Anglo American Plc is in advanced talks to sell its 85% stake in De Beers for approximately $1 billion, a price that implies a total enterprise value of less than $1.2 billion for the diamond giant.

Bloomberg News reported on the potential transaction this week, marking a dramatic collapse in De Beers' valuation. The miner was valued at over $18 billion when it was taken private in 2001, and Anglo American spent nearly $13 billion to acquire its controlling stake in 2011.

Even compared with the $2.3 billion book value after a significant writedown this February, the current sale price — less than half of that — suggests the market's true assessment of the business is far more pessimistic than the company's financial statements reflect.

Botswana stands as the biggest obstacle to the deal. The African country holds a 15% stake in De Beers and, through its joint venture Debswana, controls 70% of the nation's rough diamond output, giving it effective veto power over any change in ownership.

While President Duma Boko publicly sought a majority stake last year, the Global Diamond Consortium led by former CEO, Gareth Penny is only acquiring Anglo American's shares. Sources familiar with the matter said the most likely compromise would see Botswana increase its minority holding to between 25% and 30%, with the consortium holding the remainder, but negotiations around this core conflict are set to be exceptionally tense.

The return of former chief executive Penny is seen by the consortium as a key strategic move. Penny ran De Beers from 2006 to 2010 and successfully navigated the company through the 2008 global financial crisis — at the time, he decisively closed mines and repaired the company's finances through a $1 billion rights offering.

The consortium is betting on his operational expertise to weather the current industry crisis driven by collapsing luxury consumption in Asia and competition from lab-grown diamonds.

As part of the deal structure, an emergency cash injection of approximately $500 million is critical to De Beers' survival. The new owners will immediately need these funds to stabilise mining operations, advance production cuts, and fund a major marketing offensive to distinguish natural diamonds from lower-priced synthetic alternatives.

Anglo American, having fended off a nearly $50 billion takeover approach from BHP Group, is eager to shed non-core assets to strengthen its balance sheet. The mining giant would rather absorb a huge financial loss in this "fire sale" than continue holding a loss-making business in a structurally declining market.