The leading bidder for De Beers is reportedly close to reaching an agreement with Botswana over ownership of the diamond miner, potentially clearing a major hurdle in Anglo American’s (LSE:AAL) long-running efforts to sell the business.
According to Bloomberg, Global Diamond Consortium (GDC), led by former De Beers CEO Gareth Penny, is nearing an agreement with Botswana over their respective stakes in the company.
While the details remain unclear, the proposed arrangement could see Botswana increase its ownership in De Beers to around 25%, Bloomberg reports. Talks are ongoing and no agreement has been finalised.
The consortium emerged as the preferred bidder for De Beers in July, with discussions taking place over a potential US$1 billion ($1.43 billion) acquisition of Anglo’s stake in the struggling diamond business.
The consortium also includes interests from Angola and Namibia, two of Africa’s largest diamond-producing nations.
However, negotiations with Botswana, which hosts De Beers’ most important mines and already owns 15% of the company, have remained a key obstacle to completing the sale.
Under the proposed arrangement, Botswana, Angola, and Namibia would collectively hold less than 50% of De Beers, allowing private investors to retain majority control. This would satisfy a key condition for some of the consortium’s backers, according to Bloomberg.
For Botswana, accepting a larger but still minority stake would represent a shift from President Duma Boko’s earlier position that the country should seek majority control of De Beers.
Anglo’s diamond exit
For Anglo American, an agreement could move the potential sale into its final stages, bringing the miner closer to exiting a business it has been trying to divest for more than two years.
Anglo announced plans to sell De Beers as part of a broader restructuring following its successful defence against BHP Group’s (ASX:BHP) takeover approach in 2024.
However, the sale process has been complicated by a prolonged downturn in the global diamond market, which has significantly reduced the value of the business.
Anglo has recorded three impairments against De Beers in three years, most recently lowering its carrying value to US$2.3 billion in February.
The diamond industry has been struggling with one of its deepest and most prolonged downturns, following a period of record sales during the pandemic.
Demand had already begun to weaken before a sharp slowdown in Chinese luxury spending added further pressure.
The growing popularity of lab-grown diamonds, trade tensions, and geopolitical uncertainty have also weighed on natural diamond prices.
Write to Jackson Chen at Mining.com.au
Main Image: Debswana
