Anglo American considers listing De Beers in London as part of strategy to ‘unlock significant value’
Anglo American has today set out what it has called a “clear, compelling and decisive plan” to unlock shareholder value, which could include an initial public offering of its diamond business De Beers with London in the running for the IPO.
The update followed yet another approach from peer BHP. On Monday, the Australian group said it had offered £34bn to acquire its smaller, London-listed peer, or around £27.53 per share. That was up from approximately £25 per share in last month’s original offer.
Anglo said it had assessed BHP’s revised non-binding offer but was still “significantly” undervaluing the company’s assets and prospects. Anglo reiterated that the structure was “highly unattractive” for shareholders.
We expect that a radically simpler business will deliver sustainable incremental value creation through a step change in operational performance and cost reduction
As it set out its stall to remain independent, in today’s strategy update, Anglo said it planned to “implement a number of major structural changes” to simplify its portfolio and deliver growth over the long term.
Anglo said it would demerge or sell its De Beers diamond business, separate its Anglo American Platinum Ltd. South African unit and sell its coking coal mines in Australia.
Kumba Iron Ore, the other South African arm, is going to remain part of the company.
Anglo American took control of De Beers in 2011 when it acquired the 40 per cent of the business it did not already own for $5.1bn (£4.1bn) from the Oppenheimer family. However, its link with the producer goes back 100 years. It first became a shareholder in 1926.
Despite the entity’s role as a trophy asset, it has struggled to live up to expectations and has looked increasingly out of place in the wider group as the miner has doubled-down on copper and iron ore.
What’s more, recently, the diamond producer’s earnings have come under pressure from the rise of lab-grown diamonds, which have disrupted the market De Beers once had almost complete control over. For fiscal 2023, the company reported negative earnings before interest and tax of -$252m (£201m).
De Beers said it would outline a new strategy later this month.
The company also said that it would slow spending on the giant Woodsmith potash mine in North Yorkshire.
Anglo spent £405m on acquiring Sirius Minerals, which originally owned the mine in early 2020 but later wrote down the value of the $9bn (£7.2bn) project by $1.7bn (£1.35bn). It had been spending around $1bn a year on the project, but this will now be pared back to $200m (£159m) in 2025 and nothing in 2026.
It said it would look to bring in one or more strategic partners to syndicate costs on the project.
Chief executive Duncan Wanblad said: “Our decision to focus Anglo American’s portfolio in our world-class resource asset base in copper and premium iron ore — while retaining our crop nutrients optionality at Woodsmith — marks a major new phase in executing our strategy.
“We expect that a radically simpler business will deliver sustainable incremental value creation through a step change in operational performance and cost reduction,” Wanblad added.