Anglo American has massively downgraded the value of De Beers on its balance sheet, suggesting a bargain might be in the offing for its many bidders. Which might make the sale easier and quicker, right?
Not so fast, say some analysts.
Of course, this is not an obvious conclusion, given that after nearly two years, the sale of the once-formidable diamond business is still dragging along, while the assault of lab-grown gems on the market has intensified. Take the fact that a third cut to De Beers’ value last year – from $4.1bn to a miserable $2.3bn – was largely to blame for parent Anglo American’s $3.7bn full-year loss.
Yet, says veteran mining consultant Peter Major: “Prudent accounting requires one to regularly update what something is worth right now, if they had to sell it in a fire sale. But I doubt Anglo will have a fire sale. There is no need. They’d be stupid if they did.”
His view is partly borne out by the sheer number of potential bidders for the world’s largest and most storied diamond mining company now lining up out the door. Though, as Anglo CEO Duncan Wanblad told Currency at the Mining Indaba: “It’s not a classic auction.”
“The first phase was non-binding bids. The second one is binding bids with a handful of people that you kind of take through in a race to the end.”
Three-part sale?
Later, presenting Anglo’s 2025 results, Wanblad revealed “there is a possibility that … our share [of De Beers] will be sold in three parts, potentially, or two parts, potentially. That depends on where we get to in the negotiation in the next few weeks.”
The state of the market will be a key issue for any buyer, as well as what Wanblad calls “the very specialist nature” of the business.
“As I’ve said before, there isn’t one big strategic entity that can come in and buy a business the size and shape of De Deers,” he said.
Consider that in January, De Beers was forced to cut diamond prices again (it did so late 2024). Such is the success of lab-grown diamonds that they now make up between 20% and 25% of the total diamond jewellery market, and almost 50% of the engagement-ring market.
And then there is the complication of its current 15% shareholder, the Botswana government, which makes it not just a material shareholder but, ultimately, the owner of two of De Beers’ biggest assets.
“From the end of phase one, we deliberately chose to engage with Botswana in coming up with a shape and structure of an outcome, bearing in mind that, whoever buys the business, Botswana becomes key,” said Wanblad.
Running mates
So: who is in the running?
The most interesting potential players are the governments of Botswana and Angola; both own huge diamond deposits and both are understood to have submitted bids for majority shares in the diamond miner, though Angola has now settled on a 20%-30% stake.
Two other separate contenders with intimate diamond knowledge are former De Beers CEOs Bruce Cleaver and Gareth Penny. While it was speculated for a while that the two would be bidding – though not together – it has now been officially confirmed.
Neither could speak to Currency for comment.
The other figures in the running include Australian mining veteran Michael O’Keeffe; billionaire Anil Agarwal, the chair of Vedanta Resources; Indian diamond firms KGK Group and KapuGems; and Qatari investment funds.
This hodgepodge of executives and governments underscores the commonly held view that there will be a partnership takeover of Anglo’s stake. Yet Major points out that a consortium of both is fraught with risk. The combination of governments and individuals would lead to a battle of wills and distract from the real work needed at De Beers, he fears.
And then there’s the financial aspect.
“Botswana doesn’t have any money, Angola has maybe got a little bit of money, South Africa has got no money, and would these three get along? I doubt it,” he says.
One-man job?
Rather, Major says, a consortium would have to be led by a CEO.
“Now, Gareth Penny, he knows De Beers inside and out. People think if he can put together a consortium that backs him and his policies and lets him run it, it may be successful.”
Speaking to Miningmx, James Campbell, MD of Botswana Diamonds, said the best buyer for De Beers would have to have four prerequisites: a deep knowledge of the diamond industry; expertise in diamond marketing; deep enough pockets to fund the required expansions at the Jwaneng and Orapa mines; and strong working relationships with the governments of the African mining countries involved.
“The consortium led by Gareth Penny is the only one of the known bidders that I believe meets all these requirements,” Campbell said.
Penny spent 22 years at Anglo American and De Beers; the last five years as CEO of the diamond miner.
The Ducati of diamonds
Major sees the De Beers sale possibly going down something like the sale of Anglo American Platinum’s Rustenberg operations to Sibanye-Stillwater back in 2015. In that deal, a low upfront fee of R1.5bn was paid, with an agreement that the remaining amount was to be paid back over time. If in that time the price of platinum were to increase, the deferred total would increase too. It’s a smart way to sell off assets without taking too much of a hit.
“Anglo can sell it to Gareth Penny, and maybe Anglo keeps a 40% shareholding,” muses Major.
Above all, he is sure Anglo won’t let a coalition of African governments win the bid. “They may tell all these countries, ‘you’ve all got a chance’ but [Wanblad] doesn’t have to tell them they have a good chance or a bad chance.”
De Beers, which did so much to create the allure and desire for diamonds in the 20th century, clearly retains an aura, which Major compares to a Ferrari or a Ducati. “Only rich people can buy it … and it has high, high maintenance. But they’re beautiful, they win all the Grand Prix races.”
If the winning bidder could get De Beers roaring like a Ducati again, that would be surely something to marvel.
ALSO READ:
- Inside the strange and brilliant sale of De Beers
- Anglo’s diamond migraine
- For De Beers, are diamonds really forever?
Top image: Rawpixel/Currency collage.
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