DE BEERS intends to overhaul its entire business in order to safeguard its short-term prospects – a development that may involve jobs cuts, said Bloomberg News.
Citing a letter written by the diamond firm’s CEO, Bruce Cleaver, Bloomberg said the restructuring would extend from how it sold diamonds to mining; in other words, across the entire span of the business.
Cleaver said in the letter the short-term pressures brought about by the Covid-19 pandemic had put the spotlight on fundamental weaknesses that have existed for longer in the business and industry. “Covid-19 has compounded and exacerbated difficulties that already existed in the diamond world,” Cleaver said in the letter.
“These difficulties, which have inhibited our growth over the past several years, have become even more urgent to address. They require us to act now to protect the short-term health of the business while refocusing and reorienting it to realise our long-term potential,” he said.
De Beers sold just $56m of rough diamonds in the second quarter, a 96% decline from sales a year earlier. RBC Capital Markets expects the company to post a $100m loss in the first half of the year. De Beers is 85%-owned by Anglo American.
In the letter, Cleaver outlined a list of ways the company can narrow the gap between its revenue and costs, said Bloomberg News. These range from selling rough stones “more quickly and in a more integrated way,” to rethinking how it recovers diamonds.
“We are now working through a process to start to shape an organisation that is better equipped and empowered to deliver this change,” Cleaver said. “It won’t be easy for any of us. We will, very likely, come out of this a more focused and more connected business.”
The details of the changes are still being worked out, said Bloomberg News. However, the process is likely to involve job cuts, it said citing people familiar with the matter.