Anglo flags third De Beers writedown as Teck merger looms

Anglo American (LON: AAL) is weighing a third writedown of De Beers in as many years as weak diamond prices persist and the miner advances asset sales ahead of its merger with Canada’s Teck Resources (TSX: TECK.A TECK.B)(NYSE: TECK).

The century-old group said on Thursday it was reviewing the carrying value of its diamond business after average realized prices fell in 2025, warning the unit is likely to be lossmaking again. 

The potential impairment comes as Anglo moves to finalize the sale of non-core assets, including De Beers. At the same time, the miner is preparing to merge with Teck in a transaction approved by shareholders and regulators late last year, creating Anglo Teck (official named confirmed).

Anglo booked a $2.9 billion impairment on De Beers in February last year, following a $1.6 billion writedown in 2024. The company, which owns 85% of the diamond company, offered few details on a sale process, saying only that it was “progressing”.

In a fourth-quarter production update, Anglo said diamond trading conditions “continued to be challenging” amid industry weakness, geopolitical tensions and tariff uncertainty. It said lower prices and market conditions could lead to an impairment when full-year results are released.

Diamond prices have come under pressure from weaker consumer demand in China and competition from cheaper, lab-grown stones. De Beers’ average realized price fell 7% to $142 per carat in 2025, driven by a 12% drop in the average rough price index.

Anglo said the decline was exacerbated by selling inventory below cost, largely lower-value goods. Adjusted for that mix, the equivalent price index reduction would have been 25% year on year, suggesting some underlying resilience in the market.

De Beers sold 5.9 million carats in the fourth quarter, up from 4.6 million a year earlier, lifting revenue to $571m from $543m. Even so, Anglo said it was undertaking an impairment review that could result in another writedown.

Exit hurdles

The prolonged slump complicates Anglo’s efforts to exit De Beers. Chief executive Duncan Wanblad said only that the sale was moving forward. A consortium led by former De Beers managing director Gareth Penny is seen as a frontrunner, though Botswana, which owns 15% of the company, has said it wants to take control. Namibia has also expressed interest, and former chief executives Bruce Cleaver and Penny have been mentioned as potential buyers.

The De Beers sale forms part of a restructuring unveiled in 2024. Anglo demerged its platinum arm, Amplats (now Valterra), in June 2025, while the planned sale of its Australian metallurgical coal mines stalled after Peabody Energy (NYSE: BTU) walked away following a fire at Moranbah North. 

Wanblad said on Thursday that the formal sale process for steelmaking coal was “progressing well”, without naming alternative buyers or addressing potential compensation from the US firm.

Copper reality check

Copper remains central to the Anglo-Teck investment case, but near-term output expectations have softened. Anglo cut its 2026 copper guidance to 700,000 to 760,000 tonnes from 760,000 to 820,000 tonnes, citing lower grades at several operations.

It also trimmed 2027 guidance to 750,000 to 810,000 tonnes, including at Collahuasi in Chile, which Anglo and Teck plan to integrate with Teck’s neighbouring Quebrada Blanca mine. For the longer term, the group added new guidance for 2028 of 790,000 to 850,000 tonnes.

Copper production in 2025 was 695,000 tonnes, roughly flat year on year and at the lower end of guidance. Goldman Sachs said output missed its estimate by 5%, with Anglo’s Quellaveco mine in Peru falling short by 10% on lower-than-expected grades. Collahuasi’s underperformance was already known, while Los Bronces in Chile ended the year strongly.

Adjusting for Collahuasi, the underlying miss narrows to about 2%, which Goldman said better reflects what the market had already priced in.

A sharp rise in copper prices in recent months has renewed interest in the metal and helped spur merger talks between rivals Rio Tinto (ASX, LON: RIO) and Glencore (LON: GLEN). 

With ageing mines delivering lower grades and new projects costly and slow to develop, copper dealmaking has become more attractive as supply constraints tighten across the sector.