Anglo American Mulls Writing Down Value of De Beers
By Rob Bates | February 08, 2024
"De Beers corporate parent Anglo American said it was assessing the diamond producer’s “carrying value” in the midst of the diamond market’s continued slowdown.
“Carrying value” refers to a company’s assessed value, based on its balance sheet.
“De Beers was loss-making in the second half of 2023 owing to the subdued sight sale results reflecting…the prevailing macroeconomic environment,” Anglo American said in its fourth-quarter production report. “Whilst there has been some improvement coming into 2024, the prospects for economic growth in many major economies remain uncertain, and it may take some time for rough diamond demand to fully recover, which has led to [Anglo-American] currently assessing its carrying value of De Beers.”
At this week’s Indaba mining conference in Cape Town, South Africa, Anglo American CEO Duncan Wanblad acknowledged that the company’s diamond and platinum group metals divisions were both struggling.
“I have no doubt that the long-term future of both of those commodities looks very robust,” he said in an interview. “But we will have to navigate our way through the short term to be able to get [to] that.”
At the conference, Wanblad also said Anglo was not considering selling De Beers, as some analysts have urged, according to the Financial Times. “Because it’s at the bottom of the cycle doesn’t mean it’s time to throw it out,” he told FT.
But he added that he was considering proposals to restructure the business, including possibly splitting off its southern African assets.
De Beers plans to produce from 29 million to 32 million carats this year, but may reduce production based on market conditions.
In December, Anglo American said it would trim De Beers’ overhead by $100 million. The company owns 85% of De Beers, while 15% is held by the government of Botswana.
In a recent interview, De Beers CEO Al Cook predicted ... "
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