Editor’s Note
This article discusses a potential historic ownership change for De Beers, driven by market pressures and strategic divestment. While the core report is based on credible financial news, the specific details of the buyer consortium and the final transaction remain subject to confirmation as developments unfold.
The ownership of global diamond giant De Beers is undergoing a historic shift! As the global diamond market faces a severe downturn due to weak demand and the impact of lab-grown diamonds, its majority shareholder, Anglo American, is accelerating its divestment plan. 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 CEO 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 progressing well” and it is “almost certain” that the government of Botswana will gain a larger ownership stake in the company.
The report indicates that the deal is in the final stages of the second round of bidding, and the buyer is “likely to be a consortium” jointly formed by government and private entities. Besides Botswana, the Angolan government has expressed interest in acquiring a 20-30% stake, and Namibia is also weighing whether to bid for a minority stake.
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 the timing of a sale 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 plays a pivotal role in this sale. According to reports, the country currently holds a 15% stake in De Beers, and its President Duma Boko has publicly stated his desire to increase this share. Wanblad stated bluntly that Botswana is “the key determinant here because they are a key shareholder in the business.”
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).
Besides Botswana, other African diamond-producing countries are actively seeking a piece of the 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 situation 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 due to reduced luxury spending, US import tariffs on India (a major diamond polishing hub) have further hindered trade flows, preventing raw materials from “flowing as naturally as they used to.”
Given that the “difficult” market environment continued to deteriorate last year, Wanblad acknowledged that the final timeline for completing the sale would “largely depend on the timing of financing.” Although some analysts criticize selling assets at a market trough as potentially leading to value loss, Anglo American is determined to proceed.
Furthermore, the risk of an asset write-down for De Beers in the annual results to be released next week further highlights the urgency for Anglo American to divest this asset.
