Anglo American writes down De Beers by R30bn as company profits plunge

Anglo American is to review its assets after recording a 94% plunge in annual profit.

Posting its full year results, Anglo highlighted lower prices and higher costs in diamonds, platinum, nickel and iron ore.

The mining giant announced it has written down close to R46 billion ($2.4bn) in its diamond and nickel business.

This includes a R30 billion write-down of diamond miner De Beers.

Prices for De Beers diamonds slumped by a quarter in 2023 the Financial Times reports, as US lab-grown equivalents cut demand and consumer spending dropped in China.

Bruce Whitfield interviews Duncan Wanblad, CEO of Anglo American (AA).

Wanblad notes that the purpose of the asset reviews in the AA portfolio is really around the robustness of the whole of the portfolio, as opposed to deciding fundamentally what's in and what's out.

"Every business in a portfolio HAS to carry its weight, and it has to do that through the cycles. That's the most important thing in terms of delivering value in a multi-commodity type of business..."

"...and that isn't needed to happen periodically, I think it's got to happen consistently throughout the cycle - and that's all were doing at the moment."

Duncan Wanblad, CEO - Anglo American

Wanblad points out that it was just two years ago that Anglo Platinum contributed $7 billion to the group's EBITDA, and De Beers around $1.5 billion.

Both businesses have been impacted by a downturn in the cycle of those commodities, but that doesn't necessarily mean they are not good businesses at all, he emphasizes.

"De Beers is absolutely at the bottom of a cycle and we've seen it before... and there's no doubt that as the world's GDP comes under pressure then the diamond business really does take the brunt, but it is cyclical."

"What we do know is that there's a return from these sorts of cycles... and in the world of natural diamonds there are very few assets, the quality of those that exist within De Beers today."

Duncan Wanblad, CEO - Anglo American

In a world where supply is drying up in terms of new resources coming on stream, that actually puts De Beers in a remarkable position, he concludes.