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SourcingMar 17, 2016
De Beers’ Parent Company to Cut 85K Jobs
The layoffs include more than 1,500 jobs at De Beers as the company scales back diamond production for 2016.
London--Stung by the drop in commodity prices, Anglo American announced a “radical and aggressive” restructuring Tuesday that includes job cuts at De Beers amid scaled-back diamond production and the closure of another mine.
In Botswana, the Damtshaa Mine will be put on care and maintenance while production will be reduced at Orapa Plant 1.
The mothballing of Damtshaa follows last week’s announcement that De Beers is placing its only diamond mine in Canada, Snap Lake, on extended care and maintenance and reopening only if market conditions improve, and its earlier announcement that it has sold the Kimberley Mines.
Mellier said because of the Snap Lake shutdown, De Beers will close its head office in Canada and open a smaller support center in Calgary. The company also will close offices in South Africa following the Kimberley sale.
In addition, De Beers has shuttered its Element Six industrial diamond plant in Sweden due to the drop in demand for diamond drill bits in the oil and gas industry.
During his presentation, the much-maligned CEO--who seemingly has weathered Martin Rapaport’s rallying of the diamond industry to push for his resignation--defended De Beers’ actions during this most recent downturn.
He said De Beers always has acted “very responsibly” in an effort to ensure profitability in the midstream, reducing rough prices a total of 15 percent while polished prices are down only 8 percent, giving cutters and polishers room to make money. The company also has given sightholders “unprecedented” flexibility when it comes to refusing goods.
Further down the pipeline, he revealed that De Beers has invested $20 million in additional marketing for the holiday season in the U.S., bringing back “A Diamond is Forever” for use in both Forevermark ads and a separate campaign that echoes the company’s generic advertising of the past.
“If you have been in the U.S., it is very difficult to miss the campaign,” he said.
Mellier listed the factors he says have contributed to the diamond industry’s “stock crisis,” none of which included the actions of De Beers or any other diamond producers: lower-than-expected consumer demand for diamonds
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in 2014; the backlog at the grading labs, which led to a flood of polished hitting the market earlier this year; and lack of financing for the trade.
There is no “simple cause” to the industry’s stock crisis and, as a result, there is no single solution, he said.
The job cuts and scaled-back production at De Beers are part of a larger effort by its parent company to cut costs as profits diminish.
All told, Anglo American will be cutting 85,000 jobs in the next couple years as it sheds 60 percent of its portfolio and restructures into three business units--De Beers (diamonds), Industrial Metals (base metals and platinum group metals) and Bulk Commodities.
The company is selling off its coal and copper mining operations, and will have a total of about 50,000 employees when the restructuring is complete, down from 135,000.
In addition, Anglo American plans to relocate its London headquarters in 2017, moving in with De Beers at 17 Charterhouse St.
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