Anglo American reported a $3.1 billion loss following a significant writedown of its De Beers diamond business. The firm cut its dividend and kept selling some parts of the business as part of its restructuring plan. Anglo focus on copper and iron ore after BHP’s failed takeover in 2023 and spinning off platinum and diamond businesses while selling off coal and nickel mines.
De Beers Sale to Accelerate in the Second Half of the Year
CEO Duncan Wanblad confirmed that Anglo will accelerate plans to sell or divest De Beers in the second half of the year. The person said that market condition and business performance will push things out until later in the year. I am really not expecting much traction in the first half, but picking up in the second half, Wanblad said during a media call.
Even though they made a loss, Anglo’s London-listed shares have risen by 3.8% at 1150 GMT. Jefferies analysts said the $2.9 billion De Beers writedown cut its carrying value to a more realistic $4.1 billion.
The company restructured and improved their operations for the best.
Weak Metal Prices and Competition Affect Profits
Anglo’s loss followed a $283 million profit in 2023, reflecting weaker metal prices and struggling diamond sales due to competition from lab-grown stones. BHP, Rio Tinto and Glencore also reported falling earnings for a second straight year. A slump in commodity prices set off after two years of record profits.
The company made a $3.8 billion loss, mostly related to De Beers. The company has reduced dividend from $0.96 per share to $0.64 per share, which means it will payout $800M.
De Beers Faces $2 Billion Gem Stockpile Amid Low Prices
De Beers currently holds a $2 billion stockpile of diamonds, struggling under persistently low prices. The bottom line is that the company plans a responsible exit from diamond business, whether by way of sale or listing.
In the meantime, the firm is searching for a joint operation for Los Bronces copper mine in Chile with state-backed Codelco’s Andina operation. Merging these two nearby mines could really help reduce costs and boost production.
Mergers and Asset Sales Reshape the Mining Industry
The mining industry saw $26 billion in M&A activity in 2023, reflecting a trend toward joint operations to share risks and costs. Thanks to the shared ownership, in theory, there would not need to be any joint arrangements.
Anglo has also been actively selling assets. On Tuesday, it revealed it will sell its Brazilian nickel business for as much as $500 million. The firm has already sold off some of its properties and received around $5.3 billion from that sale. That cash will be used to cut down the debt piles as well as boost up its financial health.
Since Anglo American is undergoing a overhaul or restructuring of their business. Anglo American wants to simplify their portfolios.
