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Diamonds aren’t forever – Anglo American mulling impairment charge over struggling De Beers

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"Whilst we believe that prices have now bottomed, we expect pricing to recover more slowly than initially thought," said the CEO of Petra Diamonds.
"Whilst we believe that prices have now bottomed, we expect pricing to recover more slowly than initially thought," said the CEO of Petra Diamonds.

Embattled miner Anglo American is considering taking an impairment charge on its De Beers diamond brand as rough diamond demand may take some time to recover from its recent slump.

In the company’s 2023 production update today, it said the macroeconomic environment which saw De Beers fail to return a profit for the second half of last year was “prevailing”.

While Christmas shoppers helped boost diamond sales to $370m (£293m) during the period December 19 to January 31, this was much lower than the $454m (£387m) it reported for the same period last year.

The company today said: “Whilst there has been some improvement coming into 2024, the prospects for economic growth in many major economies remain uncertain and it may take some time for rough diamond demand to fully recover, which has led to the Group currently assessing its carrying value of De Beers.”

De Beers chief executive Al Cook recently told Bloomberg TV: “We see 2024 as a year of recovery. We expect that upturn in diamond demand to be gradual rather than sudden.”

But Anglo American’s problems are bigger than De Beers and the firm’s chief Duncan Wanblad won’t be drawn to committing to try and sell Anglo’s way out of its problems.

“Because it’s (De Beers) at the bottom of the cycle doesn’t mean it’s time to throw it out,” he told a mining conference in South Africa and reported by The Financial Times.

“I’m not looking to get rid of it [any particular businesses] I’m looking how to optimise it and make it more resilient,” he continued.

“You don’t shrink yourself to greatness in these companies.”

The company’s stock is down over 40 per cent since Wanblad took over in April 2022 and Anglo’s woes have been compounded by the relative successes of major competitors like Vale and Rio Tinto.

Even in the diamond market, other producers and merchants have a sauce that remains a recent secret to De Beers.

Earlier this week, the world’s biggest jeweller Pandora recorded high single-digit sales growth and announced a share buyback scheme.