Will Botswana support Shine for De Beers top post?

MBONGENI MGUNI
Staff Writer | Friday July 30, 2010 00:00

 

International media reports finger Diamond Trading Company CEO Varda Shine, De Beers' Finance Director Stuart Brown, Commercial Director Bruce Cleaver and Jonathan Oppenheimer as front-runners in the race to succeed Penny.

The former CEO, whose resignation was announced last Friday, will continue serving the diamond giant until September. Brown and Cleaver will act as interim joint CEOs while a replacement is finalised.

Botswana's two representatives on the De Beers board, Gabaake Gabaake and Solomon Sekwakwa Minerals and Finance permanent secretaries respectively  will carry the Cabinet's choice of candidate at the board meeting to appoint Penny's replacement.

Due to its minority shareholding status, Botswana will most likely be asked to pick from a pre-selected group of candidates or even endorse the majority shareholders' preferred choice. However, as pointed out by the International Diamond Exchange, Botswana could be the kingmaker.

'Finding a replacement for Penny will be an exercise in horse-trading between the dominant shareholders Anglo-American (45 percent) and the Botswana Government (15 percent),' says the Exchange. 'Despite its 40 percent shareholder, the Oppenheimer family is increasingly viewed as the junior partner.'

Should such 'horse-trading' occur, analysts believe Botswana would pick Shine for Penny's replacement. The DTC Director has a close relationship with Botswana, having overseen the establishment of DTC Botswana in 2008 and subsequently chairing the entity until earlier this year.

Shine has also come across as a proponent of cutting and polishing industries in producer countries as evidenced by her numerous pronouncements on the once controversial subject.

At the opening of Steinmetz diamond factory in 2008, Shine was quoted saying: 'Beneficiation is not an option in this country, but an essential part of its macroeconomic policy. At De Beers, we embrace this imperative completely and with great energy.'

She has also been quoted as saying moving diamond value addition to producer countries was as natural and logical as it was inevitable.

Botswana will be counting on Shine to bring the long-awaited diamond aggregation to Botswana.

Originally, part of the May 2006 suite of agreements signed between the Government of Botswana and De Beers, aggregation has stalled over the years, due to a variety of factors.

Last week, a diamond industry publication quoted Shine as saying: 'Our decision to move aggregation to Botswana was made because most of our diamonds today come from southern Africa.

'It makes sense to actually create a Southern Africa hub in Botswana because we have a state-of-the-art building and the latest technology for sorting there.

'When is aggregation going to move? Probably sometime at the beginning of the next year, the first quarter of the next year. That's the plan.'

In the same interview, on Botswana's wish to organise rough diamond sales outside the De Beers' pipeline, Shine said: 'We recognise Botswana's aspirations to become a diamond hub and we will work with them to achieve as much as possible.'

Other international media put the odds on Brown replacing Penny, given the Finance Director's intensive knowledge of De Beers' complex structure and workings.

Local De Beers Director, Gabaake, said Botswana would have little input in Penny's replacement. 'We are minority shareholders and our views would not sway the vote,' he said. 'They will listen to us as a partner, but from a legal point of view, we don't have any decision-making rights in the board.'