Ex-De Beers chief leads bid for diamond giant

Anglo American (LON: AAL) has selected a consortium led by former De Beers chief executive Gareth Penny as the preferred bidder to acquire its diamond business, according to Botswana’s government.

Botswana’s Minister for State and Defence Moeti Mohwasa told lawmakers Friday that the Global Diamond Consortium, led by Penny, had been identified as Anglo’s preferred bidder, offering the strongest indication yet that a sale of De Beers is nearing completion. 

Anglo declined to confirm the minister’s remarks, saying only that it continues to run a competitive sale process involving multiple bidders and will provide updates when appropriate.

“I actually think Gareth would be an ideal candidate,” independent diamond analyst Paul Zimnisky told MINING.COM. “He really seems to grasp that driving demand for natural diamonds must be the priority. De Beers is unique in that it is principally a mining company but it also has to drive demand for its product, and when times are tough this becomes a heavy lift. He seems motivated to take this responsibility, which I find quite encouraging.”

The sale is significant for Botswana, which produces about 70% of De Beers’ diamonds and owns a 15% stake in the company. 

The government has repeatedly signalled it wants to increase its ownership as Anglo reshapes its portfolio. Any deal is also expected to require agreement with sovereign partners, as Global Diamond’s proposal includes participation from Angola and Namibia, both of which have expressed interest in taking stakes in De Beers. Botswana welcomed the regional approach.

Market slump weighs on sale

Penny, who led De Beers from 2006 to 2010, has long been viewed as the frontrunner to acquire the iconic diamond producer. Other bidding groups are led by Nir Livnat, executive chair of the Diacore Group diamond business, and Michael O’Keeffe, non-executive chair of Burgundy Diamond Mines.

Zimnisky said Botswana’s push for a larger ownership stake, alongside potential participation from Angola and Namibia, could strengthen the company’s future.

“I think having everyone on the same team is the best case scenario,” he said. “Diamonds really need a strong front of united advocates right now. I think having a strong business leader, smart investors and governments with real skin in the game is a good combination.”

The sale comes as De Beers faces one of the toughest markets in decades. The company said last week it would suspend production at South Africa’s largest diamond mine amid weak demand and persistently depressed prices.

Natural diamond prices have been pressured by slowing demand in China and growing competition from lab-grown stones, which are significantly cheaper to produce and purchase. 

WWW International Diamond Consultants’ rough diamond price index has fallen about 50% from its 2022 peak.

Despite the downturn, Zimnisky said buyers may see De Beers as a long-term value investment.

“You could make the argument that De Beers is a deep value investment right now,” he said. “It has a long, resilient history, and I think with enough capital and proper execution it could flourish again. With so many independent diamond miners falling off in recent years, in addition to Russian sanctions, De Beers is in a very strong position from a supply standpoint.”