Diamond business, which is for sale, has been hit hard by declining demand, especially from China
06 February 2025 - 10:18
UPDATED 06 February 2025 - 23:43
by Tiisetso Motsoeneng
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Anglo American’s diamond unit, De Beers, is on the brink of a second writedown in as many years, underscoring the turmoil engulfing the global gemstone market and complicating CEO Duncan Wanblad’s push to lift shareholder returns.
“The group is undertaking an impairment review of De Beers’ carrying value, assessing the impact of diamond market conditions and [the] general fall in demand in China which is likely to lead to an impairment at the full-year results,” Anglo said in a production update on Thursday.
The review of De Beers, the biggest diamond producer by value, reflects weak demand for luxury products and a bleak outlook as some consumers shift to lab-grown stones, which are cheaper and more environmentally ethical than mined ones. De Beers’ presence in that is too small to make a significant impact.
The potential writedown would be the second such charge Anglo would take on its 85% stake (valued at about $7.6bn) in De Beers. In 2024, Anglo slashed the value of its holding by $1.6bn in an accounting adjustment rather than an actual cash outflow.
Its 2024 rough diamond production dropped 22% to 24.7-million carats, the lower end of its guidance, and it sold stones at 20% less on average than the previous year.
Anglo cut its production forecast for 2025 to between 20-million carats and 23-million carats. Its previous forecast was between 30-million carats and 33-million carats.
De Beers is thus likely to report a marginal drop in full-year core profit, or earnings before interest, tax, depreciation and amortisation (ebitda). De Beers’ ebitda was $300m in the first half of 2024.
For Wanblad, the pricing crisis in the diamond market complicates a portion of Anglo’s sweeping overhaul to boost shareholder returns and fend off a $39bn takeover proposal from larger rival BHP.
His proposal last year included the sale or separate listing of De Beers. In the current environment that would lower the valuation of the company and undermine the primary reason for undertaking the restructuring. “We continue to prepare the De Beers business for separation,” Wanblad said.
Still, Anglo shares surged more than 5% in late afternoon trading on the JSE as investors looked past the group’s troubled diamond operations.
“We are making excellent progress with our portfolio simplification,” Wanblad said in a statement, referring to plans to spin off its platinum assets, sell De Beers and offload its steelmaking coal business.
In November, Anglo reached agreements to sell that coal business for as much as $4.9bn. The deal is expected to be completed by the third quarter of 2025. The company also completed a second sale of its Anglo American Platinum shares via an accelerated bookbuild, netting almost $900m, and boosting the free float by more than 50% ahead of the separate listing by midyear.
“The sales process of our nickel business is well progressed,” Wanblad said.
Anglo reported a 6% drop in copper production last year to 773,000 tonnes. Output for 2025 is expected to be in the range of 690,000 tonnes to 750,000 tonnes, and 760,000 tonnes to 820,000 tonnes in 2026. The metal is used in the production of electric vehicles and renewable infrastructure.
Anglo is scheduled to publish its 2024 financial results on February 20.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Anglo faces second De Beers writedown
Diamond business, which is for sale, has been hit hard by declining demand, especially from China
Anglo American’s diamond unit, De Beers, is on the brink of a second writedown in as many years, underscoring the turmoil engulfing the global gemstone market and complicating CEO Duncan Wanblad’s push to lift shareholder returns.
“The group is undertaking an impairment review of De Beers’ carrying value, assessing the impact of diamond market conditions and [the] general fall in demand in China which is likely to lead to an impairment at the full-year results,” Anglo said in a production update on Thursday.
The review of De Beers, the biggest diamond producer by value, reflects weak demand for luxury products and a bleak outlook as some consumers shift to lab-grown stones, which are cheaper and more environmentally ethical than mined ones. De Beers’ presence in that is too small to make a significant impact.
The potential writedown would be the second such charge Anglo would take on its 85% stake (valued at about $7.6bn) in De Beers. In 2024, Anglo slashed the value of its holding by $1.6bn in an accounting adjustment rather than an actual cash outflow.
Its 2024 rough diamond production dropped 22% to 24.7-million carats, the lower end of its guidance, and it sold stones at 20% less on average than the previous year.
Anglo cut its production forecast for 2025 to between 20-million carats and 23-million carats. Its previous forecast was between 30-million carats and 33-million carats.
De Beers is thus likely to report a marginal drop in full-year core profit, or earnings before interest, tax, depreciation and amortisation (ebitda). De Beers’ ebitda was $300m in the first half of 2024.
For Wanblad, the pricing crisis in the diamond market complicates a portion of Anglo’s sweeping overhaul to boost shareholder returns and fend off a $39bn takeover proposal from larger rival BHP.
His proposal last year included the sale or separate listing of De Beers. In the current environment that would lower the valuation of the company and undermine the primary reason for undertaking the restructuring. “We continue to prepare the De Beers business for separation,” Wanblad said.
Still, Anglo shares surged more than 5% in late afternoon trading on the JSE as investors looked past the group’s troubled diamond operations.
“We are making excellent progress with our portfolio simplification,” Wanblad said in a statement, referring to plans to spin off its platinum assets, sell De Beers and offload its steelmaking coal business.
In November, Anglo reached agreements to sell that coal business for as much as $4.9bn. The deal is expected to be completed by the third quarter of 2025. The company also completed a second sale of its Anglo American Platinum shares via an accelerated bookbuild, netting almost $900m, and boosting the free float by more than 50% ahead of the separate listing by midyear.
“The sales process of our nickel business is well progressed,” Wanblad said.
Anglo reported a 6% drop in copper production last year to 773,000 tonnes. Output for 2025 is expected to be in the range of 690,000 tonnes to 750,000 tonnes, and 760,000 tonnes to 820,000 tonnes in 2026. The metal is used in the production of electric vehicles and renewable infrastructure.
Anglo is scheduled to publish its 2024 financial results on February 20.
motsoenengt@businesslive.co.za
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