Diamond sales boost would do Anglo power of good

EARLY anecdotal evidence points to a “pleasing” improvement in polished diamond sales since Thanksgiving in the US. This will come as a boost for Anglo American, which needs an improvement in the diamond market if its restructuring strategy is to be a success.“Early indicators out of Thanksgiving sales — which can’t be relied on too much as we’re only 24 to 48 hours after — are that there have been pleasing sales as we move into Christmas,” said Clifford Elphick, CEO of Gem Diamonds, a UK-listed diamond miner operating in Lesotho.He was speaking on December 3 after the company announced plans to extend its Letšeng mine, renowned for yielding high-value stones. If borne out by official sales numbers it could mean a quick improvement in sales for rough diamonds, which De Beers, 85% owned by Anglo, sells.Elphick will know in fine detail how this works for De Beers. He was Harry Oppenheimer’s personal assistant and then MD of the family business E Oppenheimer and Son in the days when the family was invested in De Beers. Such a position normally earmarked a person for a place in the Anglo firmanent, only Elphick did the unthinkable by splitting with the Oppenheimers, setting up his own rival diamond company instead.De Beers cut prices again recently by 10% or more for certain categories, said Elphick. But he also observed that some of the larger jewellery chains have not been “restocking as they should”. If demand is picking up again and a new round of restocking happens, expect Anglo to have yet more impetus as it seeks to fend off a potential second takeover bid from BHP.Analysts expect it after the six-month ban imposed by the UK’s takeover panel expired at the end of November. “An approach from BHP is very much still on the cards,” Marina Calero, an analyst at RBC, told the Financial Times in November. “The initial approach was all about copper, and that’s still pretty much the case — Anglo American has a very attractive copper portfolio,” she added.Matt Greene, an analyst for Goldman Sachs, recently spent two weeks visiting Chile’s copper industry. He says miners are “focusing on growth, but with permitting uncertainty, elevated costs and execution risk, there is now a notable increase in the narrative around the merits of asset-level synergies”. It will cost BHP at least $10bn to replace and grow production at its giant Escondida mine.Before potentially recouping money on noncore metallurgical coal, manganese and diamond assets, a BHP/Anglo takeover would have cost the Australian company’s shareholders $40bn. For that, they get up to 700,000t a year of copper growth. That’s why Anglo remains a company of interest for BHP and, when it comes around to a deal again, a good many other potential interlopers.Merger & acquisition-related consolidation in mining is expected to continue into next year as projects are becoming more, not less, expensive. To defend itself against the incoming storm, Anglo needs to quickly dispatch the demerger of Anglo American Platinum and move on to De Beers in a market that encourages decent offers for the historic asset.A version of this article first appeared in the Financial Mail.The post Holiday diamond sales boost would do Anglo power of good appeared first on Miningmx.Weiter zum vollständigen Artikel bei Mining.com Weiter zum vollständigen Artikel bei Mining.com