Anglo could take writedown on De Beers after diamond slump

Anglo American Plc said it could take an impairment on its De Beers diamond unit after the sector was hit by a collapse in prices last year and any recovery this year is expected to be slow.

Anglo said Thursday it was assessing its carrying value of De Beers, which was unprofitable in the second half of 2023.

The diamond sector almost came to a complete standstill in the second half of last year as De Beers and Alrosa PJSC — the two biggest miners — all but stopped supplies in a desperate attempt to stem a slump in prices. While those efforts helped the market to pick up a bit, it’s unclear how much appetite trade buyers currently have.

The industry has been whipsawed since the start of the pandemic. It was one of the great winners as stuck-at-home shoppers turned to diamond jewelry and other luxury purchases. But demand quickly faded as economies reopened, leaving many in the trade holding excess stock that they had paid too much for.

The cooldown rapidly escalated as the crucial US market wobbled under rising inflation. In addition, consumer confidence in key growth market China was hurt by a property crisis, while competition from lab-grown diamonds increased.

De Beers Chief Executive Officer Al Cook said earlier this week that while he expected the market to recover this year, it would be a gradual process.

Anglo bought the Oppenheimer family’s 40% stake in De Beers for $5.1 billion in 2012, increasing its holding to 85%. Botswana owns the rest.