Anglo American is reportedly in talks to sell its controlling stake in diamond producer De Beers for about $1 billion, or R16.5 billion.
The proposed price is a fraction of De Beers’ previous valuations.
Anglo has been seeking a buyer since rejecting an almost $50 billion takeover approach from BHP Group in early 2024.
However, efforts to sell the business have been slowed by a prolonged crisis in the global diamond market.
Anglo has recorded three impairments against De Beers in three years, reducing the unit’s carrying value to $2.3 billion in February.
Former CEO leads consortium
A consortium led by former De Beers chief executive Gareth Penny was reportedly selected as the preferred bidder earlier in July.
The Global Diamond Consortium includes Namibia, Angola and several major diamond traders.
Under the deal being discussed, the consortium would pay about $1 billion for Anglo’s 85% stake.
Around $750 million would reportedly be paid upfront, with another $250 million paid later.
Additional payments could be linked to De Beers’ performance after the transaction is completed.
The consortium would also inject about $500 million into the diamond company.
Diamond market under pressure
The proposed sale comes during one of the diamond industry’s deepest downturns.
Diamond prices have fallen after strong sales during the Covid-19 pandemic.
The market has also been hurt by weaker Chinese luxury spending, growing demand for laboratory-grown diamonds, trade tensions and geopolitical uncertainty.
Anglo and the consortium declined to comment on the negotiations.
The discussions are not final, and there is no guarantee that a transaction will be completed on the reported terms.
Botswana holds key stake
Botswana owns the remaining 15% of De Beers and would need to reach an agreement with the buying consortium.
The country also jointly owns Debswana with De Beers, with each party holding a 50% stake.
Debswana produces most of Botswana’s diamonds.
Botswana has previously expressed interest in increasing its De Beers shareholding.
De Beers produces about 70% of its diamonds in Botswana and also operates mines in South Africa, Namibia and Canada.
Anglo took control of De Beers in 2011 through a transaction valued at almost $13 billion.