Nicky Oppenheimer, scion of South Africa's richest family, believes that the
country where its fortune was made remains “enormously investor-friendly”
and will stay that way, despite recent concerns over its future leadership
and a continuing power crisis.
“Is South Africa a country I would feel comfortable investing in? Absolutely.
I would have no problem with that at all,” he told The Times. “I believe
South Africa is very investor-friendly and that will remain.”
Mr Oppenheimer, the 62-year-old chairman of De Beers Group and a non-executive
director of Anglo-American, in which his family has a 3.5 per cent stake,
played down talk that pro-business policies followed by President Mbeki may
be be abandoned if Jacob Zuma, his arch-rival, takes over after the next
election in 2009.
Mr Zuma is in pole position after being elected president of the ruling
African National Congress (ANC) last December, although he faces a trial on
corruption and racketeering charges in August, which could prevent him
becoming the ANC's candidate for the top job.
Mr Oppenheimer, who frequently describes himself as an African, said: “The
problem I see with the Mbeki/Zuma issue is that it is like anywhere else
where a president or a prime minister is running towards the end of his term
and a potential successor has been identified ... That leads to a sort of
interregnum and government in those circumstances takes its eye off the
ball.”
Mr Zuma, who was dismissed by Mr Mbeki as the nation's deputy president two
years ago because of the corruption scandal, is seen as the champion of the
country's poor, those who have not gained from more than five years of
economic growth that has spurred the emergence of an important black middle
class. Despite a charm offensive, many industrialists fear that his debts to
the party grassroots and the union movement may make him abandon
business-friendly policies. Mr Oppenheimer, whose company is known to have
held discreet talks with the Zuma camp, clearly disagrees and dismisses as
“transitory” the present confusion.
“When you look at South Africa from a macroeconomic point of view, the
Government has done extraordinarily well,” Mr Oppenheimer said. “I believe
they will go on doing so.”
Mr Oppenheimer, whose family's liberal views have long endeared them to the
new black elite, has overseen a process under which De Beers SA moved from
being one of the country's most “lily-white” companies to being at the
forefront of radical Black Economic Empowerment (BEE) deals aimed at real
transformation within the industry.
However, Mr Oppenheimer accepted that the present power-supply crisis in South
Africa, which has led to power cuts and job losses in the mining sector, was
a big problem.
“It is not just South Africa, it is southern Africa and it is an extremely
large problem and it is not something which you can resolve in the short
term,” he said. “We all have to do our bit, both as individuals, by
switching off the geyser [water heater] and so on, and as an industry.”
Again, however, he said that he believed that government and industry would
come up with solutions and said that “in the long term and the short term”
the lights would not be going off on the economic prospects in southern
Africa.
Indeed, Mr Oppenheimer was in optimistic mood as he gave the interview during
the opening of a new venture that he believes shows how to help Africa
better than many a well-meaning plan hatched in the West.
He is confident that he has a front-row seat at yet another turning point in
De Beers's colourful, but often controversial, history in Africa and it took
physical form at the official launch last week of the Diamond Trading
Company (DTC) Botswana.
The $83 million (£41 million) glass-and-chrome building, gifted by De Beers to
the new DTC, in which it is a 50 per cent stakeholder, is the largest and
most advanced diamond-sorting venture in the world. It also represents the
biggest transfer of skills from the United Kingdom to Africa.
The softly spoken Old Harrovian argues that the transfer is a perfect example
of how private business can do much more for development in Africa than
millions of pounds in aid generated by the G8 Gleneagles initiative or by
Live 8-style concerts. “Just add it up — aid has been a dismal failure,” he
said of the estimated $1 trillion of aid pumped into African basket cases
over the past 50 years.
“This is a good example of business coming and creating something, but it has
to be sustainable,” he said. “You can't plonk something down on the table
and say 'That's great — I feel good now' and leave.”
Apart from evaluation and sorting, the transfer will involve some marketing
jobs moved to Botswana - the world's largest diamond producer and De Beers's
main source of rough diamonds. More than 3,000 jobs will be created in
Botswana, representing a tenth of De Beers's workforce.
No wonder that Botswana government officials were smiling. Their country,
which began to mine diamonds only in the 1980s, has moved from one of the
world's poorest to reach middle-income status. The gems now account for more
than a third of its gross domestic product.
Mr Oppenheimer is the first to admit that De Beers — founded by the
imperialist Cecil Rhodes in 1888 and bought by Ernest Oppenheimer in 1929 —
is not given to charity. “This is the right and logical thing to do and
makes very good business sense, too,” he said. “London is not the
lowest-cost place to do such things.”
In the jargon of the business, the process is known as “beneficiation”.
Historically, the stones — essentially crystallised carbon that De Beers
almost single-handedly made into some of the most desired objects in the
world — were clawed out of African soil and sent to Europe. The real value
was added in London's Hatton Garden or in Antwerp, where, after evaluation,
sorting and colour-grading, the gems were cut and polished and then moved on
to the jewellers. Africa's producers — Namibia, Botswana and South Africa —
want a slice of that action and the jobs and enhanced revenues that it
produces.
Effectively, it was a price that De Beers was more than prepared to pay for a
25-year extension on Botswana's Jwaneng mine, the richest diamond mine in
the world and into which De Beers has poured investment capital.
“This is inevitable,” Mr Oppenheimer said. “Countries that produce diamonds
want to see, as far as possible, those diamonds that can be, cut and
polished economically in their country. They want to see that happen ... It
is absolutely understandable.”
However, he admitted: “Would we have gone this way? Yes. Would we have done it
so quickly had we not been pushed? Probably not.
“I don't really know what beneficiation means — but if it means polishing and
marketing as many diamonds as possible, then I am all for it.”
Mr Oppenheimer looks more like a kindly university don than a diamond magnate
with a penchant for flying his helicopter. The son of the grand old man of
South African capitalism, Harry Oppenheimer — who died in 2000 aged 91 — is
clearly enjoying himself. As he says, these are good days for diamonds, with
demand from India, Russia and the Middle East increasing.
He worries that a recession in the United States could hit sales, but points
out the US market is dominated by cheaper stones and that sales of upmarket
gems are not likely to be seriously disrupted. The days of bad publicity
arising from blood diamonds and the De Beers-managed cartel, when he and
other De Beers executives could not go to America for fear of arrest under
anti-trust legislation, appear to be over — at least for now.
Looking forward to a dazzling future
— Diamond Trading Company Botswana (DTCB) cost De Beers $83 million
(£41.75 million) to develop and it is intended to be the world's largest
rough diamond sorting and valuing operation
— Botswana is the world's largest producer of diamonds by value and the new
centre should establish the country as the world leader in the sorting and
valuation of rough diamonds
— The equipment in the manufacturing centre includes 39 diamond-sorting
machines with a value of $8 million. The building has a capacity to process
45 million carats a year and to accommodate 600 employees
— DTCB will sell the diamonds locally to 16 new De Beers-licensed Botswana
“sightholders”, who will cut and polish the gems in-country. It is expected
that $375 million of diamonds will be sold by DCTB to its sightholders in
2008. By 2009 the figure should have reached $550 million for in-country
sales alone
— Overall the process is expected to result in 3,100 jobs in Botswana
Rich seam of tradition across five continents
— Established in 1888, De Beers is the world's leading diamond company. De
Beers and its joint venture partners operate in 25 countries across five
continents, employing more than 22,000 people, 17,000 of whom are based in
southern Africa.
— De Beers, through mining operations in Botswana, Namibia, South Africa,
Tanzania and Canada, produces and markets about 40 per cent of the world's
rough diamonds.
