De Beers likely to cut jobs after Covid-19 hit

De Beers employs 20 000 people across its entire business.

03 August 2020 | Business

The year has been like nothing I have ever seen in my 43 years in the industry. - Mark Cutifani, CEO: Anglo American

LONDON/GABORONE - Diamond mining giant De Beers is likely to have to cut jobs, its chief executive said on Thursday, as it outlined plans for an overhaul of its business after the coronavirus hit jewellery demand.

De Beers, a unit of Anglo American, earlier reported plunging earnings in the first half of 2020 as a drop in rough diamond sales and prices hurt margins.

Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) were just US$2 million in the period, down from US$518 million in the first half of last year.

De Beers CEO Bruce Cleaver told Reuters official consultations with workers will begin on Aug. 11. He said the business overhaul "is likely to lead to some job losses, but I can't tell you at this point what that number will be".

Joint ventures

Cleaver said the process would last for three months and involve a review of mining, rough sales, retail and the corporate centre, but exclude joint venture businesses in Botswana and Namibia which have different governance structures.

De Beers owns 50% of Namdeb Holdings. The remaining interest is held by the Namibian government.

De Beers employs 20 000 people across its entire business.

Asked whether De Beers was planning job cuts in Botswana, executive vice president for diamond trading Paul Rowley said that as the transformation plan was a work in progress, he couldn't take anything off the table.

South Africa's National Union of Mineworkers did not immediately reply to a request for comment on possible job cuts by De Beers.

Maintaining that the long-term outlook is positive, however, the miner said its business transformation plan aims to boost margins by, among other things, modernising the way it sells diamonds.

Anglo

Diversified miner Anglo American told its investors it was on track for a second-half rebound after a 39% dive in profits in the first six months when lockdowns paralysed production.

The London-listed miner, with its extensive African exposure, has been the hardest hit of its peers by lockdowns that halted mining in South Africa, Botswana and Namibia. The company also suffered operational issues.

Apart from the impact of lockdowns, Anglo had operational incidents at its platinum unit in South Africa and at its Australian metallurgical coal mine, which were to an extent offset by performances at its Brazilian iron ore and Chilean copper operations.

"The year has been like nothing I have ever seen in my 43 years in the industry," CEO Mark Cutifani said on a call.

But he said the company was operating at nearly full capacity and expected a recovery in prices and sales of its products.

"We have done the right things in the first six months and I think we have laid the foundation for the recovery in the second half of the year," Cutifani said.

Anglo posted underlying earnings before interest, tax, depreciation and amortisation (EBITDA) of US$3.4 billion for the six months to June 30, beating a consensus of US$3 billion from nine analysts compiled by Vuma.

It declared an interim dividend of 28 US cents per share, down 55% from a year earlier, but in line with its 40% payout policy and beating consensus estimates for a 20 US cents payout.

"We believe Anglo will benefit from a continued cyclical recovery in most commodity prices, ongoing strength in iron ore prices, and operational improvements after the very difficult first half," Jefferies analysts said in a note. – Nampa/Reuters

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