Anglo American expects to book an impairment this year for its De Beers diamond business due to weak market conditions.
This announcement comes as the company moves forward with plans to either spin off or sell its diamond business, a key part of the major restructuring programme it initiated last year in response to a tentative £39bn ($48.56bn) takeover bid from rival BHP.
The company stated that it is undertaking an “impairment review” to evaluate the value of the diamond business.
The group said it was “assessing the impact of diamond market conditions and general fall in demand in China” and this was “likely to lead to an impairment at the full year result”, which will be published on 20 February.
While the company did not specify the potential size of the writedown, the news is expected to raise concerns among shareholders that Anglo may be at risk of selling its diamond business at a low market value, reported the Financial Times.
Last year, Anglo American reduced the diamond business’ book value by $1.6bn to $7.6bn.
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By GlobalData
De Beers’ rough diamond production fell by 26% to 5.8 million carats in the fourth quarter of 2024 (Q4 2024), as against 7.9 million carats in Q4 2023.
For the full year 2024, total production fell by 22% to 24.7 million carats from 31.86 million carats in 2023.
The 2025 diamond production forecast has been adjusted to 20–23 million carats, a decrease from the prior estimate of 30–33 million carats. Anglo also expects a marginal loss for the diamond business.
Earlier this week, Anglo’s chief executive, Duncan Wanblad, said the company intends to exit De Beers by the end of the year.
Anglo holds an 85% stake in De Beers, while the Government of Botswana owns the remaining 15%.
The global diamond market has been facing turbulence, with an oversupply of lab-grown diamonds, priced at just one-twentieth of mined diamonds. Meanwhile, demand has struggled to bounce back since the Covid-19 pandemic.
According to production figures released on Thursday, the average selling price of De Beers diamonds fell by 20% in 2024 compared with the previous year.
Currently, its diamond inventory is worth around $2bn and the company is looking to reduce it.
Wanblad said: “At De Beers, difficult rough diamond trading conditions mean that we have reduced production guidance in 2025 and 2026 to reflect our focus on value, working capital efficiency and cash generation.”
Meanwhile, the company produced 773,000 tonnes (t) of copper last year, within its guidance range of 730,000–790,000t, with the Quellaveco mine in Peru recording its strongest quarter of the year in Q4.
The company stated that its Minas-Rio iron ore operation in Brazil set a new record, producing 25 million tonnes (mt) for 2024, helping drive the company’s total iron ore production to 60.8mt for the year.
Wanblad added: “Our forward production guidance is unchanged in copper with growth in 2026 driven by higher grades in Chile, with this production level then maintained in 2027. We continue to set up the copper business for growth in subsequent years with the resumption of the smaller plant at Los Bronces and through debottlenecking at Collahuasi. Iron ore guidance is unchanged except for the impact of the tie in of the previously announced UHDMS project at Kumba in 2026.”
