Anglo American’s $2.9B De Beers Write-Down: What It Means for the Market

Anglo American Restructures Amid Diamond Market Decline

Global mining giant Anglo American has written down the value of its De Beers diamond business by $2.9 billion, marking the second major write-down in two years. This move comes as part of an ambitious restructuring plan, which aims to refocus the company on copper and iron ore while offloading non-core assets.

Why Did Anglo Write Down De Beers?

The diamond industry has been facing a steep decline in prices, driven by:

• The rise of cheaper lab-grown diamonds reducing demand for natural diamonds.
• Weaker consumer spending in China, a major diamond market.
• A decade-long downtrend in diamond prices, impacting profitability.

These factors have eroded De Beers' value, prompting Anglo American to reduce its carrying value to approximately $4 billion.

Anglo American’s Restructuring Strategy

After fending off a $39 billion takeover bid from BHP, Anglo American committed to streamlining its business by divesting non-core assets. Key developments in the restructuring include:

• Sale of steelmaking coal assets
• Planned sale of its nickel business
• Spin-off preparations for its platinum division
• Exploration of selling or listing De Beers

However, offloading De Beers has been a challenge. CEO Duncan Wanblad acknowledged that progress in the first half of 2025 may be slow, with potential improvements in the second half.

Interest in De Beers: Who Might Buy?

While Anglo has received unsolicited inquiries, the company has not yet launched a formal sales process. This delay was partly due to finalizing key licensing agreements with Botswana, which owns 15% of De Beers. Botswana’s President has expressed interest in increasing the country’s stake, adding another layer of complexity to a potential sale.

Impact on the Global Mining and Commodity Market

Anglo’s restructuring could send ripples across the mining industry, influencing:

• Diamond markets, as uncertainty around De Beers’ future persists.
• Stock prices, with Anglo’s shares rising 5% on restructuring progress.
• Copper and iron ore sectors, as Anglo shifts focus to these core commodities.
• Potential new acquisition bids, with analysts speculating that a leaner Anglo could attract new takeover interest.

Conclusion: How Will This Affect the Broader Market?

The $2.9 billion write-down reflects ongoing struggles in the natural diamond industry and the broader commodity sector’s shifting landscape.

As Anglo prioritizes high-growth sectors like copper and iron ore, investors will closely watch its restructuring progress. Additionally, stock markets in the US, UK, Europe, and Asia may react to shifting demand in the mining sector, particularly in metals essential for green energy and industrial development.

If Anglo successfully offloads De Beers and strengthens its core business, it could emerge more competitive—but its leaner structure might also attract new acquisition bids from major mining firms looking to expand. The next 12 months will be critical in determining Anglo’s long-term position in the market.

Source: (FT.com)