What does the diamond industry want, or expect, from the new owners of De Beers, whoever they turn out to be?
Should we expect a notable shift in the company’s character, or another adjustment to its strategy after the substantial changes CEO Al Cook has already introduced over the past two years? New owners usually leave their mark once the transition period is over, asserting both their authority and their priorities.
In some ways, the industry is still adjusting to Anglo’s approach more than a decade later. The change was profound when the Oppenheimers sold their 45% controlling stake in 2012, ending a century-long era of the family’s ownership and placing De Beers under the umbrella of a multinational corporation. Overnight, the company became answerable to institutional scrutiny and shareholder demands, which was a very different reality from the more personal relationship the trade had known.
That family dynamic had fostered a sense that the Oppenheimers were aligned with the industry’s interests. Under Anglo, the emphasis naturally shifted to meeting shareholder expectations. This was not a failing on Anglo’s part but simply a reflection of its corporate mandate, especially when measured against the Oppenheimer legacy.
A Volatile Era
Oppenheimer oversaw De Beers in comparatively simpler times, when consumers faced less choice and distraction, and when profit margins were sufficient to be shared among many in the trade — from miners to sightholders, the secondary rough market, polished dealers, and jewelers.
Anglo, by contrast, stepped into an era of near-constant turbulence. From the moment it lifted its stake in De Beers to 85%, the diamond business stood out as an odd fit for its portfolio. Shareholders accustomed to the predictable price cycles of bulk commodities struggled to reconcile the volatility and lack of uniformity that define diamonds.
That disconnect was perhaps most evident in De Beers’ pricing policy through much of Anglo’s tenure. The diamond industry in the 2010s was characterized by surges in demand followed by prolonged slumps, while De Beers held firm leverage over its clients.
Sightholders faced a rigid, uncompromising selection process and strict purchasing rules that squeezed their profits, leaving little breathing room for market dynamics to play out or for meaningful negotiation.
A Vicious Cycle
The company typically resisted lowering rough prices during downturns, opting instead to withhold supply and keep prices steady until conditions stabilized. Once the market showed signs of recovery, it would adjust prices just enough to stimulate demand. Manufacturers—buoyed by the upward trend—often became exuberant in their purchases and paid higher prices even as demand faded, leaving them with polished inventory that was difficult to sell at a profit. It was a cycle that repeated itself.
Behind the scenes, rough purchases were not always guided by real demand or operational need, but by the desire to remain in De Beers’ good graces and secure future supply. Sightholders often felt compelled to take their full allocation, even at unsustainable prices during weak periods, hoping they might earn favor with the company. Conversely, there was a lingering concern about being penalized if they declined what was on offer.
It was also argued that by withholding goods, De Beers was propping up the market during weaker periods. Had it reduced prices and released more supply, the trade might not have been able to absorb the excess. Beyond that, De Beers and its mining peers could not allow prices to fall below a certain threshold. Once costs exceed that floor, mines quickly become unviable—as the industry has seen over the past year (see video: The Most Profitable Diamond Miner)
Changing Dynamics
De Beers still assumes a stabilizing role, cutting production during downturns and offering “flexibility” that allows sightholders to take less than their full allocation. But the market dynamic in the 2020s has evolved, and from De Beers’ perspective this evolution has unfolded in two distinct ways.
The first change is that in recent years, the corporatized, Anglo-owned De Beers has taken a more engaging approach with the trade. The pandemic underscored that no company can operate in isolation; its fortunes are tied to the health of the wider industry. That truth has become even more apparent in the current downturn. As a result, De Beers has revived the stewardship role it largely abandoned in the 2010s, when it leaned on glossy strategic plans aimed at appeasing shareholders and signaling short-term profit.
The second development carries deeper, potentially longer-term consequences. Over the past five years, particularly since Covid, the relationship between De Beers and its sightholders has shifted. The balance of power now leans toward the buyers, led by the informal consortium of Indian manufacturers whose influence looms large in the trade.
When rough prices climbed too high and strayed from market reality, sightholders simply refused their allocations. That defiance became especially pronounced from 2023 onward, as companies grew more cautious with inventory, needed fewer goods, and grew less willing to purchase rough indiscriminately. In short, holding a sight lost much of its former prestige.
De Beers has acknowledged that the market requires less of its rough and has started trimming its sightholder list. At the same time, Botswana’s Okavango Diamond Company, which markets local Debswana production, is entitled to a growing share of supply — 30% today, rising to 50% over the next decade.
With less rough at its disposal, De Beers cut 10 sightholders at the end of last year and intends to reduce further from the current 69 when new contracts take effect in mid-2026. The company recently extended that deadline by six months, citing the “challenging environment for midstream businesses,” according to a spokesperson.
Confirmed Bids
Yet all of this is unfolding against the backdrop of Anglo’s planned exit. Much could still change before new contracts are signed, as Anglo pushes to close its De Beers chapter by year’s end. And the potential buyers are unlikely to resemble either the Oppenheimers, whose generational, industry identity remains unmatchable, or Anglo American with its diversified, commodity-driven base.
Details on the bidders remain scarce. Bloomberg reported in June that six consortia had expressed interest, among them former De Beers CEOs Bruce Cleaver and Gareth Penny. Whoever else may have entered — or since exited — the race is largely speculation.
This week brought some clarity, with two significant players confirming their bids. Angola announced that its state-owned mining company, Endiama, had submitted a fully financed offer for a minority stake. The company stressed that it “believes De Beers’ future depends on [it] remaining a private-sector-led, global company.” Angola also envisions a Pan-African consortium with Botswana, Namibia, and South Africa, though without any single country taking control.
Botswana President Duma Boko appears to have different plans, confirming in recent interviews that the government intends to secure a majority stake in the diamond company. As the current 15% shareholder alongside Anglo — and given De Beers’ extensive operations in the country — Boko may well have the regulatory leverage to tilt a deal in his favor.
As I’ve argued before, I believe this would be a short-sighted path for Botswana to take (see video: Botswana’s De Beers Bid: Bold Vision or Misdirection?). The Angola model makes far greater sense: treat De Beers as a strategic asset rather than a business opportunity. The business of diamonds should remain in private-sector hands.
Industry Interests
Indeed, for the diamond industry, a state-owned De Beers would once again alter the company’s relationship with the trade. Governments bring layers of political and social considerations that can run counter to market needs, and such involvement risks reintroducing the rigidity seen during the Anglo era. Amid the priorities of running a country, Boko cannot ignore industry stakeholders when it comes to De Beers, nor should he overstate the ability of the company and the wider diamond trade to elevate Botswana’s economy.
Meanwhile, any private-sector buyer will have to juggle the competing interests of De Beers’ many stakeholders, as both Anglo and the Oppenheimers did before. Those include government partners, buyers, suppliers, employees, and perhaps above all, the diamond industry itself.
In that regard, whoever takes over will have to come to terms with a newfound influence and confront a dilemma their predecessors arguably never faced with the same complexity: how to respond to such difficult market conditions, when and how to offer support, and whether to give the market — and sightholders — more breathing room, or steer the trade toward less reliance on De Beers altogether.
The next custodians of De Beers will inherit a very different company from the one the Oppenheimers steered or Anglo managed. And with it, they’ll face a very different diamond industry — one often frustrated by De Beers’ influence, yet still craving its leadership, and now asking what it can expect from whoever takes the reins next.
Image: Sightholder views De Beers rough. (De Beers)
Source : The Diamond Press