Anglo American's diamond business is getting crushed
The miner, which owns 85% of De Beers - probably the most famous diamond company on the planet - just released its third quarter production report, things don't look good.
The company has slashed production of diamonds by 27% in the past quarter "to better reflect current trading conditions" according its statement on Thursday.
Diamonds are historically one of Anglo American's key revenue drivers. The precious stone is usually seen as giving relief to counter the global rout in commodity prices. However, Thursday's results suggest that the strategy isn't really working.
Production is now expected to be at the lowest end of yearly forecasts. The company originally expected yearly production of 29 to 31 million carats but it is now more likely to be around 29 million.
The global diamond market is experiencing a massive slump right now. Prices have been steadily declining for five years now, and this year has already seen major diamond producers report poor results.
Petra Diamonds, the Jersey based company, had a first half sales fall of 10% earlier in the year, while in July, De Beers' reported that profits had tanked by 23%.
Anglo's production cut, along with the general slump in the diamond market is being driven by falling demand in China - the world's second largest market for diamonds. No surprises there then.
The London based miner also saw falls in production in many of its other commodities. Nickel production fell by a massive 36%, and there were also drops in iron ore, coal and copper. Platinum production grew by 14%, although this reflects a return to normal following strike action in mines in South Africa.
Anglo is struggling in the market this year, along with other commodity firms like Glencore, thanks mainly to the rout in global commodities that has seen prices plummet in the past year. Bloomberg's Commodity Index has fallen by more than 15% so far in 2015.
The company's shares are down by more than half in the last year, tumbling by 57.11% since October 2014. Shares fell by more than 3.5% on Thursday morning as investors reacted to the news.
