Log in
Forgot password ?
Become a member for free
Sign up
Sign up
New member
Sign up for FREE
New customer
Discover our services
Dynamic quotes 

MarketScreener Homepage  >  Equities  >  London Stock Exchange  >  Anglo American plc    AAL   GB00B1XZS820


News SummaryMost relevantAll newsPress ReleasesOfficial PublicationsSector newsAnalyst Recommendations

Diamond Business Loses Luster -- WSJ

share with twitter share with LinkedIn share with facebook
share via e-mail
04/04/2020 | 02:48am EDT

By Alexander Gladstone

The diamond industry faces a reckoning, with mines and processing centers closed due to the coronavirus pandemic and demand threatened by a looming global recession.

Market leader De Beers, a unit of Anglo American PLC, has canceled a diamond auction, its third planned for this year, after its second auction ended in early March with sales down 28% from last year's event.

Meanwhile, smaller mining companies such as Petra Diamonds Ltd., Dominion Diamond Mines and Mountain Province Diamonds Inc. confront rising risk of financial default after virus concerns led them to close their mines.

As miners and processors try to survive the downturn, the retail side of the business is also struggling with jewelry stores around the world closed because of the pandemic.

An average-quality one-carat diamond now carries an average retail price of $5,300, down from $6,200 in 2015, according to Paul Zimnisky, the founder of research firm Diamond Analytics.

"Now is a great time to buy a diamond," said Edahn Golan, who runs an Israel-based diamond market-research firm. "But it is also a difficult time to buy a diamond," he said, referring to store closures.

Even before the Covid-19 outbreak, prices for both rough and retail diamonds had been sagging due to a supply glut coupled with declining marriage rates among millennials.

Also, in India, where roughly 95% of the world's diamonds are cut and polished, a multibillion-dollar banking scandal linked to prominent jeweler Nirav Modi caused banks to hold back on credit to diamond processors.

With the credit crunch already cutting into Indian processors' demand for rough diamonds, all diamond processing came to a virtual halt after Prime Minister Narendra Modi last week declared a national three-week shutdown of nonessential businesses and government offices.

"The industry was in a fragile place to begin with, and the virus is a major blow," Mr. Zimnisky said. "The whole supply chain is frozen."

Mr. Zimnisky's diamond-price index, based on aggregated prices for rough diamonds globally, has declined 11% year-to-date and is down more than 21% over the past five years.

Jersey-based Petra Diamonds, which operates mines in South Africa, Botswana, and Tanzania, said March 27 that it has hired Rothschild & Co. and Ashurst LLP as financial and legal advisers to evaluate strategic options for addressing near-term debt maturities. Days later, Petra said that Adonis Pouroulis, the company's founder and chief executive, had stepped down from the board after 23 years with the company.

Dominion Diamonds, a private company operating in Canada's northern territories, told bondholders on a conference call Thursday that it is quickly running out of cash, according to a person familiar with the matter.

The value of Petra's $650 million in bonds has fallen to just 25 cents on the dollar while Dominion's $550 million in bonds are down to 48 cents. Another Canadian diamond miner, Mountain Province, has bonds trading at 73 cents, according to MarketAxess.

Rising unemployment amid the onset of a global recession also threatens to mute a recovery for the diamond industry even after the virus curve is flattened and production and processing rebound.

"The diamond market is facing an unprecedented challenge in the complete collapse of diamond jewellery retail sales during the Covid-19 pandemic, " said Edward Sterck, an analyst at BMO Capital Markets, in a March 30 note. "We think that the closure of a significant number of jewellers globally and a lack of consumer buying interest will this time necessitate significant cuts to diamond supply, which have not yet happened."

Write to Alexander Gladstone at alexander.gladstone@wsj.com


Stocks mentioned in the article
ChangeLast1st jan.
ANGLO AMERICAN PLC 2.50% 1712 Delayed Quote.-23.14%
NEXT 3.91% 5082 Delayed Quote.-30.31%
PETRA DIAMONDS LIMITED -1.02% 1.95 Delayed Quote.-77.71%
PLATINUM -0.94% 820.584723 Delayed Quote.-14.16%
WORLD CO., LTD. 4.87% 1616 End-of-day quote.-39.95%
share with twitter share with LinkedIn share with facebook
share via e-mail
02:12pANGLO AMERICAN : Coronavirus drives De Beers to shift diamond viewings from Bots..
05/25Nordic investors turn up heat on coal in climate campaign
05/19ANGLO AMERICAN : Tax and Economic Contribution Report 2019
05/15U.S. Stock Futures Slip on Trade Concerns
05/15U.S. Stock Futures Slip on Trade Concerns
05/15U.S. Stock Futures Slip on Trade Concerns
05/15U.S. Stock Futures Slip on Trade Concerns
05/15U.S. Stock Futures Slip on Trade Concerns
05/15U.S. Futures Waver as China Signals Slow Recovery
05/15U.S. Futures Waver as China Signals Slow Recovery
More news
Financials (USD)
Sales 2020 24 345 M - -
Net income 2020 2 288 M - -
Net Debt 2020 6 037 M - -
P/E ratio 2020 12,1x
Yield 2020 3,53%
Capitalization 26 030 M 26 023 M -
EV / Sales 2019
EV / Sales 2020 1,32x
Nbr of Employees 63 000
Free-Float 89,4%
Duration : Period :
Anglo American plc Technical Analysis Chart | MarketScreener
Full-screen chart
Technical analysis trends ANGLO AMERICAN PLC
Short TermMid-TermLong Term
Income Statement Evolution
Mean consensus OUTPERFORM
Number of Analysts 21
Average target price 22,08 $
Last Close Price 21,09 $
Spread / Highest target 47,4%
Spread / Average Target 4,67%
Spread / Lowest Target -72,5%
EPS Revisions
Mark Cutifani Chief Executive Officer & Executive Director
Stuart John Chambers Chairman
Stephen Thomas Pearce Finance Director & Executive Director
Anthony Martin O'Neill Executive Director & Group Technical Director
Anne L. Stevens Independent Non-Executive Director
Sector and Competitors
1st jan.Capitalization (M$)
BHP GROUP-9.66%107 357
RIO TINTO PLC-5.42%87 155
GRUPO MÉXICO, S.A.B. DE C.V.-4.55%17 469
FRESNILLO PLC17.28%6 761