Bruce Cleaver De Beers CEO

IS DE BEERS ABOUT TO ENTER A NEW ERA WITH NEW CEO BRUCE CLEAVER?

On July 1, 2016, Bruce Cleaver took over as CEO of mining giant De Beers, replacing the veteran Philippe Mellier, who held the helm for five years running. Cleaver served as De Beers’ executive director responsible for strategy and commercial relationships until 2015, and served as Co-Acting CEO for a year prior to Philippe Mellier’s appointment in 2011. He was appointed Group Director of Strategy and Business Development for Anglo American in 2015. Now, with Cleaver at the helm, and with multiple challenges in a struggling industry, will De Beers enter a new era?

Rough & Polished dedicated a long piece to the subject, taking a look into the new CEO manning De Beers, and the challenges he’s facing. According to the piece, written by Abraham Dayan, Mellier wasn’t the conventional choice for the job when he took over in 2011. He was “an industry outsider but with great experience in managing large organizations”, Dayan writes, “His relationship with the trade was not always an easy one, however. Known for the importance it stores by its long-standing relationships and where a person’s handshake is their bond, Mellier was a different animal altogether in the diamond world.”

Under Mellier’s leadership, and despite polished prices being more or less static in the last few years, De Beers kept raising rough diamond prices through 2014 and the first half of 2015. In 2015, De Beers run a profit of $570 million. Mellier, meanwhile, told manufacturers that they needed to make changes to remain profitable – rather than De Beers.

“It’s difficult to avoid the conclusion that although he may have been a good manager of a large organization, he didn’t understand our business or the way we operate,” one former sightholder is quoted in the piece as saying, “I am well connected with sightholders, and I know that many were unhappy with the way he spoke and acted. You cannot tell committed and loyal clients of many years standing who are struggling to make a profit because rough prices were rising and were too close to polished prices that they, essentially, don’t know what they are doing. Frankly, his people skills were terrible.”

Ironically, Dayan says, some sightholders “may be uncomfortable” with Mellier’s departure, and are fearful of a “learning process” with the new CEO. According to Dayan, this is “probably unlikely”: Bruce Cleaver has been involved with the diamond business for more than a decade, and has been at De Beers since 2005.
As for Cleaver’s various challenges, it starts with the struggling parent company, Anglo American, which will probably put him under “heavy pressure to keep sales – and earnings – high”. The markets are sluggish, especially the Asian markets, and the banks are less willing than before to lend to manufacturers.

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