De Beers London float loses shine due to weak demand for natural diamonds
- De Beers IPO could be thwarted by weak demand for natural diamonds
Plans to float De Beers could fail due to weak demand for natural diamonds.
Speculation comes just three months after FTSE 100 mining company Anglo American announced it would “spin off or demerge” its diamond business.
In May, Anglo said it wanted to focus on copper and iron ore in response to a hostile takeover battle with Australian peer BHP.
Plans to float De Beers could be thwarted by weak demand for natural diamonds
A De Beers spokesperson told The Mail on Sunday that the company is working on a possible listing and sale of the business, as ‘both options are certainly possible’.
However, BMO Capital Markets analyst Raj Ray said the public markets pose a challenge for diamond companies.
He pointed to weak demand from China, inflation squeezing consumer savings in the US and below-market prices for lab-grown diamonds.
He added: ‘While the fundamental long-term developments in the natural diamond market still look promising, with a significant supply decline expected towards the end of this decade, the short to medium-term outlook remains bleak.’
With a £4 billion stock market listing, De Beers would follow in the footsteps of some of its rivals.
Lucara, where the second largest diamond in history was recently found, is listed in Botswana, Canada and Sweden.
But when asked about De Beers’ purchase, Lucara said the company was “focused” on starting production at its Karowe mine in Botswana in 2028.
De Beers, founded in 1888, is owned by Anglo and the government of Botswana.
It is the largest diamond mine in the world by market value and was made famous by the 1960s advertising slogan ‘a diamond is forever’.
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