De Beers Faces Potential Third Valuation Writedown in Three Years as Diamond Crisis Deepens
Anglo American PLC has signaled that it may be forced to write down the book value of its diamond subsidiary, De Beers, for the third consecutive year. The announcement, buried within the mining giant’s fourth-quarter production report, underscores the relentless “structural storm” battering the natural diamond industry—a crisis driven by the rise of lab-grown alternatives, faltering luxury demand in China, and persistent inflationary pressures.
A “Diamond is Forever,” But Its Value is Not
In a revelation that has sent fresh tremors through the global diamond trade, Anglo American confirmed today that it is undertaking yet another comprehensive impairment review of De Beers’ carrying value. This review is being conducted ahead of its full-year financial results and comes with a grim warning: current market conditions “could potentially lead to an impairment.”
If realized, this would mark the third significant reduction in De Beers’ valuation in as many years, a humiliating streak for a company that once controlled nearly 90% of the global diamond trade. The once-unassailable monopoly is now fighting for relevance in a market that has fundamentally shifted beneath its feet.
According to the fourth-quarter production report released this morning, the financial outlook for the diamond unit is stark. Anglo American noted that “underlying EBITDA from De Beers is expected to be negative in 2025,” a financial milestone that highlights just how deep the rot has set in. The parent company cited “rough diamond trading conditions” that continued to be “challenging in the quarter,” exacerbated by a toxic cocktail of geopolitical instability, tariff uncertainties, and a supply chain choked with excess inventory.
The Writedown Spiral: A History of Value Destruction
To understand the gravity of today’s announcement, one must look at the rapid erosion of De Beers’ financial standing over the last 24 months. The company’s valuation has been in a freefall, shedding billions of dollars in book value as Anglo American attempts to align the asset’s price with its diminished reality.
The 2024 Shock
The cycle began in early 2024, when Anglo American stunned investors by writing down De Beers’ carrying value by
1.6billion. Management described the move as a prudent adjustment to “macroeconomic headwinds,” hoping that the post-pandemic lull in luxury spending was merely cyclical.
The 2025 Slash
Those hopes were dashed a year later. In early 2025, faced with a market that refused to recover, Anglo American took a far more aggressive approach. The company shaved off another
4.1 billion—a fraction of what the brand was worth during its zenith.
The Looming 2026 Hit
Now, in early 2026, the stage is set for a third cut. Analysts speculate that if the impairment review is as severe as the market indicators suggest, De Beers’ valuation could dip below the $4 billion mark, a psychological blow that would have been unthinkable just a decade ago. The cumulative effect of these writedowns represents more than just accounting adjustments; they are a public admission that the business model of natural diamond mining is under existential threat.
The Perfect Storm: Why the Diamond Dream is Fading
The production report does not shy away from identifying the culprits behind this decline. While cyclical downturns are common in mining, De Beers is currently facing a “structural” shift—a permanent change in how consumers buy and value engagement rings and luxury jewelry.
The Rise of Lab-Grown Diamonds (LGDs)
The most potent disruptor remains the laboratory-grown diamond sector. Once dismissed by De Beers as a niche product for “fashion jewelry,” LGDs have aggressively cannibalized the core engagement ring market, particularly in the United States. With LGDs offering identical physical properties to mined stones at a fraction of the price (often 80-90% cheaper), budget-conscious Millennial and Gen Z consumers are voting with their wallets.
The rapid improvement in LGD manufacturing technology has led to a supply glut, driving prices down further and making the “price gap” between natural and lab-grown stones impossible for consumers to ignore. For De Beers, whose entire brand mystique is built on rarity and high value, this commoditization is devastating.
The Chinese Market Collapse
Compounding the problem is the prolonged slump in China, historically the world’s second-largest market for diamonds. The report explicitly highlights “depressed consumer demand in China” as a key drag on performance.
Unlike the U.S. consumer, who is swapping natural for lab-grown, the Chinese consumer is increasingly turning away from diamonds altogether. In the face of a slowing domestic economy and a property sector crisis, wealthy Chinese buyers are pivoting toward “store of value” assets like gold, which hit record highs in 2024 and 2025. The cultural appetite for diamonds, cultivated over decades of marketing, is showing signs of reversing, leaving De Beers with fewer outlets for its stones.
Midstream “Indigestion”
The report also sheds light on the crisis in the “midstream”—the network of cutters, polishers, and traders, primarily based in India. These middlemen are currently sitting on mountains of unsold inventory.
“Rough diamond trading conditions continued to be challenging… amid persistent industry uncertainty,” the report states. With retailers in the U.S. and China refusing to restock, the midstream has stopped buying rough diamonds from miners. This blockage has forced De Beers to hold back sales and accumulate its own inventory, further straining its cash flow and leading to the forecasted negative EBITDA for 2025.
Operational Retreat: Production Cuts and Lower Guidance
In response to these headwinds, De Beers has not just sat idly by; it has aggressively scaled back its operations to stop the bleeding. The operational data released today paints a picture of a company in managed decline.
- Q4 Production Plunge: Production in the fourth quarter of the fiscal year fell by a staggering 26% to just 5.8 million carats.
- Full-Year Contraction: For the full year, production ended at roughly 24.7 million carats, a steep drop from the ~32 million carats produced in 2023.
- Forward Guidance: Looking ahead, the company has slashed its production guidance for the coming years. The target for 2026 and 2027 has been revised downward to a range of 20–23 million carats, a clear signal that management does not expect a “V-shaped” recovery.
By leaving diamonds in the ground, De Beers hopes to create artificial scarcity and support prices. However, this strategy is a double-edged sword: lower production volumes mean higher unit costs, which further erodes profitability in an environment where pricing power is already weak.
The “Separation”: Anglo American Moves On
Perhaps the most poignant aspect of today’s report is the update on Anglo American’s plans to divest De Beers. In 2024, following a hostile takeover attempt by BHP Group, Anglo American announced a radical restructuring plan to break up its conglomerate structure. The “crown jewel” of this plan was the sale or demerger of De Beers.
In the report released today, Anglo American stated succinctly that these “separation efforts” are “progressing.” However, the brevity of the statement belies the complexity of the task.
A Hard Sell
Selling De Beers in its current state is proving to be a monumental challenge. With negative EBITDA and a business model under siege, traditional mining peers have shown little interest. The list of potential buyers has narrowed, with speculation focusing on sovereign wealth funds or a consortium led by the Government of Botswana.
The Botswana Factor
Botswana, which currently owns 15% of De Beers, holds a decisive card. President Mokgweetsi Masisi has previously threatened to walk away from the long-standing partnership if the country does not receive a more favorable deal. Any sale of Anglo’s 85% stake would require Botswana’s blessing, adding a layer of geopolitical complexity to an already difficult financial transaction.
The “Anglo Teck” Future
While De Beers struggles, its parent company is moving on. The report highlights Anglo American’s successful pivot toward “future-facing” commodities like copper and iron ore—materials essential for the global energy transition. The recent regulatory approval for the merger with Teck Resources (creating a copper giant tentatively dubbed “Anglo Teck”) signals that the parent company’s future lies in green energy metals, not luxury stones. De Beers, once the engine of the group’s profits, is now viewed as a legacy anchor that must be cut loose.
Conclusion: An Uncertain Future for an Iconic Brand
As Anglo American prepares to release its full-year results later this month, the diamond industry holds its breath. A third writedown would be more than just a financial statistic; it would be a capitulation. It would signal that the “temporary” market dip is, in fact, a permanent structural reset.
De Beers is attempting to fight back with its “Origins” strategy—focusing on marketing the emotional value of natural stones and streamlining its bloated cost structure. But as today’s report makes clear, the headwinds are fierce. With negative earnings, shrinking production, and a valuation in freefall, the company that coined the slogan “A Diamond is Forever” is finding out that financial stability is far more fleeting.
For now, investors and industry watchers must wait for the final numbers. But the message from Anglo American is already clear: the diamond business is no longer the glittering prize it once was, and the parent company is ready to pay a heavy price to leave it behind.
