Editor’s Note
Anglo American has announced plans to divest De Beers, the world’s largest diamond company, as part of a strategic refocus on core commodities like copper and iron ore. This follows its recent rejection of a takeover bid from BHP.
British mining giant Anglo American announced on the 14th its plan to sell De Beers, the world’s largest diamond company within its group. This move comes after rejecting a takeover proposal from rival BHP, with the aim of focusing management resources on more stable growth sectors like copper and iron ore.
Analysts point to price competition from cheaper lab-grown diamonds and weak demand, particularly in China, as factors surrounding the potential sale of De Beers, which has long dominated the global diamond market.
De Beers was founded in 1888 by British colonial politician Cecil Rhodes. For many years, it monopolized the trade of South African diamonds, from mining to jewelry sales. Since 2011, Anglo American has held the majority stake in the company.
Paul Zimnisky, a US-based diamond industry analyst, pointed out that diamond market prices have fallen 25-30% from their peak in the first quarter of 2022.
he told AFP.
During the COVID-19 pandemic, wealthy individuals, unable to travel or dine out, purchased diamonds, making the sector outperform other luxury goods. However, post-pandemic demand has not recovered as strongly as other commodities.
Experts cite the rise of cheaper lab-grown diamonds as one reason, which has eroded the lower-priced segment of the market.
Zimnisky says the market share of lab-grown diamonds, which was less than 1% of the global diamond jewelry market a decade ago, has now grown to over 20%. Their price can be less than one-tenth that of natural diamonds, attracting consumers with their affordability.
Another issue is the slump in demand in China, the world’s second-largest diamond consumer after the United States. Personal consumption in China has yet to recover from the post-COVID crisis.
However, another industry analyst, Edahn Golan, suggests that Anglo American’s plan might be “short-sighted.”