Discoveries of diamonds on land along Namibia's coastline in the southern Atlantic may extend ground-based mining operations by another 50 years, said the country's Finance Minister, Calle Schlettwein. Namibia is the world’s largest producer of marine gems. Namdeb Diamond Corp., jointly owned by the Namibian government and De Beers, came across diamond deposits after pushing back the sea wall at its land-based operations, Schlettwein told Bloomberg.
Indian mines secretary Balvinder Kumar has stated that India is seeking the participation of Rio Tinto and Anglo American's De Beers to explore for diamonds and gold, reports Reuters, a move it refers to as part of Prime Minister Narendra Modi's ambition to make the country a major mineral producer. Kumar said that the Indian government will start to auction the rights to up to 70 diamond and gold exploration zones to mining companies this year.
Koin International will be selling original rough production from five African countries, including diamonds from Mothete in Lesotho, full original run of mine production from the Krone-Endora mine in South Africa, large single stones from the alluvial Namakwa North West mine in South Africa, more than 36,000 carats of original 'First to Market' Angola production sorted by Koin International, original tailings from the Klipspringer mine in South Africa, and original production directly from Sierra Leone and the Democratic Republic of Congo. The tender will run from June 20 to 23 in Antwerp.
After posting a $5.6 billion loss for 2015 as a global rout in commodity prices punished the costly mines it operates around the world, mining giant Anglo American (AA) entered a drastic restructuring phase intended to reduce its total number of mining operations from 45 to 16, but it is holding onto De Beers.
In February, ratings agency Moody's downgraded Anglo American's (AA) debt to junk status with a negative outlook on the London-listed company's credit rating.
De Beers, the world’s largest diamond company, is to leave its London headquarters after almost a century, as parent company Anglo American trims costs, reports Bloomberg. About 300 staff were told on Friday that they would be leaving 17 Charterhouse Street, from where De Beers once controlled the flow of diamonds around the world. Charterhouse Street became the centre of De Beers’ empire – and therefore the global diamond trade – in the early 1930s. The building no longer holds the company sights, which moved to Botswana in November 2013.
Diamond production for the first quarter of 2016 decreased by 10 per cent to 6.9 million carats, reflecting the decision to reduce production in response to trading conditions during 2015, writes Anglo American/De Beers in a press release. Full year production guidance (on a 100% basis) remains unchanged at 26-28 million carats, subject to trading conditions. Debswana (Botswana) production decreased by five per cent to 5.3 million carats as a result of the strategy to align production to trading conditions.
The huge restructuring of the diversified miner, which owns 85% of De Beers, could be preparation for a company takeover, says Paul Gait, an analyst for Bernstein in an an article on mining.com. “No longer does this feel simply like an asset slim-down in order to repair the balance sheet in the near term,” wrote Gait in a report issued on March 29. “Instead it feels like a management team driving towards an exit of the business in the medium term,” he added.
De Beers will carry on limiting supply to the market in a bid to help the industry recover from weak demand. “We’re very mindful of not pushing it too far,” Gareth Mostyn, head of strategy at De Beers, told Bloomberg. “We would much prefer a steady, sustainable recovery rather than any spectacular takeoff.” Miners slashed about a quarter of global supply last year in an attempt to stem an 18% fall in rough diamond prices due to an economic slowdown in China and a credit crunch.
Anglo American/De Beers has released its 2015 annual figures, and a 5% increase in the average realised diamond price was not enough to offset weaker rough diamond demand, leading to total De Beers revenue falling 34% to $4.7 billion (2014: $7.1 billion). De Beers reports that this was, "mainly driven by lower rough diamond sales, which declined by 36% to $4.1 billion. This was due to a 39% reduction in consolidated sales volumes to 19.9 million carats (2014: 32.7 million cts)." De Beers’ underlying EBIT decreased by 58% to $571 million (2014: $1,363 million).
Mining giant Anglo American, which owns 85% of De Beers, has reported a pre-tax loss of $5.5 billion for 2015 – more than double the loss reported in 2014 – as the company wrote off $3.8 billion due to sharply declining commodity prices. Chief executive Mark Cutifani said the state of the global economy left the mining industry facing "significant challenges". In a bid to deal with the financial hurdles facing it, the miner plans to sell assets worth $3 billion to $4 billion to repair its finances.
Further indignity could face mining giant Anglo American, which owns 85% of De Beers, with its rapidly falling market value leading to its ejection from London's blue-chip equity index at the next reshuffle in March, reports Reuters, adding that such a move could have the effect of leading to a broader sell-off thus leading to a further decline in its share price. Anglo's market capitalization has plunged to around $5.6 billion as commodity prices have dropped and its shares plummeted by 76% to record lows in 2015, making it the worst performer on the benchmark FTSE 100 index.
Anglo American & De Beers have announced the value of rough diamond sales (Global Sightholder Sales and Auction Sales) for De Beers’ first sales cycle of 2016.
Given the current rout in global commodities mining, the sale by the Oppenheimer family of their 40% stake in De Beers in 2011 to Anglo American for $5.1 billion appears all the more brilliant, reports miningmx.com. "For those among us still into fun facts in these joyless times, how about the $5.1 billion the Oppenheimer family earned from the sale of its 40% stake in De Beers to Cynthia Carroll’s Anglo American in 2011? At the current rand/dollar exchange rate, that’s enough to buy Anglo American in its entirety.
Bloomberg Business writes that Anglo American has led a collapse in mining stocks to the lowest level in more than a decade as market turmoil in China, the biggest consumer of metals, ignites a vicious spiral of tumbling equities and tumbling commodity prices around the world. The Bloomberg World Mining Index sank as much as 4.1% on 7 Jan., with Anglo sliding 12% at one point to a record low and Glencore down as much as 7.9% in London trading.
"Sightholders are looking for revenge for all the pain De Beers caused them over the years," writes diamond heavyweight Leibish Polnauer, founder of Leibish & Co., adding that, "The revolt of many of these Sightolders is imminent. They are fed up, and many of them want to see blood.
With the odd notable exception there are not many to whom I have spoken recently in the industry that have much confidence in the near future, and I would not want to be asked to define what I mean by ‘near future’. Yet for once I am probably not the gloomiest person around. Despite every attempt by the industry to scupper its own prosperity, people are still buying diamonds. In some markets many less are being purchased, but in those markets all luxury products are having a torrid time.
From a press release: The Diamond Development Initiative (DDI) is pleased to announce a three-year contribution from the Anglo American Group Foundation in support of DDI’s efforts to promote responsible sourcing and improve the lives of thousands of artisanal diamond miners and their families in Africa. Funding from Anglo American enables DDI to carry out its principle functions, including the registration of artisanal miners, the implementation of the Development Diamond StandardsTM at mining sites and development support to communities in need, such as clean water and education.
The diversified miner, which owns 85% of De Beers, may see its credit rating cut to junk unless the rout in metals prices turns around, said Standard & Poor’s. “If current prices persist, the company would be likely to see an increase in the net-debt position in 2016,” S&P said in a statement. It said it could cut the miner’s rating within about two months unless metals recover or it sees “sufficiently predictable benefits” from Anglo’s counter measures.
"Anglo American is the classic tale of over-extending during the good times only to be left with too much debt and too little money when markets take a dive," writes Bloomberg's Thomas Biesheuvel. As the diversified miner cuts deep in a bid to cope with a sharp decline in commodities, the firm will eventually employ 50,000 people. Although that's a huge number, it's an incredible 85,000 fewer than now. It will control a maximum of 25 assets, down from 55 today, and any mines that don’t make money will be put up for sale or simply shut.
Anglo American plc, which owns 85% of De Beers, is to carry out an "accelerated and more radical restructuring program to redefine the focus of its asset portfolio to transform the company’s competitive position and create a more resilient business to deliver sustainable shareholder returns". The firm is facing financial pressures regarding all its mining operations, not least De Beers where it allowed sightholders to defer 100% of their allocations in December.
Rob Bates of JCK takes an insightful look into the troubles that have plagued the diamond industry in the second half of 2015, and analyses the internal bickering that has resulted. Only a short time ago, De Beers was the crown jewel in the tarnished Anglo American crown, but now, at the end of 2015, the bottom has fallen out of the diamond business. De Beers’ second-half sales will likely come in at $1.2 billion–$1.3 billion, a 30-year low.
Martin Rapaport is calling for the resignation of De Beers CEO Philippe Mellier, that he expects De Beers' second half rough diamond sales to be down by at least 60 percent and calls for De Beers to reduce rough prices by 30-50% to inject profits and liquidity into the trade. "Please note that we do not expect polished prices to decline due to a fall in rough diamond prices. Increased trade profits and liquidity will support polished diamond prices and expand demand as downstream distributors invest in marketing and sales."
According to an HSBC report on Anglo American, the second-worst performer in the benchmark FTSE 100 this year, the mining giant could earn more than $10 billion by selling its diamond subsidiary De Beers, for instance by means of a market flotation. De Beers is the worlds largest diamond producer and is 85% owned by Anglo American. The rest is owned by the government of Botswana. According to HSBC, "De Beers would likely attract a premium valuation.” The subsidiary is one of Anglo American's best performing activities.
Bruce Cleaver, De Beers’ executive head of strategy and corporate affairs and "one of the most powerful people at De Beers," according to Rob Bates, has left De Beers and joined parent company Anglo American as head of strategy and business development. Cleaver joined De Beers in 2005 and briefly served as interim co-CEO. Cleaver’s mandate at Anglo American, according to their press release, includes the ongoing analysis of global economic and commodity specific trends to inform the Group's strategy in a more volatile market environment. He will have his work cut out for him.
The Wall Street Jounal takes an inside look at De Beers' efforts to uncover the first major diamond mine in at least 20 years, an exploration drive that started in earnest last year in the southern desert of Botswana. "De Beers’ undertaking highlights the dilemma faced by diamond miners," writes Scott Patterson of the WSJ, "who are forecasting diminishing supplies if they don’t discover new caches of gems. Only a blockbuster discovery will enable them to keep long-term production at current levels, according to De Beers and analysts.
According to the AngloAmerican Q3 production report, De Beers' diamond production for the third quarter of 2015 decreased 27% to six million carats, following the decision to reduce production to better reflect current trading conditions - namely, oversupply in the diamond market. Anglo also said that De Beers' full year production guidance is now ~29 million carats - the bottom end of the previously indicated 29m to 31m range, and up to 5m carats fewer than Anglo’s original guidance given early in 2015. So far this year production is 11% below last year’s levels.
Anglo American CEO Mark Cutifani has warned investors at recent private meetings that the diversified miner may hack back its $1 billion-a-year dividend if raw material prices do not make a comeback in the coming months. Commodity prices have plunged due to the global slowdown, particularly the slowing Chinese economy. Although diamonds were a success story for Anglo American in 2014, De Beers has had to cut prices in the face of dropping demand from sightholders.
The strong dollar and concerns about emerging market demand led to a new wave of selling that hit the world's top five public mining companies on Friday. The commodity slump slashed market valuations to 60%–88% below 2011 highs. The main culprit was a stronger dollar which rose following a US jobs report that pointed to higher US rates and a boost for the dollar - which is up 16% year-on-year, making commodities more expensive in emerging market currencies. This creates a further drag on demand as the economies of top consumers, notably China, are already slowing down.
South Africa will review recently applied visa regulations that require visitors to provide biometric data before they could enter the country, said Reuters citing the country's president, Jacob Zuma. Applying for biometric data is a problem for people in large countries like China, which only has South African consulates in Beijing and Shanghai, said Reuters. The consequence of this on the mining sector was highlighted by Mark Cutifani, CEO of Anglo American last month, who said Ch
In the face of a commodities rout, AngloAmerican's revenues (-$3bn or -36% EBIT) are not the only thing being slashed, as the miner expects to cut 6,000 jobs in a restructuring effort. Anglo, which employs more than 150,000 people, said 4,000 jobs that are not operational — “people who do not touch product”, as chief executive Mark Cutifani put it — would be cut. A further 2,000 such jobs are set to disappear as part of the asset sales programme.
Anglo American has announced that De Beers' diamond production decreased by 6% to 8.0 million carats in Q2 compared to the same period in 2014, mainly due to lower grades and reduced plant availability at Orapa, the company said. Its first half production dropped 3% to 15.6 Mct. Total rough diamond sales volumes for the first six months of 2015 decreased YoY by 26% to 14.0 million carats. This reflected relatively low levels of re- stocking by the midstream in 2015.
De Beers’s customers declined to buy about a third of the diamonds offered for sale this week by the world’s biggest producer, according to two people familiar with the process. Sightholders exercised the right granted by De Beers to defer purchasing about 25% of the stones on offer and rejected about another 10%, said the people, who asked not to be identified as the information isn’t public.
Mining Weekly reports sources close to the matter claim Anglo American, employing some 151,200 staff globally, is planning to cut between 5% and 20% of staff at head offices around the world, in an effort to keep shareholders on side and respond to a commodity price rout that has hit profits. Restructuring efforts, which includes the sales of non-core assets, is said to move slowly, causing Anglo's share performance to lag its peers. One source commented: "The picture as currently presented is not sustainable.
Mineweb analyst Warren Dick believes Anglo's determination to pay dividends in an increasingly challenging environment, analyzing the company's projected future earnings and debt levels, is going to get somebody hurt, either equity investors or debt holders. Whilst capital expenditure peaked last year; the company indicated earlier it expects net debt will rise to between $13.5 – 14bn this year. At the same time – largely due to falling commodity prices – analysts have been downgrading the earnings forecast for this year.
In a press release, Anglo American has announced changes to its leadership structure in South Africa. In light of South Africa’s strategic importance to Anglo American, this reorganisation of the Board of Anglo American South Africa (AASA) is expected to bring greater effectiveness and alignment across the Group’s diversified mining businesses in South Africa. Mark Cutifani, Chief Executive of Anglo American, will assume the role of Chairman.
In an article on The Wall Street Journal, analysts comment on mining giant BHP Billiton's decision to set up a company, South32, to house unwanted operations including coal mines and alumina refineries. In the process, it would halve the number of assets it runs and the number of continents on which it operates, leaving BHP focused on a handful of commodities including iron ore, copper and oil.
Anglo remains far behind rivals BHP Billiton and Rio Tinto in terms of future-proofing its business for a world of lower commodity prices. The announcement by its most profitable producer, De Beers, that the diamond miner would produce between 30m to 32m carats this year compared with an earlier target of 34m carats is thus worrisome. Estimates are that a 1m carat cut in diamond production would translate into a 1.5pc drop in Anglo’s earnings per share in the current financial year.
Diamond prices have weakened in recent months amid a supply glut and slowing demand in China. The weaker diamond market has prompted mining giant Anglo American, which owns De Beers, to cut its forecast for annual diamond production. Anglo lowered its 2015 production guidance for diamonds to 30m-32m carats from 32m-34m carats, citing "current trading conditions". The 7-8% downgrade came after diamond production increased by 2% to 7.7m carats between January and March – traditionally the weakest quarter.