Philippe Mellier, the French former auto executive who led De Beers for five profitable but sometimes tumultuous years, has resigned and will be replaced by a well-regarded company veteran, Bruce Cleaver.
Mellier, the first outsider to head the mining company, spent five years in his role, the same as his predecessor, Gareth Penny. His departure had been rumored for months, after his name surfaced as a reported candidate to head Air France.
Cleaver has worked for De Beers for more than a decade, serving as interim co-CEO prior to Mellier’s appointment and then executive director responsible for strategy and commercial relationships. He left De Beers in November 2015 to take what turned out to be a short-lived post at parent Anglo American, acting as group director of strategy and business development.
Sightholders reacted favorably to Cleaver’s appointment, saying they hoped the former lawyer would rebuild relationships that had frayed under Mellier. In an interview on De Beers’ website following his appointment, Cleaver struck a decidedly different tone from his predecessor, calling De Beers’ customers “core stakeholders” and saying their success is tied with the company’s.
Other De Beers veterans also seem optimistic. “I am certainly pleased to see a CEO from within the De Beers group,” says Forevermark CEO Stephen Lussier. “Philippe was an outsider. In the end, that was probably a good thing at that time. But then we had the Oppenheimers still involved and a lot of insiders as well. I am pleased to see the torch passed this time to an insider who understands how the industry works, understands our clients, understands it is an industry that needs an experienced hand to navigate through the complexity.”
In 2011, De Beers’ then-chairman, Nicky Oppenheimer, chose Mellier—who headed a division at transportation company Alstom with greater sales than De Beers—because he wanted a “fresh set of eyes.”
Mellier’s tenure was marked by tremendous change. Two months after he took the job, De Beers announced it was moving sorting operations from its London headquarters to Botswana. Shortly after that, the Oppenheimer family cashed out, selling its shares to Anglo American for $6.1 million. In the ensuing four and a half years, De Beers shut its Snap Lake mine in Canada, settled its U.S. antitrust issues, opened grading labs and a buyback service, put greater stress on online auctions, and, in April, announced it was vacating its historic and iconic Charterhouse Street headquarters in London.
Mellier delivered consistent returns while at the helm: In 2014, De Beers reported $1.4 billion in operating income. But while those numbers may have pleased Anglo shareholders, they also rankled sightholders, who felt their profits were increasingly being squeezed. In a January 2015 interview with JCK, Mellier brushed off client gripes: “I am not responsible for the margin of my customer. They are responsible for their margin.”
Such comments turned Mellier into a bit of a lightning rod, especially after the diamond industry spiraled into a crisis in summer 2015. That November, trade commenter Martin Rapaport called on him to resign. In response, Mellier told an analyst, “When things are tough…you have to blame somebody. The midstream has been fragile [for] two to three years, [and] we knew that it has to restructure itself. This is a wake-up call.”
De Beers did cut back significantly in response to the trade’s woes. In 2015, sales dropped 33 percent. The company also reported a lower, if still healthy, operating profit of $571 million.
Mellier seemed surprisingly emotional as he said goodbye to the trade at the Forevermark breakfast at June’s JCK Las Vegas, telling attendees that leading the company was a “privilege.” He also embraced Cleaver—who once served under him and is now his successor.
Top: Philippe Mellier at the Forevermark breakfast at JCK Las Vegas 2016; inset: the De Beers bunch—Forevermark US president Charles Stanley, Bruce Cleaver, Philippe Mellier, and Forevermark CEO Stephen Lussier