It’s Complicated: Anglo American and De Beers
Gary Roskin –
Roskin Gem News Report –
As we have been reporting here in the Roskin Gem News, Anglo American has been seriously considering the selling off of its diamond mining property, De Beers. BHP swooped in to attempt a takeover of Anglo, and in an effort to hold off BHP’s bid, Anglo started making plans to sell off unwanted/unnecessary properties. Their timing could not have been worse, as the natural diamond business has been heading in the wrong direction as of late. As we all know, business strategy says to “buy low, sell high.” And this cannot happen for Anglo American until the natural diamond business turns around. And no one can predict that.
Two recent articles talk about Anglo American’s situation. One from a subscription only Investors Chronicle in the UK. The other, from Mining.com. See portions of both, with links, here below.
Struggling diamond market complicates Anglo’s De Beers plan
by Alex Hamer
InvestorsChronicle.co.uk
Diamond companies have not fared well on the public markets and any deal is further complicated by the De Beers’ Botswana mines
July 9, 2024
*Anglo American is planning to sell or spin off the historic diamond miner
*Listing would radically increase clarity around diamond supply chain
Diamonds have held little sparkle for investors in recent years. Prices rose during the pandemic as spending power grew in the US and China, but a striking fall in the past two years has left miners on shaky footings and those further down the supply chain battling cheaper, lab-grown alternatives.
This is the backdrop Anglo American (AAL) faces as it considers an initial public offering (IPO) for De Beers, the historic miner that is largely responsible for the size of the diamond market, which is driven by engagement rings. The move is part of a restructure to allow Anglo to focus on copper, iron ore and fertilisers.
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Anglo’s Sale of De Beers Hindered by Diamond Market State
The company announced the restructuring in May amid a successful rebuttal of a $49 billion takeover approach from BHP (ASX: BHP), the world’s biggest miner.
The plan includes a sale or divestment of its 85% stake in De Beers, the world’s largest diamond producer by value, to focus on copper, iron ore and the Woodsmith fertilizer project in the UK.
Anglo American lowered its full-year diamond guidance in April to between 26 million and 29 million carats. While it has decided to maintain the current target at De Beers, it revealed it is simultaneously exploring options to further reduce output.
The diamond miner seems ready to fly alone as it did for 124 of its 136 years of existence. Anglo American acquired a majority stake in De Beers only 13 years ago.
The government of Botswana holds the remaining shares and recently stated it would increase its stake in the company in order to play a central role in selecting a new investor to replace Anglo.
Wanblad restated his goal of finishing the majority of Anglo’s streamlining process within the next 18 months.
Tap here to read the full story in Mining.com
