Larry Acker In The News : 

Harry Oppenheimer 1908-2000

In August 19, 2000, one of the world’s truly legendary businessmen passed away late in the evening in a Johannesburg hospital just days away from his 92^nd birthday. Harry Oppenheimer was the head of both the Anglo-American Corporation and DeBeers—the world’s largest gold producer and diamond producer, respectively. He was of great intelligence, and had extremely good business acumen.

He got this honestly enough. His father was Ernest Oppenheimer, the business genius who put the family’s gold and diamond interests together long before Harry came of age. Ernest was of German-Jewish extraction but, in putting his companies together, realized that no one wanted to see the South African mineral resources owned by Jews—either English-or Afrikaans-speaking South Africans—so he converted the family to Anglicanism and behaved like a WASP patriarch. Harry was sent to English private schools and graduated from Oxford. Father Ernest started (and son Harry continued) hiring many Rhoades scholars by preference, and did little for the local Jewish population—ignoring much of their entrepreneurial ideas.

Harry came into the business in 1932 when the world depression was on, and the Central Selling Organization—controlled by DeBeers—was taking a lot of heat for not lowering diamond prices. His answer was to close diamond mines, and the prices gradually recovered. Harry also served in the British Army and fought in the North African desert campaigns against Rommel—the "Desert Fox" until he (Rommel) was defeated in 1943. He came back to head Anglo-American when the war was over, and bet the entire company on some new gold finds in Orange Free State. It was a huge payoff. Then he entered politics, and was elected to Parliament in 1948 as a liberal member of the United Party under Jan Smut.

He had his enemies in politics—especially when he realized that all racial discrimination would ultimately have to go. He also started bringing in other minorities, and eventually sold the huge General Mining Company to an Afrikaans financial house (it trades today in London as Billington on the stock exchange). Anglo became huge and had interests in just about everything in South Africa s well as in many mineral mines all over the world. Minerals included but were not limited to: 10% of the world’s nickel, platinum, gold mines around the world, cobalt, fluorite, gems such as sapphires and opals, chromite, copper, rare earth mines such as iridium, tungsten and Gallium, molybdenum, bismuth, asbestos and sphalerite—to just name a few. Some of these were controlled indirectly through stock holdings and didn’t exercise active control, but for some of the companies, the holdings were big enough to warrant a seat on the company board of directors. Harry really liked the diamond industry and, while he retired from Anglo-American in 1982, he continued as chairman of DeBeers until 1984 and stayed on as a member of the board of directors until 1994 while his son Nicholas (called Nicky) ran the companies.

Harry could get along with everybody, literally. He steered his companies through apartheid from the 1950s into the late ’80s and kept everything intact. He had connections with the Soviets, and knew that the Soviet Union had substantial gold and diamond interests, so he worked with them—despite the fact South Africa had no diplomatic ties to the Soviets, and the Soviets were wanting to overthrow the South American government. During the 40 years of apartheid, all parties in power from the Afrikaner Nationalists to the Afraican National Congress as well as minority parties vowed to nationalize these big companies. None of them did, because they realized the fabric of life that these companies wove into the South African economy. He had a tremendous sense of balance, and also could see great opportunity when no one else could see it. He had friends everywhere, and kept building his companies despite political troubles, strikes, wars, revolutions, boycotts, sanctions and price controls.

So the world has witnessed the passing of both Ernest Oppenheimer (he died in 1957) and now Harry. Both of these managerial geniuses and their styles were widely studied by such diverse tycoons as Alfred Krupp (German Steel works), Alfred P. Sloan (father of General Motors), Thomas B. Watson (IBM founder) and even General Douglas McArthur.

Now that Harry is gone, what about the price of gold and the future of the companies he had built? First of all, with companies this big, they have their own inertia and can go for quite awhile on their own speed. Harry hasn’t been active in company affairs for six years, but you can be sure his advice was occasionally sought out, and he responded.

There are a lot of problems now coming up where his advice will be sorely missed. Two of the big ones are the changing of mining technology and also the pricing of the metals. Gold prices have been cheap for many years and new uses are needed for these metals to build more demand and get the prices up. Anglo American has the world’s highest-priced gold mines in terms of cost per ounce. Modernizing the mines and the processing would take billions of dollars. Metal prices will now become much more volatile, and political events could bring some high-priced gold as early as 2001. Banks and even cartels are involved in pricing, but this, too, shall pass. The future of these companies and the products they handle will now be on a more volatile course than formerly—because they did not have the genius who started them and nurtured them on hand now to help provide his decades of experience and understanding to guide them. R.I.P.

Reprinted from September, 2000