Anglo American has again decreased the value of its De Beers diamond division, marking the second time in just two years. This move comes as the company works to finalize a significant restructuring by the year’s end.
On Thursday, the London-based mining company reported an impairment charge of $2.9 billion related to its diamonds unit due to falling demand in the diamond market. This follows last year’s $1.6 billion writedown related to De Beers during its annual report.
Over the last ten years, diamond prices have dropped, and the market is facing additional pressure from the increasing popularity of less expensive lab-grown diamonds and a decline in consumer spending in China.
Due to these challenges, Anglo American posted a net loss of $3.1 billion for 2024, a stark contrast to the $283 million profit it earned the previous year. Despite this, the company’s shares, which have gained over 40% in the last twelve months, rose by 5% by midday in London.
The impairment charge is part of Anglo’s broader strategy to recover following a failed £39 billion acquisition attempt by its rival, BHP, last year. Rather than merging, Anglo has committed to a major overhaul, including selling off several business units by the end of 2025, to concentrate on copper and iron ore.
So far, the company has made strides in three of the key areas of its restructuring plan. It has sold its steelmaking coal assets and recently announced plans to sell its nickel business and prepare for the spin-off of its platinum division. However, finding a buyer for De Beers has proven trickier. CEO Duncan Wanblad noted that the current market conditions for diamonds make it unlikely that any progress will occur in the first half of the year, although he hopes activities may pick up in the latter half.
Anglo is contemplating both selling and listing De Beers, which currently carries a value of about $4 billion, including roughly $2 billion in inventory, similar to the previous year’s values. Wanblad mentioned that the company had received multiple unsolicited inquiries about De Beers, but that they had not yet initiated a formal sales process because they finalized crucial licensing agreements with the Botswana government, which holds a 15% stake in De Beers.
He also indicated that the president of Botswana had expressed interest in increasing their stake in De Beers, though specifics were not disclosed.
Wanblad emphasized that Anglo’s restructuring should be largely complete within this year. He also reaffirmed the company’s commitment to remaining listed in London, countering speculation that rival mining companies may relocate.
In another development, Anglo announced that it has entered into a partnership with Chilean state miner Codelco to enhance copper production in their existing neighboring copper mines in Chile with minimal additional capital investment.
However, Anglo has predicted a decrease in copper production for this year compared to 2024, along with expected lower diamond production figures. Wanblad remarked that the company is actively exploring more such partnerships that could leverage existing synergies.
Analyst John Meyer from SP Angel noted that Anglo’s ongoing effort to downsize and grow its cash reserves from asset sales might make it a target for other companies looking to acquire their assets.