Anglo American just posted a $3.7 billion loss. The culprit? A brutal $2.3 billion writedown on De Beers that nobody in the diamond industry wants to talk about openly.
That writedown isn’t an anomaly. It brings the total value destruction for De Beers to $6.8 billion in 2025 alone. The carrying value of the diamond unit has been slashed from over $4 billion to $2.3 billion in a single reporting cycle. That’s not a correction. That’s a crisis.
The Numbers Tell a Grim Story
De Beers is hemorrhaging value across every metric. The unit recorded a $511 million loss while production declined for the third consecutive year. CEO Duncan Wanblad put it bluntly: “There is at the moment a plentiful supply of rough diamonds in the market.”
Plentiful supply. Weak demand. High inventories sitting in vaults and distribution channels. This is the trifecta that kills commodity businesses, and diamonds aren’t immune to the basic laws of supply and demand despite the industry’s century-long efforts to position them as something special.
De Beers has already cut its 2026 output forecast. The company that once controlled 90% of global rough diamond supply is now managing decline, not growth. The romantic narrative about diamonds being forever runs headlong into the reality that consumer preferences shift, alternative luxury goods proliferate, and lab-grown diamonds disrupt pricing power.
Why This Matters Beyond Anglo
The De Beers writedown is a signal flare for the entire diamond sector. When the dominant player with the strongest brand equity and the deepest relationships with Botswana’s mines takes a $6.8 billion haircut, the message is clear: the traditional diamond business model is broken.
Natural diamond producers face structural headwinds that aren’t going away. Lab-grown diamonds now match quality at a fraction of the cost. Younger consumers increasingly view diamonds as discretionary luxury rather than obligatory engagement purchases. Chinese demand, which propped up the industry for years, has softened considerably.
Meanwhile, mining costs haven’t declined. Botswana supplies roughly 70% of De Beers’ annual rough diamond output, and those operations require sustained capital investment regardless of demand conditions. The operational leverage works both ways: it amplifies profits during booms and magnifies losses during downturns.
The Sale Process: Who Wants In?
Anglo American isn’t trying to fix De Beers. It’s trying to exit. The sale process is advanced, with multiple consortia expressing interest. Wanblad has publicly stated optimism that a deal will close in 2026.
But the interested parties reveal the political complexity layered into this transaction. Botswana holds a 15% stake in De Beers and has signaled it wants to increase its shareholding. The country’s economy depends heavily on diamond revenues, and maintaining control over its primary export commodity is a matter of national interest.
Angola is pursuing a 20% to 30% stake and is reportedly in discussions with other African producers to coordinate a collective bid. This isn’t just a financial transaction: it’s a geopolitical negotiation about resource control and value capture in producing nations.
The strategic calculus here isn’t subtle. African governments watched decades of diamond wealth flow primarily to Anglo American’s shareholders in London. Now, as the business deteriorates and Anglo seeks an exit, those same governments want ownership at depressed valuations. That’s a needle that’s almost impossible to thread diplomatically while maximizing shareholder value.
Anglo’s Broader Restructuring Play
The De Beers sale is one piece of Anglo American’s larger portfolio transformation. After successfully fending off a takeover approach from BHP in 2024, management announced plans to exit three businesses entirely: diamonds, coal, and platinum.
The strategy is brutal but logical. Anglo is reallocating capital toward assets with better structural growth prospects. The company has already agreed to merge with Teck Resources to create one of the world’s largest copper miners. Both companies’ shareholders approved the transaction, and the combined entity will have significant scale in exactly the commodity that matters most for electrification and energy transition.
Copper and iron ore will be Anglo’s core profit drivers going forward. That positioning makes sense in a world where copper supply deficits are widening and infrastructure investment is accelerating globally. Diamonds, by contrast, face secular decline in a market where discretionary luxury spending is increasingly fragmented.
What the Writedown Reveals About Valuation
The magnitude of the De Beers impairment reflects how dramatically assumptions about future cash flows have deteriorated. Asset impairments of this scale don’t emerge from quarterly earnings misses: they result from fundamental reassessments of long-term value generation capacity.
Anglo’s impairment calculation would have incorporated revised projections for diamond prices, production volumes, operating costs, and capital requirements. Each of those inputs moved in the wrong direction simultaneously. Prices are under pressure from lab-grown competition. Volumes are declining as mines mature and new discoveries fail to replace depleted reserves. Costs continue rising due to inflation and deeper ore bodies. Capital needs remain elevated to maintain existing operations.
The carrying value of $2.3 billion represents what Anglo believes De Beers is worth today under realistic operating scenarios. That’s less than half what the company thought the asset was worth before the writedown. For potential buyers, that establishes a valuation ceiling. For Anglo, it represents billions in shareholder value destruction that can’t be recovered.
The Timeline and Transaction Risk
Wanblad’s public optimism about closing a deal in 2026 should be viewed through the lens of execution risk. De Beers isn’t a simple asset to divest. The business spans multiple jurisdictions, has complex joint venture structures, and carries significant political sensitivities.
Botswana’s government must approve any change in ownership structure given its existing stake and the concentration of operations within its borders. Angola’s interest adds another sovereign stakeholder to negotiate with. Meanwhile, Anglo needs to extract reasonable value to satisfy its own shareholders while those governments push for favorable terms.
The longer the sale process drags on, the more value deteriorates. De Beers continues generating losses. Market conditions for diamonds aren’t improving. Every quarterly report that shows declining performance weakens Anglo’s negotiating position and emboldens buyers to demand lower prices.
Where This Leaves the Industry
The Anglo American loss and De Beers writedown mark an inflection point for natural diamond producers. The industry’s dominant player is in distress, major producing countries are angling for ownership at depressed values, and the fundamental demand outlook remains weak.
Other natural diamond producers face similar pressures. Russia’s Alrosa, the world’s largest diamond miner by volume, operates under Western sanctions that complicate sales channels. Smaller producers in Canada and Australia lack the scale and brand power to reshape market dynamics. Lab-grown diamond manufacturers continue scaling production and driving down costs.
The broader mining sector is watching how Anglo navigates this exit. The company’s ability to complete the De Beers sale while preserving shareholder value will establish precedent for how mining majors manage declining assets in politically sensitive jurisdictions.
For now, the diamond sector remains in crisis mode. Inventories need to clear before prices stabilize. Consumer demand needs to recover before production economics improve. And Anglo American needs to find a buyer willing to take on a structurally challenged business at a valuation that doesn’t inflict further damage to its balance sheet.
The $3.7 billion loss and $6.8 billion in total writedowns represent more than accounting entries. They represent the collapse of assumptions that sustained the natural diamond industry for decades. What emerges on the other side will look fundamentally different from what came before.
