Martin Rapaport, chairman of the Rapaport Group, has also demanded that De Beers and others drop prices for rough diamonds by up to 50% to save the ailing industry.
The global diamond sector has run into severe problems after years of poor decisions in financing the purchasing of rough diamonds by banks, pricing and production by mining companies, and the way the industry treated easy and abundant finance.
Taking specific aim at De Beers, Mr Rapaport, who analysts describe as highly regarded and influential in the polished segment, said the company, 85%-owned by Anglo American, was inflicting damage on the industry.
De Beers is the largest producer of rough diamonds by value and second behind Russia's Alrosa in carat output.
He said De Beers had to cut rough diamond prices considerably to widen thin profit margins in the cutting, polishing and trade segments that face a "cascade of bankruptcies", threatening the viability of the industry.
"Destroying long-term client trust relationships - the essence of the De Beers brand - while bankrupting the diamond trade for the sake of short-term balance sheet profits is poor leadership at its worst," Rapaport wrote in an article in a Rapaport publication on Tuesday, 13 November.
"Frankly, De Beers CEO Philippe Mellier's brand of trade exploitation and cannibalisation is no longer tolerable. It is time for Mellier to go. If De Beers wants to survive in the diamond-distribution business, they must urgently appoint a leader who is a diamantaire, someone who is knowledgeable and passionate about the diamond business and the future of the diamond trade."
Analysts were divided on Rapaport's comments, with one saying Mellier was doing exactly what shareholders expected of him by maximising the value of every diamond mined. Who Rapaport represented, should be carefully considered, he said.
A second analyst said Mellier's approach was "too much like he was selling cars" and Rapaport was making a valid point.
Neither analyst could be named due to company policy.
De Beers executives this week defended its approach, saying it had cut rough diamond prices by 8% in the first half of the year and again in the second half, and had reduced output from its mines in SA, Botswana, Namibia and Canada to about 29-million carats from 34-million carats. It had given its 84 clients or sightholders flexibility to roll over purchases, said chief financial officer Gareth Mostyn.
Head of strategy Bruce Cleaver said De Beers was pouring tens of millions of dollars in addition to its $100m spend on advertising campaigns in the US and China to spur diamond jewellery buying to clear clogged inventories of polished and rough stones that are suppressing buying and contributing to low prices.
Botswana, one of the world's largest sources of rough diamonds and which is heavily dependent on the stones for government revenues, is one of the main casualties as De Beers reportedly slowed down purchases of rough diamonds from Debswana, which it owns jointly with the Botswana government.
Source: BDpro
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