Anglo American is preparing for a potential initial public offering (IPO) of its diamond subsidiary, De Beers, but not before significantly lowering its valuation. The company has confirmed a second consecutive write-down of De Beers' value, driven by a weak diamond market and falling demand from China—a key luxury goods consumer.

This move is part of Anglo American’s broader restructuring strategy, aimed at focusing on its core assets in copper and iron ore. It also comes as the company defends itself against a £39 billion takeover bid from rival miner BHP.

De Beers Valuation Drops Further

Following a $1.6 billion write-down in March 2024, this latest adjustment is expected to reduce De Beers’ total valuation to around $4.7 billion, down sharply from $7.6 billion just a year earlier. The cut reflects lower demand for rough diamonds, falling prices, and ongoing economic uncertainty in key markets, particularly China.

In the second half of 2024, De Beers’ average realized diamond prices dropped by 24% to $127 per carat, while rough diamond production declined more than 25% year-over-year. As a result, Anglo American has also lowered its production guidance for 2025 and beyond.

Refocusing on Core Commodities

Anglo American's decision to reassess De Beers’ value comes amid increasing pressure from institutional investors and the ongoing BHP takeover attempt. The company is now directing more capital and resources towards copper and iron ore—commodities with strong long-term demand, particularly due to their roles in the energy transition and industrial development.

Copper, in particular, has seen rising demand as it is essential for electric vehicles, renewable energy systems, and power grid upgrades.

This strategic shift away from diamonds mirrors a broader trend in the mining industry. Despite being a high-margin business, the diamond sector faces pricing challenges from demand volatility and growing competition from synthetic alternatives.

IPO Outlook and Market Response

While no official timeline has been set for a De Beers IPO, industry analysts believe listing it as a separate company could help unlock value and allow Anglo American to concentrate on its core mining operations.

However, with De Beers’ valuation under pressure, any future IPO would need strong interest from institutional investors despite current market challenges.

Investors appear to support Anglo American’s strategy. The company's shares rose 6.2% to £24.77 in London trading, signaling confidence in the restructuring plan and its potential to improve long-term performance.