Anglo American pays Oppenheimer family US$5.1 billion for 40% of De Beers

Michael Allan McCrae | November 4, 2011 | 2:49 pm Precious Metals Africa Europe Diamond Gold

Anglo American (LON:AAL) increased its interested in De Beers from 45% to 85% by buying out the Oppenheimer family for US$5.1 billion.

De Beers is looking to Anglo American for better operational management.

“Anglo American is well positioned to enhance the value of De Beers through its expertise and scale in such areas as technical, supply chain and financial management functions as part of a simplified and more integrated ownership structure,” said the company in a statement.

De Beers and the Oppenheimer family are one of the most storied relationships in the world of diamonds, and perhaps in mining itself.

Cecil Rhodes formed De Beers Consolidated Mines in 1888. Recognizing that limiting the production of diamonds was the only way to enhance their value, Rhodes bought up or squelched competitors. Cullinan Mine, operated by Bernard and Ernest Oppenheimer, refused to join the De Beers cartel, and the business grew to rival De Beers. During World War I Cullinan Mine was finally absorbed into De Beers, and Ernest Oppenheimer became chairman of De Beers in 1927.

Anglo American was also founded by Ernest Oppenheimer in 1917.

There have been three generations of Oppenheimers exerting major control of De Beers, up to Nicky Oppenheimer, who represented the family during the sale.

“This has been a momentous and difficult decision as my family has been in the diamond industry for more than 100 years and part of De Beers for over 80 years,” said Nicky Oppenheimer.

“After careful and deliberate consideration of the offer, and what is in the best interests of the family, we unanimously agreed to accept Anglo American’s offer. Anglo American is the natural home for our stake as they have been major shareholders in De Beers since 1926 and have a deep knowledge of the diamond business. I am certain that Anglo American will provide strong support to Philippe Mellier and the De Beers management team.”

Anglo American has been busy. It announced a major nickel find in Finland. De Beers recently announced that it is upping its investment in South Africa.