Anglo American Confirms De Beers Is Up for Sale

Rob Bates

Confirming recent reports, Anglo American said today that De Beers will be “divested or demerged” from its portfolio.

In an online investor presentation, Anglo CEO Duncan Wanblad said he expected the sale of De Beers—as well as a number of Anglo American’s other holdings, including its platinum unit—will be completed by the end of 2025.

Spinning off De Beers will “unlock full value from its new Origins strategy, its world-class assets, and its iconic brand,” he said.

Anglo controls 85% of De Beers, while the government of Botswana owns 15%.

Wanblad declined to speculate on possible new owners for De Beers.

We’re only just starting,” he said. “There are a potential number of pathways. All of them are on the table at the moment.

He said De Beers is “a great business, and it has fantastic assets and it has an exceptional brand…. How we [sell it] will be a journey. We have to look at a number of options, in terms of a trade sale, or a demerger, but it also has to be in conjunction with one of our most important stakeholders, which is the government of Botswana.

Recent articles in multiple newspapers said Anglo was shopping De Beers to “luxury houses and Gulf sovereign-wealth funds.

Wanblad noted that any De Beers sale will not affect the company’s yet-to-be-signed 10-year contract for Botswana’s gems.

The Botswana agreement is an extremely valuable outcome for both De Beers and the government of Botswana,” he said. “We are very close to finalizing the last elements of it….

Whatever happens as far as De Beers is concerned, in a new ownership structure or an independent company spun out of Anglo American, the relationship with the government of Botswana is an absolute key component to the success of that business,” he added. “I don’t see any reason that the current agreement would change.

Diamond analyst Paul Zimnisky tells JCK he doesn’t think this is the “optimal time” for De Beers to be sold.

It can certainly be argued that the company, and larger natural diamond industry, is in a fragile state right now,” says Zimnisky. “Any changes in De Beers will be felt throughout the greater diamond supply chain. What the trade should hope for is that the acquirer has a longer-term ambition of growing the industry with proper investment. If the buyer Is more of a short-term value buyer, I would be concerned.

Zimnisky calls De Beers a “unique asset,” as it’s both a mining company and a luxury brand.

It needs a proper suitor that is motivated to take this on, make the proper investments, and continue the long legacy of this company and the natural diamond industry,” he says. “It needs someone that really believes that the diamond business has a long runway ahead with growth potential.”

De Beers Group CEO Al Cook said in a statement, “De Beers has led the diamond industry for more than a century. We have unparalleled expertise, outstanding assets across more than 20 countries, a unique sales model, and an iconic brand, synonymous with diamonds. I am confident that we will remain the diamond leader for the next century.

Today’s announcement from Anglo American opens up new possibilities under new ownership. But some things will not change. We will continue to deliver value for all our stakeholders, including our partners in Botswana, South Africa, Namibia, Canada, Angola, and other countries. In particular, we look forward to finalizing our transformational agreement with the government of the Republic of Botswana.

Cook said De Beers will unveil a new marketing strategy for diamonds at the upcoming JCK Las Vegas show.

Diamonds remain some of the most desired products around the world, and I am excited by the opportunity we have to bring their magic to a new generation,” said Cook’s statement. “With the ongoing recovery in rough diamond demand and such a positive outlook for the sector, I feel very confident in our future.

Cook discussed De Beers’ plans, including cutting $100 million from its bottom line, on the latest episode of JCK’s The Jewelry District podcast.

Anglo announced the De Beers sale as part of a larger Anglo reorganization, which will see the mining giant sell off its coal and platinum assets and focus on copper and iron ore. The platinum sale could also affect the industry, as Anglo is the primary funder for the U.S. operations of Platinum Guild International.

In the presentation, Wanblad said that Australian miner BHP’s recent offer for De Beers—which Anglo turned down—accelerated the announcement of Anglo’s reorganization, though the process had already been underway.

Anglo American has owned 85% of De Beers since 2012, when De Beers’ longtime owners, the Oppenheimer family, sold their 40% share. Traditionally, De Beers and Anglo were considered corporate siblings; Anglo was founded in 1917 by Sir Ernest Oppenheimer, the former chairman of De Beers.

In February, Anglo wrote down De Beers’ value to $7.6 billion.

(Photo courtesy of De Beers)

Source jckonline