Editor’s Note
This article discusses a potential historic shift in the ownership of De Beers, driven by market pressures and strategic divestment. The reported move underscores the evolving dynamics within the global diamond industry.
The ownership of global diamond giant De Beers is undergoing a historic shift! As the global diamond market faces a downturn due to weak demand and the impact of lab-grown diamonds, its majority shareholder, Anglo American, is accelerating plans for its sale. The ultimate buyer is highly likely to be a consortium composed of African sovereign governments and private capital.
On February 9, according to the Financial Times, Anglo American’s Chief Executive Duncan Wanblad stated that despite the continued deterioration of the diamond market, the company still hopes to complete the sale of De Beers within this year. He revealed that the sale process is “relatively smooth” and it is almost certain that the government of Botswana will secure a larger ownership stake in the company.
The report indicates that the deal is in the final stages of the second round of bidding, with the buyer “likely to be a consortium” jointly formed by government and private entities. Besides Botswana, the government of Angola has expressed interest in acquiring a 20% to 30% stake, and Namibia is also weighing a bid for a minority interest.
Hit by multiple factors including intensified competition from lab-grown diamonds and US tariffs on polished diamonds from India, Anglo American issued a warning this month that it may be forced to write down the asset value of De Beers for the third consecutive year. Although analysts question selling at what appears to be the market bottom, Anglo American’s management insists that divesting this struggling diamond asset is the best path to safeguard shareholder returns.
The government of Botswana holds a pivotal position in this sale. According to reports, the country currently holds a 15% stake in De Beers, and its President Duma Boko has previously publicly stated his desire to increase this shareholding.
Once Anglo American identifies a preferred bidder, the company will not only need to negotiate terms with the buyer (individual or consortium) but must also reach an agreement with the Botswana government.
The report points out that this unique shareholding structure means that any decision regarding De Beers’ future cannot bypass the will of Gaborone (the capital of Botswana).
Beyond Botswana, other African diamond-producing nations are actively seeking a slice of this industry giant, pushing ownership further towards the African continent.
The report states that during the Indaba mining conference held in South Africa this week, Angolan government officials indicated the country’s interest in purchasing a 20% to 30% stake in De Beers.
Meanwhile, according to informed sources, Namibia, responsible for producing about one-tenth of De Beers’ diamonds, is also weighing whether to bid for a minority stake.
Analysis suggests that this scenario of multiple government involvements confirms that the final buyer is highly likely to be a consortium appearing in a “public-private partnership” form.
De Beers’ predicament reflects the severe challenges facing the entire natural diamond industry.
In addition to facing the structural substitution threat from cheaper lab-grown diamonds and weakened demand from luxury consumer spending, US import tariffs on India (a major diamond polishing center) have further hindered trade flows, preventing raw materials from “flowing naturally as they used to.”
Given that the “difficult” market environment continued to deteriorate last year, Wanblad admitted that the final timeline for completing the sale would “depend largely on the timing of financing.”
Although some analysts criticize that selling assets at a market low may lead to value loss, Anglo American is determined to proceed. Wanblad emphasized that the company must focus on businesses that create the best returns for shareholders, “and that does not include continuing to hold De Beers.”
Furthermore, the risk of an asset write-down facing De Beers in the annual results to be released next week further highlights the urgency for Anglo American to divest this asset.
