MARKET REPORT: Anglo American shares shine after Botswana diamond deal

Shares in Anglo American rose on the FTSE 100 index after its diamond arm signed a deal with Botswana.

De Beers, which recovers precious stones from four mines in the southern African nation, reached a ten-year sales deal through to 2033 for Debswana’s rough diamond production.

That will see Botswana gradually increase the share of rough stones it gets from the joint business over the next decade from 30 per cent to 50 per cent.

The Botswana government had indicated it could end talks if De Beers failed to increase its 25 per cent share. There was also a 25-year extension granted for the Debswana mining licences to 2054.

Anglo American owns 85 per cent of De Beers, with the rest controlled by the Botswana government. 

Ten year deal: The Debswana Diamond Company’s open cast mine in Jwaneng, Botswana, is a joint venture between De Beers and Botswana’s government

The pair hold an equal stake in Debswana. De Beers also extracts the precious stones in Canada, Namibia and South Africa.

Shares in Anglo American gained 4.3 per cent, or 96.5p, to 2329.5p.

The miner led a rally in the sector with Glencore up 3.3 per cent, or 14.45p, to 458.95p, Antofagasta gaining 2.5 per cent, or 36p, to 1497p and Rio Tinto increasing by 2.1 per cent, or 105.5p, to 5091p.

The London stock market began the first trading session of July on a mixed note, with the FTSE 100 edging down 0.06 per cent, or 4.27 points, to 7527.26 and the FTSE 250 gaining 0.5 per cent, or 91.01 points, to 18507.77.

Oil prices fell back a touch even as Saudi Arabia and Russia outlined further supply cuts.

The Saudi Ministry of Energy said its voluntary cut of 1m barrels per day, which began this month, will be extended to August.

Russia is also planning to cut half a million barrels per day off its output next month, according to the deputy prime minister Alexander Novak. 

Stock Watch – Eagle Eye

Technology group Eagle Eye, whose second-largest shareholder is the former Tesco chief executive Sir Terry Leahy, landed a five-year deal to develop Morrisons’ loyalty programme.

The AIM-listed firm’s platform runs rewards and promotion schemes for the likes of JD Sports and Pret a Manger. The scheme, which is expected to start later this year, will be launched in all 499 Morrisons stores.

Shares gained 8.7pc, or 45p, to 560p.

Oil majors held on to their gains, with BP up 2.7 per cent, or 12.45p, to 470.8p, and Shell added 1.6 per cent, or 37p, to 2379.5p.

Mondi completed the sale of its three Russian packaging converting operations to a Moscow-based producer nearly seven months after the pair first struck a deal.

The paper and packaging giant said it had received net proceeds of £26million from the Gotek Group following the disposal.

And the blue-chip firm said it remains committed to offloading its largest facility in the city of Syktyvkar, and will distribute the funds from all sales when it leaves Russia. Shares added 2 per cent, or 24.5p, to 1223.5p.

There were also gains across the sector, with DS Smith up 2.4 per cent, or 6.6p, to 278.4p and Smurfit Kappa gaining 1.8 per cent, or 46p, to 2674p.

Easyjet flew higher after investment bank JP Morgan raised its target price to 570p from 550p and reiterated a ‘neutral’ rating. 

The broker said the budget airliner’s revenue outlook looks positive while the business should also benefit from lower non-fuel and interest costs. Shares rose 2.7 per cent, or 12.8p, to 495.4p.

But Smith & Nephew traded lower after Credit Suisse cut the medical tech firm’s target price to 1330p from 1385p. Shares fell 5.8 per cent, or 73p, to 1195p.

The chief executive of trading business IG Group is taking a short period of medical leave from the business. June Felix, who has been boss since 2018, has temporarily handed over the reins to the finance boss Charlie Rozes. Shares fell 0.4 per cent, or 3p, to 674p.

ME Group has set its sights on cashing in on demand for photo ID in Japan after it agreed to buy Fujifilm’s automated photobooth business for around £5.5million.

The AIM-listed firm, which also provides launderette and food services, already operates 10,500 photobooths in the country and said the deal should be completed by the end of September. Shares gained 4 per cent, or 6.6p, to 170.2p.

This post first appeared on Dailymail.co.uk