De Beers Looking Into Restructure Due to New Law

De Beers is looking into ways of restructuring its operations to minimize the impact of a stringent new South African minerals law, the company says today (Monday).

The move would leave all of the firm’s South African mining operations in De Beers Consolidated Mining (DBCM) and remove the businesses that supply services to the entire De Beers group. They could be moved to the Luxembourg-registered De Beers Societe Anonyme, said Public and Corporate Affairs Officer Lynette Hori.

“The plan is still in the formative stages and nothing has been decided yet,” Hori says. “Essentially, certain functions that are not provided only to South African operations would be moved abroad. It makes sense to put them elsewhere.”

The moves to restructure have been set in chain by a new law that demands that companies bring black investors into the mining industry and sets out conditions on the number of blacks who must be employed.

“Faced with the Minerals Development Act and the need to prepare ourselves for black economic empowerment, we realized the group in SA had grown up under DBCM, but is not linked to DBCM,” De Beers Managing Director Gary Ralfe said last week.

Ralfe said another reason for the move was that DBCM wanted to get more definite value out of the South African operations. Hori was unable to give a date for when any changes might go into effect although Ralfe last week announced management changes, including the appointment of Jonathan Oppenheimer as the new Managing Director of DBCM, starting in July.

Parts of DBCM's business, such as diamond market intelligence and exploration, which were still part of DBCM in South Africa simply because the company was founded there, were not particularly relevant to the South African operations and could be a candidate for being moved abroad.