Anglo American Plc is in advanced negotiations to sell its 85% controlling stake in De Beers for approximately $1 billion, according to reports — a figure that underscores a precipitous collapse in the value of a business that once commanded an $18 billion valuation and a near-total grip on the global diamond trade.
The potential transaction would transfer ownership of the iconic diamond producer to the Global Diamond Consortium (GDC), an investment vehicle led by Gareth Penny, a former Chief Executive Officer of De Beers.
Bloomberg reported that the proposal envisages participation by major diamond traders as well as the governments of Namibia and Angola, although neither government has publicly confirmed its involvement.
The proposed deal structure includes an upfront cash payment of approximately $750 million, followed by a deferred payment of around $250 million.
The transaction would also feature earn-out provisions tied to De Beers’ future financial performance, alongside a planned $500 million capital injection by the consortium to support the company’s ongoing operations. Those terms have not been finalised and remain subject to change.
The decision to divest De Beers comes as the luxury diamond market navigates one of its most severe and sustained downturns in modern history, with rough diamond prices tumbling under the weight of weakening macroeconomic conditions and a fundamental shift in consumer behaviour.
A primary driver behind the market slump is the rapid ascent of lab-grown diamonds, which have captured significant market share by offering substantially lower-priced alternatives to natural stones, eroding demand for mined diamonds at the premium end of the market.
The challenge has been compounded by a sharp decline in luxury spending across China, historically one of the industry’s most reliable and highest-growth consumer markets.
Anglo American’s drive to sell its diamond business accelerated after the mining group successfully repelled BHP Group’s unsolicited takeover approach — valued at approximately $50 billion — in early 2024.
In the aftermath of that bid, Anglo committed to a sweeping portfolio overhaul, pledging to shareholders that it would divest non-core assets, including De Beers, its platinum operations, and its steelmaking coal business.
Following the launch of a formal sale process, Anglo American identified Gareth Penny’s Global Diamond Consortium as its preferred bidder for the De Beers stake.
However, negotiations are continuing, and the proposed transaction has not been finalised.
When approached for comment on the reported $1 billion negotiations, representatives for both Anglo American and the Penny-led consortium declined to respond, reflecting the confidential nature of the discussions.
Bloomberg also noted that any completed deal would require the buying consortium to reach a separate agreement with Botswana. The southern African nation, which holds a 15% stake in De Beers and vies with Russia as the world’s largest diamond producer by value, is seeking to increase its ownership in the company.
While Botswana’s President Duma Boko has previously stated that the country wants majority control of De Beers, people familiar with the government’s thinking told Bloomberg that Botswana may ultimately accept a larger minority holding rather than insisting on outright control.
The reported $1 billion valuation marks a dramatic erosion in the equity worth of a business that for decades held a near-monopoly over the global diamond trade.
De Beers was valued at more than $18 billion in 2001, when Anglo American and the Oppenheimer family took the company private in a landmark deal.
A decade later, in 2011, Anglo American acquired the Oppenheimer family’s remaining 40% stake in a transaction that valued De Beers at close to $13 billion, cementing Anglo’s dominant position in the diamond sector.
As market conditions deteriorated over subsequent years, Anglo American recorded three separate impairment charges over three consecutive years. By February of this year, the company had reduced De Beers’ carrying value on its balance sheet to $2.3 billion.
Should the deal be finalised at approximately $1 billion, it would bring Anglo American’s era as the controlling shareholder of De Beers to a close at a fraction of the value the asset once represented — a denouement that illustrates the structural pressures reshaping the global natural diamond industry.
The potential involvement of Angola and Namibia as participants in the GDC consortium adds a significant sovereign dimension to the transaction, reflecting both governments’ strategic interest in securing a stake in one of the most influential diamond businesses in the world.
Angola, through state diamond company Endiama, is one of Africa’s major diamond producers, while Namibia operates a long-standing partnership with De Beers through the Namdeb joint venture, which mines alluvial and offshore deposits along the country’s Atlantic coast.
The inclusion of major diamond traders in the consortium alongside sovereign government investors suggests the GDC is designed to bring together the full supply-chain ecosystem of the natural diamond trade under a single ownership structure.
The earn-out mechanism tied to De Beers’ future performance indicates that the final purchase price could exceed the headline $1 billion figure if market conditions for rough diamonds recover — a scenario that would depend heavily on reversing the structural decline in natural diamond demand relative to lab-grown alternatives.
The $500 million capital injection planned by the consortium would be critical to stabilising De Beers’ operational capacity, which has been strained by sustained revenue pressure and the impairment charges recorded on Anglo American’s books in recent years.
The outcome of negotiations — including the terms agreed with Botswana and the confirmation or otherwise of Angola’s and Namibia’s participation — is likely to determine not only the future ownership structure of De Beers but also the broader trajectory of Africa’s natural diamond industry in the years ahead.
Source: Business Insider Africa / Original article: https://africa.businessinsider.com/local/markets/how-africas-diamond-giant-de-beers-fell-from-an-dollar18-billion-empire-to-a-dollar1/wgrvxjg
