104
SIR ERNEST OPPENHEIMER
Beers
explosives interests and competing firms) from the task of satisfying
the large capital requirements, which, it was foreseen, the chemical
industry would need in the post-war period. Ernest Oppen-heimer had
been a member of the board of African Explosives since its formation in
1924 and had been its chairman since 1931. 'The company', Ernest
Oppenheimer explained to De Beers shareholders on 26 May 1944, 'is well
placed to play an important part in the development of chemical
industries in South Africa', but 'we felt that we could not expect
deferred shareholders [in De Beers] to approve a policy of financing
future capital requirements of African Explosives and Chemical
Industries out of diamond profits at the expense of the deferred
dividends. We therefore decided to form a separate industrial company.'
Of the £6 million of capital of the new company, £4 million in
ordinary shares were sold to De Beers for its 50 per cent interest in
Cape Explosives: at the same time, it was agreed that De Beers
should
find subscribers for the whole of the preference share capital, and it
was felt that it would be in the best interests of, not only the
industrial company, but your company as well, that the principal mining
houses in South Africa should become interested. It has, therefore,
been arranged that the whole of the preference share issue be taken up
by the mining houses. . . . The new company will thus have £1,000,000
in cash, thereby placing it in a position to participate in industrial
developments arising from its interest in African Explosives and
Chemical Industries Limited, and in other fields in this country.
Since that time, the scope of De Beers Industrial Corporation has widened considerably.
In
1952, at the sixty-fourth ordinary general meeting of De Beers
Consolidated Mines Limited, Ernest Oppenheimer, as chairman, drew
attention to the position of the Diamond Corporation, created during
the depression to carry the then large stocks of unsaleable diamonds,
but by 1952 owned by the De Beers Group, and which was the link between
the Union and 'outside' diamond producers.
In
carrying these large stocks over many years, the corporation had to
bear a heavy burden, but it has now reaped a reward much greater than
our expectations, as these stocks, which were acquired when prices
were low, have been sold at the high prices now ruling. As a result,
the corporation has created a very strong cash position. The cash
resources exceed considerably the requirements of the corporation to
meet its commitments for contracts with producers outside the Union and
for protecting the diamond trader
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