Will the diamond industry see more of the same with the appointment of Bruce Cleaver as the new CEO of De Beers following the departure of Philippe Mellier, asks Charles Wyndham in his latest commentary on polishedprices.com. Mellier succeeded in 2014 when De Beers was the only division of Anglo American that met the mother-company's target of a 15% return on capital employed. "The only problem was that reaching that target nearly wiped out the whole industry, a sort of wonderful coup de grace. Mellier was the whipping boy for this total screw up, and to some extent I think holding him accountable is justified but I emphasize ‘to some extent’.I personally hold Anglo American more at fault than Mellier," Wyndham writes.
He says that Anglo’s "total implosion" placed unjustified pressure on De Beers to go all out in raising prices since it was the only source of cash for Anglo. However, Mellier has since shown a much more "judicious appreciation" of the industry, and "a genuine independence accompanied by a sensitivity to what is in fact a remarkably backward industry."
He voices concern about the rough market, which has outperformed his expectations in the first half of this year, but he says that he "cannot see how the rough band wagon can keep rolling as it has for the first half, so far. Whatever the numbers may say, common sense says things simply do not add up."
Cleaver at least has experience of the diamond industry unlike Mellier, but the timing for him is not good. "I wish Cleaver all the luck possible, we all need him to succeed. ‘Succeed’ is, I believe, breaking the claustrophobic spiders web of self serving resistance to real change and real transparency whilst being sensitive to the industry," he concludes.