De Beers broke with a tradition of promoting internally to appoint Alstom SA (ALO)’s Philippe Mellier, a mechanical engineer with a background in cars and trains, to head the world’s largest diamond producer.
Mellier, 55, vice president for Alstom’s rail equipment and transportation services, will join De Beers as chief executive officer in July, the gem producer said in a statement today.
“It’s a surprise, he’s from such a different background,” Des Kilalea, an analyst at RBC Capital Markets Ltd., said from London today. “People might have expected to have somebody from within De Beers or Anglo, somebody with knowledge of diamonds. It’s either going to be inspired or it’s not going to work.”
Mellier takes over from Gareth Penny, who was CEO during an economic crisis that slashed diamond prices, forcing him to idle mines and restore finances with a $1 billion rights offer. The hiring echoes a decision by Anglo American Plc (AAL), part-owner of De Beers, to appoint Cynthia Carroll as CEO in 2006, the first time in the 89-year history of Anglo it had chosen an outsider.
Mellier, who began his career at Ford Motor Co. in 1980, will oversee an expansion of mines in Canada and Botswana at Johannesburg-based De Beers as demand for jewelry recovers.
“We’re looking for Philippe really to shape De Beers to be relevant for the next generation,” Chairman Nicky Oppenheimer, 65, said in a phone interview from London today. “There’s no doubt that De Beers, when Philippe comes to the end of this tenure, will be a different company to what it is today.”
‘Generations to Come’
The Oppenheimer family owns 40 percent of De Beers, Anglo has 45 percent and the Botswana government holds 15 percent.
Oppenheimer said in February he would quit as a director of Anglo after a stint of about 37 years, the first time a family member hasn’t sat on the board since the business began in 1917.
He won’t “disappear immediately” from De Beers, even as he’s “nearer my sell-by-date than my start-date,” the chairman of the gem company said today. The family wants to be involved “for generations to come,” he said, adding that Jonathan, his son, was “very much involved” in selecting the new CEO.
Asked about speculation that Anglo may sell or increase its stake, Oppenheimer said: “As long as the shareholders are happy with what the management is doing, then I don’t see a great pressure to change.” Separating the company’s mining and trading functions is “very unlikely,” he added.
Mellier, who became president of Alstom Transport in 2003 following his appointment as chairman and CEO of Renault Trucks and as a member of the Volvo Group executive committee in 2001, is joining De Beers as profits surge.
The company, producer of about 40 percent of the world’s rough diamonds, posted record 2010 earnings after a 57 percent expansion in its trading arm’s sales to $5.08 billion.
“He’s joining a company that’s much rehabilitated,” Kilalea said. “His job is made much easier.”
De Beers may raise production to the “high 30” million carats this year from 33 million last year, Oppenheimer said, even though the market may consolidate in the July and August holiday period in Europe following “strong growth.”
Alstom, based in Levallois-Perret near Paris, is the world’s third-largest power-equipment maker.
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