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Anglo American Plc is looking to cut more diamond production as the industry continues to struggle with weak demand and too much stock.
While Anglo maintained its production target for now at its De Beers unit, the company said that it’s looking at how it can reduce output further.
The continued poor performance of the diamond market will add to Anglo’s frustrations as it looks sell or separate its De Beers business.
Anglo drew up a radical plan to restructure its business while it fended off a $49 billion approach from BHP Group earlier this year. That included exiting platinum, coal and diamond mining.
The company would prefer to wait for a recovery in the diamond market, as the internal view at the company is that De Beers should command a price that reflects its status as a trophy asset.
The market came to an almost complete halt last year as weak global demand combined with too much supply. That’s continued this year with poor demand from the crucial Chinese market.
The company lowered its full-year diamond target in April to between 26 million and 29 million carats. It will now likely reduce that further.
“With higher than normal levels of inventory remaining in the midstream and an expectation for a protracted recovery, we are therefore actively assessing options with our partners to further reduce production to manage our working capital and preserve cash,” Anglo said.
The company also lowered its coking coal target, a move widely expected after a fire at one of its flagship mines last month.
source:Anglo plans to cut more diamond output amid slow recovery – Moneyweb
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