Log in
E-mail
Password
Remember
Forgot password ?
Become a member for free
Sign up
Sign up
New member
Sign up for FREE
New customer
Discover our services
Settings
Settings
Dynamic quotes 
OFFON

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

ANGLO AMERICAN PLC

(AAL)
  Report
SummaryQuotesChartsNewsRatingsCalendarCompanyFinancialsConsensusRevisions 
News SummaryMost relevantAll newsPress ReleasesOfficial PublicationsSector news

Diamond Business Loses Luster as Coronavirus Crisis Spreads

share with twitter share with LinkedIn share with facebook
04/03/2020 | 01:43pm 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 2.14% 1925 Delayed Quote.-13.27%
EURO / US DOLLAR (EUR/USD) 0.10% 1.12995 Delayed Quote.1.12%
GOLD -0.53% 1793.75 Delayed Quote.19.23%
NEXT PLC 0.36% 4717 Delayed Quote.-33.03%
PETRA DIAMONDS LIMITED -3.72% 1.762 Delayed Quote.-79.30%
PLATINUM -0.24% 831.959 Delayed Quote.-11.87%
THE GLOBAL LTD. -3.30% 205 End-of-day quote.-56.48%
THE NEW HOME COMPANY INC. -3.09% 3.1843 Delayed Quote.-30.47%
WORLD CO., LTD. -5.40% 1420 End-of-day quote.-47.23%
share with twitter share with LinkedIn share with facebook
Latest news on ANGLO AMERICAN PLC
07/07EXCLUSIVE : Chile putting mine workers' health over copper production, minister ..
RE
07/03'ON THE EDGE' : Chile copper production at risk as coronavirus bites
RE
07/02World top copper producer Chile keeps output steady in May even as coronaviru..
RE
06/25ANGLO AMERICAN : to buy wind power energy from Brazil's Casa dos Ventos
RE
06/23BHP Group hires JP Morgan to sell Australian thermal coal mine - sources
RE
06/18S.Africa's Amplats targets mines at 75-80% capacity by end-year
RE
06/17Copper sustainable group expects more members following Rio Tinto's units
RE
06/10Platinum processing continues at Amplats plant despite repairs
RE
06/03Anglo American Platinum shuts unit at processing plant
RE
05/29ANGLO AMERICAN : Second Price Monitoring Extn
PU
More news
Financials (USD)
Sales 2020 24 296 M - -
Net income 2020 2 256 M - -
Net Debt 2020 6 550 M - -
P/E ratio 2020 13,2x
Yield 2020 3,07%
Capitalization 29 313 M 29 339 M -
EV / Sales 2019
EV / Sales 2020 1,48x
Nbr of Employees 63 000
Free-Float 89,4%
Chart ANGLO AMERICAN PLC
Duration : Period :
Anglo American plc Technical Analysis Chart | MarketScreener
Full-screen chart
Technical analysis trends ANGLO AMERICAN PLC
Short TermMid-TermLong Term
TrendsBullishNeutralNeutral
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus OUTPERFORM
Number of Analysts 21
Average target price 26,23 $
Last Close Price 23,75 $
Spread / Highest target 41,5%
Spread / Average Target 10,4%
Spread / Lowest Target -30,1%
EPS Revisions
Managers
NameTitle
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$)
ANGLO AMERICAN PLC-13.27%29 339
BHP GROUP-7.01%118 962
RIO TINTO PLC2.42%97 915
GRUPO MÉXICO, S.A.B. DE C.V.7.15%19 042
POLYMETAL INTERNATIONAL PLC34.06%9 535
FRESNILLO PLC44.58%8 604