Struggling Diamond Giant De Beers Is Reportedly for Sale

One of the world’s oldest and biggest diamond producers has lost its shine.

The Wall Street Journal reported Thursday that British mining company Anglo American is considering selling off its diamond mining subsidiary De Beers, a 136-year-old concern. The potential sale is playing out against a much larger deal as Anglo American’s Australian rival BHP has offered to buy Anglo American for $39 billion. There aren’t many transactions that could make diamonds feel like an afterthought, but here we are…

Hard Times

While De Beers may not be the jewel in Anglo American’s crown, it’s huge as far as diamond producers go. It and Russian mining giant Alrosa supply around two-thirds of the world’s rough diamonds, according to the Financial Times. Diamond miners large and small have suffered severe whiplash over the past few years — demand for the precious stones soared in 2020 as people stuck at home indulged in retail therapy, but demand dried up and by 2023 there was a supply glut which precipitated a price fall so perilous that both De Beers and Alrosa halted sales of their stones for a few months.

Although De Beers brushed off concerns about prices at the time as normal market fluctuation (or as De Beers’ head of diamond trading called it: “a little bit of cannibalization”), worries persist about the ability of rough diamonds to compete in a world where lab-grown diamonds are not only bloodless but cheaper: 

• Per the FT, lab-grown diamond prices have sunk to around 15% or even less that of natural diamonds. Independent diamond industry analyst Paul Ziminsky told the paper that lab-grown diamonds account for around 10% of the global diamond jewelry market.
• According to a Forbes report, lab-grown diamonds could go much lower. Rachel Smith, a head valuer at online jeweler Hatton Jewels, told Forbes that some retailers massively inflate lab-grown gem prices by as much as 1,200% — either because they fear that a diamond that looks too cheap just won’t sell, or because hey, a 1,200% markup ain’t bad.

So who would buy a diamond mining business if diamonds are going out of style? The WSJ reported that DeBeers has already held talks with “luxury houses and Gulf sovereign-wealth funds.”

Copper-bottomed M&A: BHP, Anglo American’s prospective buyer, doesn’t have a diamond-mining operation, and the deal is mostly focused on creating the world’s biggest copper-mining business. Copper is looking brighter due to its usefulness in green transition technologies, and Bloomberg’s Mark Burton predicts a BHP acquisition of Anglo American would spark a flurry of mining M&A. There’s copper in them thar hills…