Editor’s Note
Anglo American’s latest financial report underscores the mounting pressures within the diamond sector, as reflected by a $2.9 billion impairment on its De Beers unit. This marks the second consecutive year of significant write-downs, pointing to broader market challenges and strategic uncertainties facing the iconic brand.
Recently, Anglo American released its 2024 fiscal year financial report, revealing significant challenges facing its diamond business, De Beers. The report indicates that due to changes in the market environment and internal adjustments, Anglo American has impaired the value of De Beers for the second consecutive year. The 2024 impairment amounted to a substantial $2.9 billion, highlighting the downturn in the diamond market and the uncertainty surrounding De Beers’ prospects.
As one of the world’s largest diamond mining companies, De Beers has long been a key asset for Anglo American. However, recent changes in the market environment have placed immense pressure on De Beers. The rapid rise of lab-grown diamonds, which are lower-priced and comparable in quality, has gradually eroded the market share of natural diamonds. Furthermore, declining demand in China, once the world’s second-largest diamond consumer market, has exacerbated De Beers’ difficulties.
Data shows that De Beers’ total revenue in 2024 fell by 23% year-on-year to $3.29 billion. Rough diamond sales decreased by 25%, dropping from $3.6 billion to $2.7 billion, while sales volume also declined by 28%.
Faced with continued losses and a sluggish market, Anglo American has decided on a strategic adjustment, shifting its focus towards resources with greater growth potential, such as copper and iron ore.
Despite the ongoing difficulties in the diamond market, he remains cautiously optimistic about the future. De Beers’ diamond production fell by 22% in 2024, closely linked to reduced demand in the Chinese and US markets. In response to market challenges, De Beers has revised its 2025 production target down from the original 30-33 million carats to 20-23 million carats.
Despite weak market demand, Anglo American believes that as the market gradually recovers, De Beers’ production will rebound in the coming years. Production is expected to recover to 28-31 million carats by 2026 and 2027. The report notes that the diamond market downturn is not only due to declining demand but also significantly impacted by competition from lab-grown diamonds. With advancements in lab-grown diamond technology, an increasing number of consumers are opting for lower-priced, high-quality artificial diamonds.
Anglo American stated in its financial report that although natural diamond demand is affected in the short term, as lab-grown diamond supply increases and market competition intensifies, the market share for natural diamonds is expected to gradually recover. Additionally, with falling retail prices for lab-grown diamonds in the US market squeezing retailer profit margins, this may encourage consumers to return to the natural diamond market. The Group believes that while lab-grown diamonds have impacted natural diamond demand in the short term, this effect may diminish in the future.
Anglo American’s strategic adjustment is not only a response to the diamond market’s difficulties but also preparation for future market recovery. By divesting non-core businesses like De Beers, the company plans to focus on copper and iron ore resources.
