure ever of US$6.47 billion, despite a volatile and fragile macroeconomic environment.

Diamdel is a global market leader in negotiating spot sales and the pricing of rough diamonds. Competitive sales negotiations involve small, medium and large scale manufacturing, retailing and trading business buyers from around the world, and are conducted using an innovative online auctioning capability. The business is wholly
owned by De Beers with offices in Antwerp, Tel Aviv, Hong Kong and Dubai. In 2011, Diamdel delivered record profits for shareholders. Sales grew by 30 percent to US$405 million – the highest since 2006.

De Beers Société anonyme (the Company, or De Beers) was formally incorporated
in the Grand Duchy of Luxembourg in November 2000. It is the holding company of all De Beers Group operations. The Company is managed and controlled from its head office in Luxembourg where the board meets to attend to the business of the Group. As of 31 December 2011, the De Beers board consisted of 13 directors, rising to 14 on 8 February 2012.

Baron David de Rothschild

Five directors on the board serve in an executive capacity and are members of the Executive Committee. Each shareholder group is entitled to nominate two persons for appointment to the board. Accordingly, six directors, four of whom are non-executives and two executives (the Chairman, Nicky Oppenheimer, and Jonathan Oppenheimer) are currently appointed under the relevant clauses of the Shareholders’ Agreement. Baron David de Rothschild was appointed to the board on 5 April 2006, he is Group Chairman
of Rothschilds. He is also a director of Casino, Compagnie Financière Martin Maurel, La Compagnie Financière Saint-Honoré and President of the Fondation pour la Mémoire de la Shoah.

Lucinda Saunders argues that De Beers should be held accountable for trading in conflict or blood diamonds. She notes that experts claim political ideologies do not motivate insurgent groups. Instead, they argue that control of diamond production is a root cause behind the war in Sierra Leone. The consensus is insurgents would not have the money to buy arms and commit human rights abuses without the willingness of diamond buyers to trade with them.

Observers note that the conflict diamond trade occurs in regions where diamonds are mined by insurgent groups and then sold for arms or cash. Conflict or blood diamonds are diamonds mined or stolen by insurgent forces in opposition to the legitimate government. Commentators speculate that the conflict diamond trade comprises between four and fifteen percent of the world trade in diamonds. Presently, conflict diamonds come from Angola, Sierra Leone, and the Democratic Republic of Congo. The civil wars in Angola and Sierra Leone are examples of insurgent movements using diamonds to finance wars against official governments.

Corporate actors facilitate the conflict diamond trade by buying illicit diamonds directly or indirectly from insurgent groups. De Beers's control of the diamond trade makes its involvement with conflict diamonds particularly relevant. De Beers has set the price of diamonds for the entire diamond industry by acquiring the majority of diamonds before they reach the market. Although De Beers no longer operates any buying activities in Angola or Sierra Leone, it is claimed that the organization acquires diamonds from these areas by buying from outside dealers.

De Beers is a corporation controlled by the Oppenheimer family. De Beers controls about sixty percent of the world's uncut diamond sales. De Beers' involvement with diamonds from Angola and Sierra Leone reflects their old policy of acquiring the majority of diamonds produced world-wide in an effort to keep the diamond supply steady and diamond prices stable. De Beers bought diamonds from Angola in the 1990s when UNITA occupied most diamond mines in the country, in addition, it acquired diamonds from Sierra Leone through outside dealers thereby providing funds to
combatants, who perpetuated strife in the region. The United Nations also reports that De Beers was involved in the Angolan conflict diamond trade.

Matloff claims De Beers bought between US$500,000,000 and US$800,000,000 worth of diamonds from UNITA controlled mines between 1992 and 1993. It has also been stated that De Beers spent US$40,000,000 per month in efforts to buy up UNITA diamonds. These guys fed and sustained wars, and Lucinda Saunders insists they should be held liable under the ATCA.

Lucinda Saunders quite rightly concludes "The trade in conflict diamonds can be stopped, and could have been stopped years ago if De Beers had decided that human life was more important than profits. The threat of litigation would have made De Beers contemplate the results before engaging in this trade. Amending the ATCA and adopting more comprehensive legislation will make this threat a real possibility, thereby forcing multinational corporations to carefully consider the lives at stake in their business choices."

Resources: Anglo American Plc, FORDHAM INTERNATIONAL LAW JOURNAL, SADC: Research
Corporate Social Responsibility in the Diamond Mining
Industry in Botswana

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Tetsuko said...

Very well researched, it tells the story of Western plunder like no other. It's clear the West is going down and desperate to keep head above water but picking on the weak isn't going to get them very far, all it'll do is buy them very little time before that Western house comes tumbling down.

Frankenstein said...


Ghost said...

What one finds listed here is only a minute fraction of the Oppenheiner family wealth. This family as well as the Rothschild's have spent generations hiding their wealth and playing the victim. I doubt very seriously if anyone knows the extent of their wealth, them inclusive.

Long John said...

Sure thing Ghost; one family conjures money out of thin air and the other sells everyday rocks for a fortune.