Diamond Crash: De Beers Is About to Be "Sold to Africa"

All ownership of the global diamond giant De Beers is experiencing a historic turning point! As the global diamond market faces a downturn due to weak demand and the impact of synthetic diamonds, most of its shareholders, Anglo American, are accelerating their sale plans, with the final buyer highly likely to be a consortium composed of African sovereign governments and private capital.

On February 9, according to the Financial Times, Duncan Wanblad, CEO of Anglo American, stated that despite the ongoing 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 smooth,” and it is “almost certain” that the Botswana government will acquire a larger ownership stake in the company.

The report indicates that this transaction is in the final stages of the second-round bidding, with buyers “very likely to be a consortium” formed by government and private entities. Besides Botswana, the Angolan government has expressed interest in acquiring 20-30% of the shares, and Namibia is also weighing whether to bid for a minority stake.

Faced with intensified competition from synthetic diamonds and U.S. tariffs on polished Indian diamonds, Anglo American issued a warning this month that it may be forced to write down De Beers’ asset value for the third consecutive year. Although analysts question whether this is the market bottom, Anglo American’s management insists that divesting this struggling diamond asset is the best way to ensure shareholder returns.

Multiple governments compete for diamond assets

The Botswana government plays a pivotal role in this sale. Reportedly, the country currently holds a 15% stake in De Beers, and President Duma Boko has previously publicly expressed a desire to increase this share.

Wanblad straightforwardly said, “Botswana is the key decision-maker here because they are a major shareholder in this business.” Once Anglo American identifies its preferred bidder, the company will need to negotiate terms not only with the buyer (individual or consortium) but also reach an agreement with the Botswana government.

The report points out that this special equity 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 share in this industry giant, pushing ownership further toward the African continent.

It was reported that during the Indaba mining conference held this week in South Africa, Angola’s government officials stated that the country intends to purchase 20% to 30% of De Beers’ shares.

Meanwhile, sources familiar with the matter revealed that Namibia, which accounts for about one-tenth of De Beers’ diamond production, is also weighing whether to bid for a minority stake.

Analysts believe that this multi-government involvement confirms that the final buyer is highly likely to be a consortium formed through a “public-private partnership” model.

Diamond market faces a perfect storm

De Beers’ predicament reflects the severe challenges faced by the entire natural diamond industry.

In addition to the structural threat of cheap synthetic diamonds replacing natural ones and the impact of luxury spending on demand, U.S. tariffs on Indian (a major diamond polishing hub) imports have further hindered trade flows, preventing raw materials from flowing “as naturally as before.”

Given that the “difficult” market environment continued to worsen last year, Wanblad admitted that the timeline for completing the sale will “mainly depend on the timing of financing.”

Although some analysts criticize that selling assets during a market low could lead to value loss, Anglo American is resolute. Wanblad emphasized that the company must focus on businesses that generate the best returns for shareholders, “and this does not include holding onto De Beers.”

Furthermore, the upcoming annual results release next week highlight the risk of asset impairments faced by De Beers, further emphasizing the urgency for Anglo American to divest this asset.

Risk warning and disclaimer

Market risks are present; investments should be cautious. This article does not constitute personal investment advice and does not consider individual users’ specific investment goals, financial situations, or needs. Users should consider whether any opinions, viewpoints, or conclusions in this article are suitable for their particular circumstances. Invest accordingly at your own risk.