Anglo American posted a $3.7 billion loss for 2025 after taking a fresh $2.3 billion writedown on its De Beers diamond unit, the third consecutive annual impairment as the global diamond market continues its brutal slide.
The London-based miner simultaneously slashed its dividend 64%, declaring $0.23 per share compared to $0.64 per share a year earlier. The dividend reduction, totaling approximately $200 million versus the prior year's $800 million payout, marks one of the steepest cuts among major diversified miners in recent years.
The writedown reduced De Beers' carrying value from over $4 billion to $2.3 billion. Total writedowns for the division now exceed $6.8 billion over the past year alone, effectively erasing most of the diamond unit's book value and signaling Anglo's determination to exit the business entirely.
Diamond Market in Structural Decline
De Beers reported a $511 million operating loss in 2025, a dramatic deterioration from the $25 million loss posted in 2024. The losses stem from weak global demand, elevated inventories across the supply chain, and structural headwinds that show no signs of abating.
The diamond market faces a toxic combination of pressures. Chinese economic growth remains weak, crimping demand from the world's second-largest diamond consumer market. Lab-grown diamonds continue gaining market share, offering consumers chemically identical products at a fraction of natural diamond prices. Consumer preferences are shifting, particularly among younger buyers who view lab-grown options as both economically and ethically preferable.
De Beers reported a third straight annual drop in production and cut its 2026 output forecast, acknowledging that supply discipline alone won't solve the demand crisis. The company is no longer attempting to defend market share or price levels through production cuts: a tacit admission that structural change has overtaken cyclical weakness.
"The diamond industry is facing challenges we haven't seen in decades," CEO Duncan Wanblad said in the earnings release. "We're taking the necessary steps to reposition our portfolio around our strongest assets."
Advanced Sale Negotiations
Anglo American confirmed it is in "advanced stages" of selling its 85% stake in De Beers to a select group of interested parties. Wanblad stated the company is "optimistic a deal will be signed this year" but noted the sale might occur in multiple stages: potentially two or three separate transactions.
The complexity stems from competing stakeholder interests. Botswana, which holds a 15% stake in De Beers and supplies roughly 70% of annual rough diamond output, is pushing to increase its shareholding significantly. Angola, another major diamond producer in the De Beers portfolio, is pursuing a 20% to 30% stake in the restructured entity.
Both governments view diamond assets as strategic national resources and aren't willing to simply accept whatever transaction Anglo negotiates with private buyers. The result is a delicate three-way negotiation involving Anglo American, sovereign stakeholders, and potential commercial buyers.
Industry sources suggest the phased approach may involve selling Anglo's stake to Botswana first, then bringing in additional partners or investors in subsequent transactions. That structure would satisfy Botswana's desire for increased control while allowing Anglo to extract maximum value through competitive bidding for remaining stakes.
No timeline has been specified beyond "this year," but the sale represents Anglo's most urgent strategic priority. Every quarter De Beers continues to hemorrhage cash, it undermines Anglo's balance sheet and strategic repositioning.
Copper-Iron Ore Future
Anglo American is executing a dramatic portfolio transformation, exiting diamonds, coal, and platinum to focus exclusively on copper and iron ore: the commodities with strongest long-term demand fundamentals.
The company announced plans to merge with Teck Resources, creating one of the world's largest copper producers at a time when copper prices are approaching $6 per pound and supply constraints are tightening globally. The merger positions Anglo to capitalize on surging copper demand driven by electrification, renewable energy infrastructure, and data center expansion.
Copper markets are experiencing unprecedented tightness, with projected deficits extending through the end of the decade. Anglo's strategic pivot recognizes this reality.
Iron ore will serve as the portfolio's second pillar, providing cash flow stability and geographic diversification. Anglo operates large-scale, low-cost iron ore assets in Brazil that generate substantial margins even during softer pricing environments.
"We're building a portfolio focused on the metals that will power the global energy transition," Wanblad said. "Copper and iron ore are where we see the strongest growth and returns over the next decade."
Underlying Performance Holds Steady
Despite the headline loss, Anglo American's underlying earnings from continuing operations rose 2% to $6.4 billion, demonstrating that the core mining portfolio remains profitable and cash-generative.
Net debt fell to $8.6 billion, down from $9.2 billion the prior year, as Anglo maintained capital discipline and prioritized debt reduction over shareholder returns. The company's leverage metrics remain within target ranges despite the dividend cut.
The financial results reveal a company managing two distinct realities simultaneously. The legacy portfolio: particularly De Beers: continues deteriorating and destroying value. The forward-looking portfolio centered on copper and iron ore is performing adequately and positioning Anglo for stronger growth once the strategic restructuring concludes.
Free cash flow generation remained positive despite De Beers' losses, with Anglo's copper and iron ore operations offsetting the diamond unit's cash drain. Management emphasized that continuing operations can sustain the reduced dividend while funding growth capital and maintaining balance sheet strength.
Stakeholder Pressure Mounts
Anglo American faces increasing pressure from shareholders to accelerate the restructuring and clarify the path forward. The stock has underperformed peers over the past three years as the De Beers crisis deepened and strategic uncertainty persisted.
Activist investors have quietly accumulated positions, viewing Anglo as a potential catalyst situation if management can successfully divest non-core assets and deliver on the copper-focused strategy. However, patience is wearing thin as the De Beers sale process extends and quarterly losses continue.
The Teck Resources merger requires shareholder approval from both companies, adding another layer of execution risk. Some Teck shareholders have expressed concerns about combining with Anglo while the De Beers overhang remains unresolved, preferring a cleaner transaction structure.
Botswana's government has signaled it won't rubber-stamp any De Beers transaction that diminishes its influence or economic benefits from diamond production. With Botswana supplying 70% of De Beers' rough output, the government holds significant leverage in negotiations.
Anglo must thread a needle: satisfy Botswana's requirements, extract reasonable value from the De Beers sale, complete the Teck merger, and deliver operational performance across its remaining assets. Any one of these objectives alone would be challenging. Executing all simultaneously is the operational equivalent of defusing a bomb while riding a bicycle.
2026 Outlook
Anglo American provided cautious guidance for 2026, citing continued uncertainty in diamond markets and broader macroeconomic headwinds. The company expects copper production to rise modestly as brownfield expansion projects come online, while iron ore output should remain relatively flat.
Capital expenditure will focus on copper projects, with limited investment in legacy assets scheduled for divestiture. Anglo plans to maintain the reduced dividend level through 2026 while prioritizing debt reduction and strategic flexibility.
The company faces a critical year ahead. Success requires closing the De Beers sale, advancing the Teck merger, and demonstrating that the remaining portfolio can generate sufficient returns to justify the painful restructuring process.
Failure on any front could trigger renewed activist pressure or even takeover speculation. Anglo's current market capitalization suggests investors remain skeptical that management can execute the transformation without further value destruction.
The $3.7 billion loss and 64% dividend cut represent more than disappointing quarterly results. They mark the cost of a decade-long strategic misallocation to diamonds and the price of repositioning toward commodities with sustainable demand fundamentals. Whether that bet pays off depends on execution quality over the next 12 to 18 months.
For now, Anglo American is hemorrhaging value in diamonds while betting its future on copper. The company can't afford another writedown cycle.
