De Beers on the Chopping Block

The best news I’ve heard in a long time from our industry is that Anglo American, the multinational British-based mining company, is considering a sale of De Beers. Included among its top suitors are Persian Gulf sovereign wealth funds, and luxury entities.

Sorting rough diamonds in the De Beers mine in the 19th centurySorting rough diamonds in the De Beers mine in the 19th century

Sale or Takeover?

But Anglo American itself is a target for a takeover after receiving a bid from its largest competitor, Australian mining conglomerate  BHP for $39B. The current bid was rejected by Anglo due to its objections that Anglo divest its platinum and ore industries in South Africa.

Long Held Relationship

Anglo American has a deep history with DeBeers going back over a century. In 1917, gold and diamond entrepreneur Sir Ernest Oppenheimer founded Anglo American. By 1926, the company became the largest single shareholder of De Beers Consolidated Mines. By 1929 Oppenheimer became De Beers chairman.

In 2011 following the death Oppenheimer’s son Harry (1908-2000) who was chairman of Anglo and De Beers -- the family sold its 40% stake in De Beers to Anglo American for $5.1B (with a valuation of c. $11B for the entire company.)

Revised Valuation

But recently Anglo American has downgraded the value of De Beers by $1.6B - or 17%. As of February 2024 it valued the mining company at $7.6B. 15% is still owned by the Botswana Government.  

Hippopotamus in Botswana
Hippopotamus in Botswana (Credit photo Saadja Greenberg)

De Beers Through the Years

The name DeBeers was once synonymous with the entire global diamond brand, and Harry Oppenheimer was called Mr. Diamond. De Beers owned 91% of the world’s rough diamond market at one time. But that was a long time ago.

Harry Oppenheimer called Mr. DiamondHarry Oppenheimer called Mr. Diamond

Today De Beers market share is less than 30% of that global industry. What was once a money-making machine and a monopoly, now claims it may lose $250M or more this year.
Key Commodities Year over Year Price Change (Edahn Golan)Key Commodities Year over Year Price Change (Edahn Golan)
 
The recent talks with major luxury brands and a Sovereign wealth fund could create that magic bullet to pull De Beers out from under the rubble of a yearslong mismanagement and wrong branding. De Beers as a part of a major brand like LVMH (Moët Hennessy Louis Vuitton) could then emerge as the final buyer for De Beers. 

Duncan Wanblad (De Beers Chairman)
Duncan Wanblad (De Beers Chairman)
 
This would see the continuation of a partnership between the two giants. In 2001, De Beers Diamond Jewellers (DBDJ) was established as a 50/50 joint venture between The De Beers Group of Companies and LVMH, the French luxury goods company. The partnership was terminated in 2017.

De Beers Store at Madison Avenue in NYC
De Beers Store at Madison Avenue in NYC

LVMH, which bought Tiffany in 2021 completely reimagined the brand and turned it around in short order. So it certainly could breathe life back into the ailing diamond brand. In doing so, the legendary De Beers slogan, Diamonds are Forever, would dominate the minds of luxury consumers once again.

Flagship Store of Tiffany
Flagship Store of Tiffany

This potential deal of bringing DeBeers under the umbrella of a luxury brand provides us with great hope that diamonds will shine again and be sold at retailers as a unique one-of a-kind cherished item.

PS---But here is a critical first step to this to ensure its success. De Beers must sell LIGHTBOX and get rid of that nasty bug riding on the back of a luxury product.

LEIBISH Extraordinary No Heat Oval Sapphire and Diamond Side Stone Ring LEIBISH Extraordinary No Heat Oval Sapphire and Diamond Side Stone Ring
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