Anglo American is moving forward with the sale of its De Beers diamond division as part of a broader restructuring effort initiated to ward off a takeover bid by BHP Group in 2024. The sale process, however, has been complicated by one of the deepest downturns in the diamond industry's history, driven by a post-pandemic slump, reduced luxury spending in China, the rise of synthetic diamonds, and recent geopolitical shifts, including an Iran war that has hampered financing efforts for some bidders. This downturn has led Anglo American to repeatedly cut De Beers' carrying value, from $9.2 billion in early 2023 to just $2.3 billion earlier this year.
The leading bidder is now a consortium headed by Gareth Penny, De Beers' former CEO who left in 2010. Penny's bid is centered on refocusing De Beers on the mining and marketing of natural diamonds, with the backing of some of the world's largest diamond trading companies. Other interested parties include Australian mining veteran Michael O'Keeffe and Israeli diamond trader Nir Livnat, though Livnat has faced difficulties in securing financing from Middle Eastern backers due to ongoing regional conflict. Several other potential bidders, including former De Beers CEO Bruce Cleaver and groups linked to the governments of Namibia and Angola, have withdrawn their interest, citing unfavorable market economics and an inability to justify appropriate returns.
A significant hurdle in the sale is the involvement of Botswana, which owns 15% of De Beers and is home to its largest mines. Botswana's President has expressed a desire for the country to gain majority control of De Beers, which could deter private investors. However, there are indications that Botswana might be open to doubling its current holding instead of seeking majority control. The unique structure of De Beers, with major joint ventures with the governments of Botswana and Namibia as shareholders, partners, regulators, and tax collectors, further complicates its valuation.
