(Bloomberg) -- Anglo American Plc is looking at more diamond production cuts as the industry continues to struggle, complicating its plan to sell the De Beers unit as part of a radical overhaul of its business.
Anglo announced the restructuring earlier this year as part of a successful rebuttal of a US$49 billion approach from BHP Group, the world’s the biggest miner.
That plan centered around exiting diamond mining by spinning off or selling its De Beers unit, separating platinum and selling its coal mines.
Yet the miner is facing headwinds at all those businesses. A fire and explosion at its flagship coal mine in Australia has complicated that sale process, while the diamond market continues to languish, deterring potential buyers of the unit. Anglo also signaled a further profit slump at its platinum business today.
While Anglo maintained its production target for now at De Beers, the company said that it’s looking at how it can reduce output further.
The company would prefer to wait for a recovery in the diamond market, as the internal view at the company is that De Beers should command a price that reflects its status as a trophy asset.
Yet that recovery, which the company already expected to be slow, is showing little signs of gathering pace.
The market came to an almost complete halt last year as weak global demand combined with too much supply. That’s continued this year with poor demand from the crucial Chinese market, adding to existing pressures from lab grown gems and inflation-hit consumers.
The company lowered its full-year diamond target in April to between 26 million and 29 million carats. It will now likely reduce that further.
“With higher than normal levels of inventory remaining in the midstream and an expectation for a protracted recovery, we are therefore actively assessing options with our partners to further reduce production to manage our working capital and preserve cash,” Anglo said.
Anglo’s Johannesburg-listed platinum unit – which is set to be spun out of the 107-year-old group under the restructuring plan – continued to battle low metal prices.
Anglo American Platinum Ltd. said Thursday that first-half earnings likely fell as much as 25 per cent from a year earlier. That comes after profit at the company known as Amplats slumped by 83 per cent in 2023.
Amplats is gearing up to become a standalone company, with Anglo’s controlling interest to be distributed to its shareholders. That coincides with a period of cost-cutting in response to weak prices in so-called platinum-group metals. Palladium and rhodium have slumped 44 per cent and 63 per cent, respectively, since the beginning of last year.
Anglo also lowered its coking coal target, after the fire at its Australian mine.
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