Broker Liberum re-iterated its sell stance on Anglo American PLC (LON:AAL) following a 13% drop in diamond revenues from famous subsidiary De Beers.
Revenues from De Beers’ second sight of the year rang in at US$490mln as against US$563mln for the corresponding period a year ago.
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The main reason for the drop was reduced demand for lower quality stones, although certain specific events have been affecting prices too.
Last week in Mumbai cutting centres prices for a specific size of diamond dropped by 30% as inventory from a recently deceased holder was flooded into the market.
Liberum speculated that to stop prices falling further De Beers might have to begin hoarding or even curtailing production. Some mines are already being shut down, but that’s either because they have reached the end of their lives or else because they are becoming inefficient.
Most analysts agree that Anglo American had the better end of the recent earnings figures amongst the mining majors, but that hasn’t been enough to shift Liberum away from its negative stance and its 1,200p price target.