De Beers’ depleted coffers just received a much-needed boost with the sale of some Australian iron ore royalty rights for $150 million.
The company announced that Taurus Funds Management has purchased De Beers Exploration Australia, which owns the right to collect royalties from the Onslow Iron project in the Pilbara region of Western Australia. The price includes $125 million cash up front, and as much as $25 million in deferred consideration.
De Beers discovered the iron ore deposit while unsuccessfully prospecting for diamonds in Australia. It eventually sold the property for cash and royalty rights.
De Beers is now disposing of those rights as part of its focus on “streamlining the business and divesting non-core assets in support of our Origins strategy,” said a company statement.
Yet even as De Beers receives this pile of cash, there are new hints the diamond giant may be facing more pain ahead.
De Beers has said it expects to produce 26 million to 29 million carats this year, down from the 32 million carats it mined in 2023—which itself was 7% drop from 2022’s production.
A second-quarter production report noted that “demand for rough diamonds recovered slightly at the start of 2024 following the cessation of the voluntary moratorium on rough diamond imports into India in late 2023, and improved demand for diamond jewelry in the United States year-end retail selling season.
“However, with midstream polished inventories remaining higher than normal and continued cautious restocking from retailers, demand for rough diamonds deteriorated in the second quarter of the year. Market conditions are expected to reflect a protracted recovery in demand.”
Duncan Wanblad, CEO of De Beers’ majority owner Anglo American, suggested in Anglo’s most recent production report that additional production cuts may be coming.
“We are actively assessing options with our partners to further reduce production to manage our working capital and preserve cash,” he said.
(Photo courtesy of De Beers)
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