Jul 27, 2017
De Beers diamond unit says open to doing deals
Jul 27, 2017
Anglo American's diamond unit De Beers is open to buying new assets at the right price, its chief financial officer said on Thursday, after the unit reported a 3 percent increase in underlying earnings.
The company as a whole announced the resumption of dividend payments and said it had cut debt and improved cash flow, meaning it could be positioned for growth.
"We are open to M&A activity, but it's got to be the right opportunity," CFO Nimesh Patel said in a telephone interview.
"We will look at opportunities - the right quality, long-term sustainable and first and foremost at the right price. We benchmark against our own organic production."
Following a deep downturn, miners such as Anglo American were focussed on disposal of assets rather than buying them, but analysts say balance sheets have been repaired and some players have begun to do deals.
Earlier this month, Canada's Dominion Diamond Corp said it was being bought by The Washington Companies for $1.2 billion.
Anglo American has said diamonds, along with copper and platinum, are at the centre of its business. They have the advantage of being counter-cyclical as a luxury product that can hold value when basic commodities fall.
Diamond sales last year were hit in India, the third biggest market, by the withdrawal of high-value notes, but that market is recovering, De Beers says.
It has increased its 2017 marketing budget by 20 percent to around $140 million, including both its own advertising and a contribution to the industry body the Diamond Producers Association's campaign to boost sales.
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