De Beers provides stability to Anglo – Moody's

De Beers, a subsidiary of Anglo American is providing stability to the diversified group as well as improve its business profile, according to a report by risk assessment firm Moody's.
It said De Beers provides geographic diversification for Anglo's business as it produces the bulk of its diamonds in Botswana, an A2 stable rated nation, which helps to reduce Anglo's reliance on assets in South Africa, which is rated Ba2 negative.
"We view the high exposure to profit and cash flow generated by assets in South Africa as a constraint for Anglo's rating. Without De Beers, South African assets would contribute an even greater share of Anglo's Ebitda," it said.
Diamonds' geographical demand breakdown differs from metals such as copper and iron ore, where China accounts for 50% or more of global demand.
The US accounts for about 45% of diamonds demand, while China accounts for about 30%. Other countries, predominantly high-income countries in Europe and the Middle East, as well as Japan account for 25%.
The firm highlights that the global supply of rough diamonds is concentrated, with De Beers, which is 85%-owned by Anglo, and Russia's Alrosa (with a Baa2 stable rating) accounting for more than 50% of global rough diamond sales in dollars and slightly less than 50% of production volumes.

Mathew Nyaungwa, Editor in Chief of the African Bureau, Rough&Polished