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Anglo American is “possible” to write down down the worth of its De Beers diamond enterprise for the second time in a yr due to poor market situations, underscoring the challenges of a possible public itemizing of the unit.
The announcement on Thursday comes because the London-listed miner prepares to spin out or promote the diamond enterprise as a part of a radical restructuring programme launched final yr throughout its defence towards a £39bn takeover offer from rival BHP.
Anglo stated it was finishing up an “impairment overview” to evaluate the worth of the De Beers enterprise.
The group stated it was “assessing the affect of diamond market situations and common fall in demand in China” and was “more likely to result in an impairment on the full yr end result”, which might be printed on February 20.
The corporate didn’t point out the dimensions of the potential writedown, however the information is more likely to heighten shareholder considerations that Anglo dangers promoting its diamond enterprise on the backside of the market.
It might be the second writedown of De Beers in 12 months. Anglo introduced a $1.6bn writedown on the worth of the enterprise in its annual outcomes final yr, bringing the carrying worth to $7.6bn in Anglo’s accounts.
Anglo owns 85 per cent of De Beers, a stake that analysts at RBC have valued at about $2.5bn, far decrease than the valuation in Anglo’s books. The federal government of Botswana owns the remaining 15 per cent.
The worldwide diamond market has been in turmoil as low cost lab-grown diamonds, which value one-twentieth the worth of a mined diamond, have flooded the market, and as demand has didn’t recuperate after the Covid-19 pandemic.
The common promoting value of De Beers diamonds dropped 20 per cent in 2024, in contrast with the prior yr, despite the fact that the corporate additionally reduce manufacturing by 22 per cent final yr in an effort to stabilise the market, in response to manufacturing figures printed on Thursday.
The corporate slashed its diamond manufacturing steering for this yr by 31 per cent, and for subsequent yr by 18 per cent. It’s searching for to cut back its massive diamond stock, at present price about $2bn.
Anglo’s chief govt Duncan Wanblad has insisted that he’ll attempt to maximise the quantity the corporate receives for De Beers, which might be both bought or listed as a public providing.
Different manufacturing figures printed on Thursday had been largely in step with analysts’ expectations — together with a 6 per cent drop in copper output final yr in contrast with 2023. Shares within the firm rose virtually 5 per cent in early buying and selling in London.
Anglo stated the deliberate shutdown of a plant on the Los Bronces mine, and decrease grades at Collahuasi, each in Chile, contributed to the decline in copper output.
After its deliberate restructuring, Anglo will primarily produce copper and iron ore, in addition to proudly owning a big fertiliser mine that’s nonetheless in growth.
The corporate final yr efficiently bought its steelmaking coal property for a value of as much as $4.9bn. It additionally decreased its stake in Anglo American Platinum, which it’s making ready to spin out as a standalone listed firm this yr.
