The diamond industry has already been feeling the heat. Prices have slumped, Russian sanctions are threatening trade and the emergence of lab-grown gems is eating into some key traditional markets.
The entire supply chain knows exactly how an Anglo-backed De Beers works in a market it largely controls, and the prospect of a new owner could upend the way diamonds are sold. Anglo has ultimately become tired of the boom-and-bust nature of diamonds, which along with the platinum division has dragged down the entire company and eroded returns from commodities that shareholders covet, such as copper.
Some also expressed concern about De Beers’s ability to fund expansions at Jwaneng, its most important mine in Botswana. ADVERTISEMENT CONTINUE READING BELOW De Beers is trying to alleviate those fears. Chief executive officer Al Cook on Tuesday told sightholders that a new ownership will allow the company to be more flexible in the way it operates, according to a copy of a memo seen by Bloomberg. It also said any changes will likely take months, or even years.
For now, those challenges are pretty big. De Beers made just $72 million in core profit last year, down from $1.4 billion a year earlier. Still, Anglo CEO Duncan Wanblad said Tuesday that the market is expected to recover and the company wouldn’t rush to sell the business at the bottom of the market.