“The census allows me to combine two of my favorite things: flying & managing our environment,” says the 59-year-old third-generation patriarch of the De Beers diamond dynasty and a family fortune estima-ted at $4.4 billion. With his bushy salt-and-pepper beard, Oppenheimer looks more like an explorer just in from the back woods—or perhaps someone more notorious in the minds of his countrymen, who call him “The Cuban”—than one of the world’s most influential billionaires. Last November, the Financial Times ranked him number 7 on its list of the world’s 25 most powerful billionaires.

When Oppenheimer is not busy counting his wild animals, he is retooling the diamond industry for a new era and championing his own proposal to reform South Africa’s postapartheid economy. Few families have managed to maintain hegemony over an industry in the way the Oppenheimers have controlled the diamond trade. De Beers and its reigning family have long lived behind a veil of mystery, but changing times for the industry have tempted Nicky Oppenheimer and Jonathan, his 35-year-old son who will presumably be CEO one day, to emerge from their seclusion.

SIR ERNEST Oppenheimer, Nicky Oppenheimer’s grandfather and a German-born diamond buyer, arrived in South Africa in 1902 and worked his way up the business, eventually becoming chairman of De Beers. He gained a controlling interest in 1930 and began the Oppenheimer legacy.

Two decades ago, the Oppenheimers’ mines were the source of 85%  of the world’s diamonds. The family says that figure has fallen to about 55 percent because of competition from sources including Russia and Canada (where De Beers, after protracted negotiations, will start mining this year). The collective nemesis of all diamond miners—the technology that can create imitation diamonds so perfect as to be nearly indistinguishable from the genuine—will also take its toll as the price of producing fakes comes down.

Market swings notwithstanding, De Beers and the Oppenheimers—by far the richest family in South Africa—remain rock solid. De Beers enjoyed record-breaking sales in 2003 of $5.5 billion, with earnings of $465 million. The Oppenheimers own nearly half of the company and are major shareholders in Anglo American, which owns the other half. When De Beers took the company private in a $3.6 billion leveraged buyout in 2001 (the second largest such deal ever after the RJR Nabisco buyout in the late 1980s) the local investment community all but wept at losing access to one of only two companies (the other is Johann Rupert’s tobacco and luxury goods behemoth Richemont Securities) truly tied to the global consumer cycle. The South African newspaper Business Day called the disappearance of De Beers from the Johannesburg Stock Exchange “just one more step in a destructive process that sees the bourse becoming more of a regional than an international market.”

TOP VIEW The romance seemingly inherent in diamond jewelry can be traced directly to the house of Oppenheimer, the marketing-savvy family behind the De Beers empire. As the latest generation of Oppenheimers encounters new modes of competition, however, its new sovereigns are eyeing life beyond their monopoly, with ventures in Canadian mining, retail and ecotourism.

The Oppenheimers have refused to discuss why they decided to delist the company, but industry analysts say the move seems connected to their concerns about keeping their corporate assets in South Africa at a time when certain factions within the nation want to embark on a program of nationalization. Certainly Nicky Oppenheimer is doing his part to shape the country’s political and economic future. At a now-famous meeting on August 5, 2003, at his Johannesburg estate, Little Brenthurst, Oppenheimer gathered President Thabo Mbeki and approximately 100 other South African power brokers to hear his plan for economic reform, now known as the Brenthurst Initiative. The scheme includes a proviso to have black South Africans own 25 percent of the companies listed on the same Johannesburg Stock Exchange to which his company just bid adieu. The initiative has stimulated debate on economic expansion policies, as well as a foundation that the Oppenheimers plan to launch in April, aimed at finding ways to draw investment into the continent.

The Oppenheimers are acutely aware of how Africa’s politics affect their business. They refuse to mine in the “conflict diamond” countries of Sierra Leone, Angola, Liberia and Congo, and some family members worked to end apartheid at home. Although human rights experts may forever see De Beers as the beneficiary of an unjust regime, Nicky’s father, Harry Oppenheimer, was an outspoken supporter of liberal policies and black political representation while he served in parliament.

JONATHAN, HARRY and Nicky Oppenheimer.

The company has now said it intends to comply with the law in all of the jurisdictions in which it operates, a radical move for a colossus once so powerful that it could afford to ignore antitrust investigations on two continents. Last July, De Beers paid a $10 million fine to settle a 60-year-old criminal indictment by the U.S. Justice Department charging it with conspiring to fix the price of industrial diamonds in the United States and elsewhere. Then, in December, the company proposed a drastic reduction in its purchase of diamonds from the Russian state diamond monopoly, Alrosa, in order to resolve a long-running antitrust investigation by the European Commission.

“No company wants to have a criminal indictment outstanding,” Nicky Oppenheimer says. “America is the largest consumer market of jewelry, so it’s important that De Beers can experience it firsthand.” The settlement may give De Beers a better chance of winning three federal antitrust class action suits. Moreover, De Beers executives can now travel to the United States without the risk of arrest.

ON BENDED KNEE
Non grata standing, however, even during the era of sanctions against South Africa, did not completely block De Beers from the world’s most lucrative market; the company simply sold diamonds to intermediaries, which then sold jewels to retailers. In 1947, not long after the United States indicted De Beers, the company’s advertising slogan, “A diamond is forever,” debuted in the U.S., marking the apogee of Harry Oppenheimer’s marketing campaign. On Harry’s watch, diamonds first became enduringly entwined with the question: “Will you marry me?” Even today, ever-romantic Americans account for over half of all global diamond sales.

De Beers’ legal reparations have opened the way for what will likely be one of the most notable retail ventures of 2005. De Beers and LVMH Moët Hennessy Louis Vuitton plan to open a new store that will sell jewelry under the De Beers LV brand on New York’s Fifth Avenue, along the shopping mile that already glitters with the likes of Van Cleef & Arpels, Harry Winston and Tiffany & Co. The scheduled spring opening will mark the fifth De Beers LV store. The first opened in 2002 on Old Bond Street in London, and there are now three in Tokyo, the capital of the world’s second-largest diamond market. Until now, brand names were largely absent from diamond jewelry sold in specialty boutiques. But this move represents the multifaceted face of the new De Beers.

The new plan requires once-anonymous sight holders, the industry term for the companies to which De Beers granted the privilege of buying its diamonds, to invest in building diamond jewelry brands to compete against other high-profile luxury marques. “The very fact De Beers has its own brand name jewelry and encourages all other diamond companies to push their own diamond branded jewelry is part of the reason that diamond sales are so strong,” Nicky Oppenheimer says.

ELEPHANTS IN the Venetia Limpopo Nature Reserve.

This is a far cry from the monopoly engineered by the company’s founder, Cecil John Rhodes, one of the first wave of British prospectors to mine the diamond fields of South Africa in the years after the jewels were first discovered there in 1866. After Rhodes began excavating the famous Kimberley Mine, he bought a steam-powered pump for draining water from flooded mines. He happened to be the owner of the only such pump in South Africa. When small mine operators ran out of cash to pay Rhodes, they were forced to sell him their mining claims. Nicky’s grandfather Ernest, a German-born diamond buyer, arrived in South Africa in 1902 and worked his way up through the business, eventually becoming chairman of De Beers. He gained a controlling interest in 1930.

Ernest—Sir Ernest after he was knighted in 1921—quickly realized the benefit of controlling the output of diamonds and established a single-channel marketing structure, which eventually became known as the Central Selling Organization. This syndicate distributed De Beers diamonds to preselected dealers around the world. De Beers’ policy tempered price fluctuations by allowing independent buyers to pay what the market would bear when prices were up, and when prices plunged, the company would pay more than the going rate, buying up excess stones before the market became saturated. In return, diamond producers were forced to abide by sales quotas that De Beers would readjust whenever necessary to match demand. There was a time when the supply of diamonds would have outpaced demand had De Beers not controlled it. Then came Harry Oppenheimer’s stroke of brilliance: linking diamonds to romance, establishing a virtual guarantee that even in hard times women would hang onto their diamonds, thereby eliminating the chance of a flood of used gems competing with the cartel.

De Beers and its reigning family have long lived behind a veil of mystery, but changing times are beginning to rouse Nicky Oppenheimer and Jonathan, his 35-year-old son who will presumably be CEO one day.

Lev Leviev is another reason the Oppenheimers have had to realign their strategy. Leviev is an Israeli who has become the world’s second-largest diamond supplier of both cut and uncut diamonds. He currently sells $2.5 billion worth per year, according to industry estimates. Leviev is also exploring new diamond mining projects, forging industry partnerships and funding his own branded jewelry collections. The Oppenheimers refuse to sell to Leviev in their current business plan, but Nicky Oppenheimer claims the competition does not worry him. “For a century, we have been the biggest and best miners and marketers of diamonds,” he says. “Our ambition is to maintain that position. From every ton of ore, we will discover more diamonds than any other company.”

Conserving the Business
While De Beers continues to stress the celestial image of its terrestrial minerals, the company is becoming more vocal about its own conservation initiatives. These are not new efforts: Rhodes used part of his wealth to create the Rooipoort Nature Reserve on the land surrounding Kimberley Mine. Rooipoort remains one of the largest private nature reserves in southern Africa and is home to more than 2,000 animals.

“My grandfather said, ‘In business you can’t just look to make money, but you must do it in a way that makes a real and lasting contribution to the countries and the people in which we operate,’” Oppenheimer recalls. Few people outside his immediate circle are familiar with the family’s longstanding commitment and dedication to wildlife conservation and other philanthropic endeavors. The latter include a multimillion-dollar project to prevent the spread of AIDS and treat its victims, and a cooperative in Botswana that teaches natives farming skills and develops new industries in the country, which is currently dependent on its diamond revenue.

Outsiders question a mining company’s genuine goodwill toward conservation; the nature of its business, after all, involves extracting wealth from the earth. But De Beers dedicates six acres of land to conservation for every acre it mines, and the Oppenheimers have implemented progressive, far-reaching conservation initiatives that include the reintroduction of endangered species, scientific and biodiversity research and ecotourism. The De Beers Fund, the company’s social investment agency, spends an average of 23 million rand ($4 million at current exchange rates) annually on South African projects. It also has invested more than 135 million rand ($23.4 million) in more than 2,500 projects in South Africa in the past few years.

De Beers is also working with government agencies to pursue large-scale programs such as the Transfrontier Conservation Area, a revolutionary concept that would promote the management of wildlife and cultural resources across borders with South Africa, Zimbabwe and Botswana. While the first portion of the South African park opened in September, it may take years for the trinational park to become a reality.

SIR ERNEST and Lady Oppenheimer.

The company’s 198,000-acre Venetia Limpopo Nature Reserve (VLNR), adjacent to its Venetia mine, is being integrated into the proposed conservation area. De Beers has committed more than $10 million to the project. At VLNR, De Beers has successfully funded a program—in cooperation with Endangered Wildlife Trust, Oxford University’s Wildlife Conservation Research Unit and Land Rover South Africa—to reintroduce the threatened South African wild dog to its homeland. “In addition to wild dogs, we reintroduced dozens of elephants into this reserve that have been absent from the area for more than 50 years,” says Warwick Mostert, manager of the reserve and a 10-year veteran of the company’s 65-person ecology division.

The family is using its private 470,000-acre game reserve in the Kalahari Desert, known as Tswalu, to create an economically sustainable environmental model for future reserves. The current force behind many of the conservation efforts is Jonathan Oppenheimer, who joined the family business only four years ago, after traveling and working in the banking industry in London. Because he was not employed by De Beers at the time, he also managed to spend six months traveling in the United States, where he met his wife, Jennifer, an American. The couple has three children. Jonathan, boyishly clean-shaven and jovial in a more formal manner than his father, is now managing director of De Beers Consolidated Mines, the company that runs the seven De Beers mines in South Africa.

When conversation turns to the game reserves and other good deeds, Jonathan speaks candidly, to the point of contrition. “We always had the intention of wanting to do good work in the community,” he says, “but from time to time, because we thought we knew the answer better than others, we have been more prescriptive than working in partnerships. Since the end of apartheid, we have been moving away from that style, and we’re more inclusive.”

When asked what he means by “prescriptive,” he admits that “in the old days” De Beers might have parachuted into an impoverished community and established a school. Today, De Beers engages the local community, and they jointly decide that a school is needed, making locals part of the process and giving them an interest in seeing it succeed. He adds, “The real lesson we learned in the last 10 years is that we have to partner with people.”

Jill Newman has written about jewelry, gemstones and watches for Worth, Robb Report, New York Magazine and W. Additional reporting by Daniel DelRe.