Wry & Dry

Diamonds caught up in commodity sell-off

W&D has first hand experience of the price of diamonds.  And the tentacles of De Beers, the world's largest diamond company.

There is no doubt in W&D's mind that the women of the world have conspired with De Beers to create an illusion of the indispensability of diamonds as the certification of a relationship.  This illusion means that a gentleman is now virtually forced to spend his net worth on what are, in effect, highly polished items of carbon. 

All in the hope of...oh, never mind.

But the point is that the owner of the world's largest company that mines, fashions, markets and distributes diamonds is on the ropes.  Anglo-American is a commodity conglomerate, with ownership of companies that are deep into coal, industrial metals, iron ore, precious metals and gemstones.  It owns the famous De Beers diamond business.  

[De Beers is, in fact, a group of companies that operates a most successful vertically integrated business.  It sells about 35% of the world's rough diamond production. And is about a quarter the size of BHP.  And its debt is about twice its share market capitalisation.]

So Anglo-American is undertaking a fire sale of its assets (but not De Beers).  It has also said it will not pay a dividend for at least three years.

Not pay a dividend?  BHP and Rio take note.