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Daily Maverick
31-07-2025
- Business
- Daily Maverick
Anglo still favours De Beers sale, IPO option could include JSE primary listing
The format and timelines of Anglo American's disposal of De Beers remain up in the air, underscoring the arduous nature of offloading the asset at a time when the once-glittering diamond industry is fast losing its shine. Anglo CEO Duncan Duncan Wanblad provided an update on the slow-motion De Beers disposal on Thursday when the company unveiled its interim results, saying that a trade sale was still the preferred option but an initial public offering (IPO) remained a possibility. The company is preparing for one or the other – a 'dual track' approach – against the backdrop of a prolonged rough patch in the natural diamond sector, which faces an existential crisis from lab-grown gems and shifting consumer patterns. 'Our preferred exit route is still via a trade sale. We certainly have a fair amount of very credible interest in the business, it is of course one of the world's most iconic brands and it's still a business that consists of some fantastic assets,' Wanblad said on a conference call with journalists. Wanblad acknowledged the 'current turmoil in diamond markets' but said Anglo's view was that the bottom of that cycle had been reached. 'If that (a trade sale) doesn't come together, we have to keep the options open for the dual track and therefore work is carrying on in parallel with setting up the business for an IPO at the right time,' he said. On that front, Wanblad said Anglo was still considering the best home for a primary listing, with three main contenders: London, Johannesburg or New York. 'It's a very special business and I think it would attract an enormous amount of interest from the right types of shareholders, and it's important for us to get that right,' he said. In terms of the timeline, Wanblad said that if the right buyer was found for a trade sale 'it would not be impossible to have this done in the next six to nine months'. For the IPO, the timing would hinge on 'some visible strength coming back to the market'. So, the format and timelines of Anglo's disposal of De Beers remain up in the air, underscoring the arduous nature of offloading the asset at a time when the once-glittering diamond industry is fast losing its shine. What this means A De Beers IPO with a primary listing in Johannesburg could add some sparkle to the sagging listings fortunes of the JSE – unless it turns out to be a damp squib. For Anglo, it remains a costly and time-consuming distraction from its pivot to a few key commodities. And for Botswana, the stakes are sky high. Long regarded as an African success story with a stable state and investment-grade ratings, its fortunes are sinking in tandem with diamonds – highlighting the dangers of dependence on a single commodity. The resource curse that has long bedevilled oil-producing African nations such as Angola is now casting its spell on Botswana. It must be said that a 'dual track' approach is costly – lawyers and investment bankers don't come cheap, and the fact that both a sale and IPO remain in play highlights the uncertainty of how all of this will play out. De Beers remains a drain and the poor diamond market accounted for a $500-million hit on Anglo's interim earnings, which were disappointing with a 55% fall in earnings per share. The bottom line: it is not a great time for either a sale or an IPO for the world's most famous diamond brand. 'Diamond prices remain stuck at low levels and have not shown signs of recovery,' Brendon Verster, an economist at Oxford Economics, noted in a recent commentary. De Beers' latest production report showed that diamond output in southern Africa cratered more than 33% in the second quarter of this year compared with the previous three months. Among other things, this bodes ill for the lacklustre economy of Botswana, which has expressed interest in upping its 15% share in De Beers to a controlling stake. Wanblad said on Thursday that Anglo was in talks with De Beers about increasing its stake but the country would not get a discount. And Botswana's deteriorating financial situation raises questions about its ability to finance such a transaction, which would be questionable: its economy is sinking with diamond prices and so it seems like a case of the country wanting to buy the anchor that is dragging it down into the abyss. 'Global diamond price conditions remain gloomy, with the impact being most pronounced in Botswana. The landlocked economy is running the risk of contracting again this year, with the Q1 GDP figures not inspiring any confidence,' Verster of Oxford Economics said in his research note. 'Given the ongoing diamond market woes, FX reserves have taken strain, dipping from $4.4bn in May 2024 to $3.1bn in May 2025.' One route for Botswana could be the debt markets. Unlike, say, South Africa, it has a coveted credit rating that is well above investment grade. But Moody's and S&P are expected to downgrade Botswana, though not below investment grade. In a much smoother process, Anglo recently demerged its platinum unit which now trades as Valterra Platinum – a launch that comes as platinum group metals are on the rebound. Will diamond prices rebound? Aside from the challenge presented by the lab-grown versions, consumers, for a range of reasons, are just no longer as drawn to the sparkle of diamonds as they once were. It all points to a potential fire sale or a possible flop of an IPO. DM
Yahoo
21-02-2025
- Business
- Yahoo
Anglo writes down De Beers, pressing on with business overhaul
By Clara Denina and Felix Njini LONDON (Reuters) -Anglo American posted a $3.1 billion loss on Thursday after a writedown of its De Beers diamond business, as it presses on with shedding unwanted assets. Anglo aims to focus on copper and iron ore assets after BHP's failed takeover attempt last year. That means spinning off its platinum and diamond businesses after the sale of its coal and nickel mines. CEO Duncan Wanblad also said the company was exploring jointly running its Los Bronces copper mine in Chile with that of state-backed Codelco's Andina operation. The plan, which analysts said would cut costs and boost production of the two adjacent mines, helped cheer investors. Anglo's London-listed closed up 2.5%. "Two things stood out today - the cost savings are really showing and the other big news for Anglo is the Chilean joint venture," said George Cheveley, portfolio manager at Ninety One. Wanblad said the process to sell or divest diamond specialist De Beers would accelerate in the second half of the year. The prevailing market downturn means the process to divest the diamonds business could only pick up in the second half of this year, the CEO said. A $2.9 billion De Beers writedown means that Anglo has been able "to bring the carrying value of this business to a more reasonable $4.1 billion," Jefferies analysts said. COMPETITION FROM LAB-GROWN STONES The $3.1 billion loss followed a profit of $283 million for 2023, as metal prices retreated and diamond sales struggled against competition from lab-grown stones. Other diversified miners including BHP, Rio Tinto and Glencore also reported a second consecutive year of declining earnings due to weaker metal prices, following two record years when prices soared. Anglo booked a $3.8 billion impairment, mostly related to the diamond unit, and declared a dividend of $0.64 per share, or about $800 million, down from $0.96 a share previously. De Beers has a stockpile of gems worth about $2 billion, amid a persistent lower price environment, Wanblad said. Anglo would continue to evaluate either selling or listing De Beers to exit the diamonds business responsibly, he added. The CEO said that to list and divest the unit, market conditions have to be right, so he would prefer a speedier sale to a trade buyer. "The market conditions have to be suitable for that to happen effectively," Wanblad told Reuters. "(But) we're probably more likely than not to be able to execute on a trade sale than on a listing in the short run." The miner's joint venture plan in Chile was 13 years in the making. "(Even though) the synergies were very obvious, there's a lot of pre-work for these things to come together," Ninety One's Cheveley said. The mining sector has seen a jump in M&A activity, which stood at around $26 billion in 2023, and jointly operating assets is also a way to share risks. Anglo on Tuesday said it's selling its Brazilian nickel business for up to $500 million. It has so far raised about $5.3 billion from sales of its assets that the CEO said would be used to cut down debt. Sign in to access your portfolio
The Guardian
20-02-2025
- Business
- The Guardian
Anglo American writes down value of diamond firm De Beers by $2.9bn
The world's biggest diamond miner De Beers cost its parent company almost $3bn last year as the growth in lab-grown stones continues to take the shine off the industry. Anglo American was forced to write down the value of the renowned gem producer for a second consecutive year as its chief executive admitted that the diamond markets had proved 'really, really difficult for the company'. Duncan Wanblad, the chief executive of the FTSE 100 miner, added that its plan to shrug off De Beers as part of a radical strategy to dismantle parts of the 108-year-old group – which coined the slogan 'a diamond is forever' in 1947 – may be delayed. He added that the company did not expect 'much traction or progress' on its plans to spin off De Beers in the first half of the year, which could be via a trade sale or a listing via an IPO or demerger, but it might 'pick up' towards the end of the year. Diamond prices have slumped over the past decade because of the rising popularity of cheaper, lab-grown versions and a slowdown in consumer spending in China. In response Anglo has taken impairments of $2.9bn on De Beers last year, after a $1.6bn writedown of the company in its annual results last year. This drove Anglo to a $3.1bn net loss in 2024, from a $283m profit the previous year. The latest writedown of De Beers, which once controlled 90% of the world's diamonds, means the company is now valued at $4bn. Anglo laid bare the ongoing losses at De Beers after setting out a plan last year to sell the diamond business as part of a historic corporate overhaul to defend the company against a £34bn takeover plot by the Australian miner BHP. Anglo hopes to guard the company against further unsolicited advances from BHP, which attempted to force the board to offload two Johannesburg-listed subsidiaries, the platinum miner Amplats and the iron ore miner Kumba, in order to complete a takeover. Instead Anglo hopes to spin off De Beers alongside the 'orderly' sale or demerger of its South African platinum business and its steel-making coal assets to focus on its more profitable copper and iron ore mining. Sign up to Business Today Get set for the working day – we'll point you to all the business news and analysis you need every morning after newsletter promotion Wanblad said the company had received unsolicited interest in the diamond business but a formal process had not started. At least part of the company is expected to be purchased by the government of Botswana, which hosts many of the company's diamond mines.
