Impairment is expected at De Beers this year as the diamond business continues to experience declining sales amid weak demand.
As a result, the parent company Anglo American will review the value of De Beers as efforts to exit the diamond business continue.
De Beers, the world’s largest diamond producer was put up for sale last year as part of Anglo American’s process to simplify its portfolio following a takeover bid from BHP.
Last year, Anglo reduced De Beers’ book value by $1.6 billion to $7.6 billion as a result of persistently weak diamond demand.
Something which might happen once more since the diamond sector is yet to recover.
De Beers rough diamond production decreased by 26 percent to 5.8 million carats in 2024, compared to the previous year.
The 2025 production guidance has been revised to 20–23 million carats, down from the previous estimate of 30–33 million carats- this reflects “challenging rough-diamond trading conditions.
Therefore Anglo is now assessing the impact of market conditions and the decline in Chinese demand.
The crisis in the diamond world hit De Beers’ business in 2024 with sales value falling by 25 percent to $2.72 billion for the year on a consolidated basis, which excludes rough sales by joint-venture partners.
The average selling price rose 3 percent to $152 per carat, reflecting a shift in the sales mix to higher-value goods.
The average price index, which tracks like-for-like rough prices at sights across the entire year, fell 20 percent when compared with 2023.
In 2023, De Beers actively reduced its production in response to the downturn, resulting in full-year output declining 22 percent to 24.7 million carats.
Anglo’s chief executive Duncan Wanblad stated earlier this week that they plan to exit De Beers by the end of the year.
“At De Beers, difficult rough-diamond trading conditions mean that we have reduced production guidance in 2025 and 2026 to reflect our focus on value, working capital efficiency and cash generation,” said Wanblad.
Consolidated sales more than doubled to $543 million in the fourth quarter of 2024, but this reflected extremely weak conditions in the same period a year earlier, when sales came to $213 million.
Production dropped 26 percent year on year to 5.8 million carats.
Trading conditions remained challenging through the fourth quarter, as retailers were cautious with their purchases and inventory levels were above normal therefore denting demand for rough diamonds.
Further, Anglo anticipates a marginal loss for the diamond business in 2024.
“De Beers continues to focus on managing working capital, and despite low sales volumes, inventory has reduced slightly year on year through managing purchases and downstream stocks. The business is also “implementing actions to further manage cash flow, spending and inventory levels in 2025,”said Anglo in a statement.
In December 2024, it was allegedly reported that De Beers was in possession of diamond stockpiles worth $2 billion, the largest since the 2008 global financial crisis.
In November, Anglo announced agreements to sell its steelmaking coal business for up to $4.9 billion, while its platinum business was also put on offer.
