Botswana may raise De Beers stake as Anglo weighs spin-off
IPO mooted
De Beers may become a separate entity from Anglo American.
The Botswana government may raise its shareholding in global diamond miner De Beers, President Mokgweetsi Masisi told JCK News after parent company Anglo American said it plans to spin off or sell the business.The government owns a 15% stake in De Beers and Botswana accounts for 70% of the company's annual rough diamond supply.
Anglo outlined a radical review of its business, including a sale or divestment of the diamond business to focus on copper, iron ore and a fertiliser project in the UK to fend off a takeover from its bigger rival BHP Group.
Masisi told JCK in Las Vegas that Anglo's sale of De Beers would be "the best thing", if it happens.
The government could raise its shareholding in De Beers "if it's attractive," Masisi told the online Diamond News channel.
In May, the president told CNBC Africa that the government would defend its interests in the diamond miner.
Among the plans Anglo could consider is an initial public offering for the diamond business, Reuters reported on 14 May, citing sources.
Like other luxury goods, diamond prices have been hammered by a slump in global demand. De Beers has been limiting supply and offering flexibility to contracted customers. In February, Anglo announced a US$1.6 billion impairment charge on De Beers. Anglo acquired De Beers in 2011, buying the Oppenheimer family's 40% stake for US$5.1 billion.
Long-term investment
Masisi told JCK News Botswana's ideal partner in De Beers would be a long-term investor. The government will try to keep the "bad guys out" and wants investors whose vision is aligned with the government's.
"One of the characteristics of a bad owner is someone who has impatient capital," Masisi said. "This industry requires somebody who is in it for the long haul, because it has its ups and downs."
CEO Duncan Wanblad previously said the plan was to spin out or sell De Beers without giving further details. Anglo holds 85% of De Beers, while the government of Botswana, the location of its biggest mines, owns the remainder.
Anglo declined to comment. Botswana's government did not immediately respond to a request for comment.
De Beers could fetch a valuation of eight to 10 times its core earnings, one of the people said.
Although he supports the growth strategy Anglo has developed for De Beers, the world's largest diamond producer by value, Wanblad said Anglo believes it is "better executed by different owners and in a different structure" from today's.