Diamonds are not selling well, De Beers may be sold soon

According to a recent report by the Wall Street Journal citing informed sources, De Beers Group, a natural diamond miner and wholesaler, may be sold. The company is currently controlled by mining company Anglo American.
These insiders say that British and American capital groups listed in London have stopped talks with several potential buyers in recent weeks, including luxury goods companies and sovereign wealth funds in the Gulf countries.
Insiders say that British and American capital groups have withdrawn signals from potential buyers, showing a declining stance on the offer to buy.
British and American capital groups are considering the sale of Pickles for business, perhaps because the latter is deeply mired in a downturn in the natural diamond industry.

As commodity prices rise and encompass the entire industry, British and American capital groups have also cut production and have been conducting comprehensive and extensive evaluations of their assets. Among them, its diamond business has played a particularly serious role.
Under the influence of the continuous expansion of diamond production range and the continuous increase in global natural diamond prices for a year, the overall diamond consumption in the United States and China, the two largest natural diamond malls in the world, in 2023, is sluggish.
The weak effect of terminal demand on upstream purchasing. From April 2023 to December 2023, Pickles Company recorded a year-on-year decline in sales and sales for seven consecutive sales cycles. Due to this effect, British and American capital groups have had to set aside a $1.6 billion (approximately RMB 11.59 billion) property appreciation for DeBeers in their 2023 financial statements.
The entire natural diamond industry is still in poverty. On April 24th, Pickles announced its diamond production report for the first quarter of 2024, stating that the company’s rough diamond production in the first three months of this year decreased by 23% year-on-year. The production of mining areas in Botswana, South Africa, and Canada decreased by 28%, 19%, and 4% respectively, while the production of mining areas in Namibia decreased slightly by 2% year-on-year.
At the same time, the production indicator for the entire year of 2024 has been lowered from the originally planned 29 to 32 million carats to 26 to 29 million carats.
According to private data from Zebils, Zebils Company and its mutual partners in the four mining areas mentioned above produce approximately one-third of the rough diamonds for Global every year. Having controlled a vast upstream mining source of natural diamonds, Pickles has a huge collection of terminal mutual aid partners worldwide, including well-known jewelry brands such as Chow Tai Fook and Chow Sang Sang in Greater China.
Not only that, this company also has two diamond brand wholesalers downstream, namely De Beers Jewellers, which focuses on high-end jewelry malls, and De Beers Forevermark. But compared to its mining business, the wholesale business of Pickles is not strong, and its brand awareness and influence are still survival differences compared to brands such as Cartier and Tiffany in high-end jewelry malls.
This may also be one of the considerations of British and American capital groups considering the sale of the Pickles business, as the advantage of its action miners is not in wholesale operations. The Wall Street Journal also mentioned in a report that an informed person stated that the ultimate buyer of Pickles is likely to be the lure of luxury goods companies and financial investors. From the perspective of the business acquisition of Tuobiles Company, such potential buyer acquisition is in line with folding logic.
According to insiders from the department, discussions on the sale and acquisition of Pickles Company are still in the early stages, and the valuation has not yet been discussed. The names of these potential bidders are currently unknown.
The form of a straight industry chain with the complexity of natural diamond pricing does not benefit amateur investors in evaluating its financial costs. At present, the potential valuation range of the public discount for Tuobiles Company is very large. The British and American capital groups believe that the valuation of Pickles’ business is $7.6 billion (approximately RMB 55.052 billion), while analysts’ valuations range from $600 million to $4 billion (approximately RMB 4.346 billion to RMB 28.975 billion).
It is worth noting that on April 25th, Anglo American Capital Group announced that the company had received a full stock buyout offer from BHP, the world’s largest mining company, provided that the group divested its holdings in two South African listed companies, Anglo American Platinum and Kumba Iron Ore.
This potential business operation may reshape the global mining industry. However, BHP Billiton’s buyout offer does not specifically mention the Pickles business, but BHP Billiton has included the Pickles business in its potential buyout plan. Once both Pickles are bought, BHP Billiton will evaluate Pickles as a natural diamond business after the business is realized.
The Wall Street Journal reported that the discussions between British and American capital groups and potential buyers surrounding the acquisition of Beers are separate from BHP’s initiation of its acquisition. British and American capital groups accounted for 85% of the shares in Zaibils, and the other 15% was in the hands of the Botswana authorities. This means that once the British and American capital groups find potential buyers for discounts, the act of selling and selling the Pickles business can be very straightforward.


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