Anglo American expects De Beers to suffer another impairment as the parent company carries out a review of the diamond miner’s value amid weak demand.
The mining group has also reduced De Beers’ 2025 production plan by 10 million carats to reflect “challenging rough-diamond trading conditions,” it said Thursday in its fourth-quarter operational report.
Anglo American, which is trying to sell De Beers, already wrote down the subsidiary’s book value by $1.56 billion last year, and is now assessing the impact of market conditions and the decline in Chinese demand. This “is likely to lead to an impairment at the full-year results,” which are scheduled for February 20.
De Beers’ 2024 earnings before interest, taxes, depreciation, and amortization (EBITDA) will be “marginally negative,” the parent company projected.
The crisis in the diamond world hit De Beers’ business in 2024. Sales value fell 25% to $2.72 billion for the year on a consolidated basis, which excludes rough sales by joint-venture partners. The average selling price rose 3% to $152 per carat, reflecting a shift in the sales mix to higher-value goods. The average price index, which tracks like-for-like rough prices at sights across the entire year, fell 20% compared with 2023.
Inventory crisis
De Beers actively reduced its production in response to the downturn, resulting in full-year output declining 22% to 24.7 million carats.
Significantly, the company has cut its 2025 production outlook to between 20 million and 23 million carats, compared with an earlier forecast of 30 million to 33 million carats. In 2026, it expects to produce 26 million to 29 million carats, down from a previous plan of 32 million to 35 million carats. It anticipates production of 28 million to 31 million carats in 2027.
“At De Beers, difficult rough-diamond trading conditions mean that we have reduced production guidance in 2025 and 2026 to reflect our focus on value, working capital efficiency and cash generation,” said Anglo American CEO Duncan Wanblad.
Consolidated sales more than doubled to $543 million in the fourth quarter of 2024, but this reflected extremely weak conditions in the same period a year earlier, when sales came to $213 million. Production dropped 26% year on year to 5.8 million carats.
Trading conditions remained challenging through the fourth quarter, as retailers were cautious with their purchases and inventory levels were above normal, denting demand for rough diamonds, the company added.
“De Beers continues to focus on managing working capital, and despite low sales volumes, inventory has reduced slightly year on year through managing purchases and downstream stocks,” the company explained.
The business is also “implementing actions to further manage cash flow, spending and inventory levels in 2025.”
In December, the Financial Times reported that De Beers held diamond stockpiles worth $2 billion, the largest since the 2008 financial crisis.
Image: Rough diamonds on display at De Beers’ offices in Calgary, Canada. (Ben Perry/Armoury Films/De Beers)
