Electrification And Decarbonization Will Boost Copper And Iron Ore Demand

The consensus price target for Anglo American has been raised to £23.13 as analysts cite the transformative merger with Teck Resources—making it a top-five global copper producer—as a catalyst for improved scale, growth prospects, and earnings outlook.

Analyst Commentary

• The merger of equals between Anglo American and Teck Resources transforms the company into the world’s fifth-largest copper producer, significantly improving scale and growth prospects.
• Analysts note that this deal is a “game-changer” for Anglo American, improving its competitive positioning and future earnings potential.
• The implied $20B equity value in the Teck deal, and the expectation for further sector consolidation, is viewed as a catalyst supporting higher price targets.
• Bullish analysts highlight upward revisions to price targets driven by anticipated operational synergies, enhanced copper exposure, and stronger long-term fundamentals.
• Previously bearish analysts are moderating their negative views as the merger reshapes the investment case, while others maintain their position but recognize the improved outlook.

What's in the News

• Anglo American is in advanced talks to acquire Teck Resources in a mostly stock transaction potentially worth around $20 billion, with a deal announcement possible this week (Bloomberg, Key Developments).
• The company plans to declare a special dividend of $4.5 billion (approximately $4.19 per ordinary share) ahead of completing the merger with Teck Resources, payable to shareholders on record (Key Developments).
• Anglo American intends to sell its remaining 19.9% stake in Valterra Platinum Limited, capitalizing on a significant share price rally post-demerger, with the sale expected to raise approximately $2.73 billion and support portfolio simplification (Key Developments).
• The planned $5.8 billion sale of Anglo American’s Queensland coal mines to Peabody Energy is facing legal arbitration due to a material adverse change claim, while Yancoal Australia is now a leading contender to acquire these assets amid a weaker coal price environment (Key Developments).
• Anglo American reported mixed first-half 2025 production results, with year-over-year declines in copper, diamonds, steelmaking coal, nickel, and platinum group metals output, but a slight increase in iron ore and manganese ore production; full-year production guidance remains unchanged (Key Developments).

Valuation Changes

Summary of Valuation Changes for Anglo American

• The Consensus Analyst Price Target remained effectively unchanged, moving only marginally from £22.71 to £23.13.
• The Future P/E for Anglo American has significantly fallen from 23.43x to 20.63x.
• The Net Profit Margin for Anglo American has fallen slightly from 10.23% to 9.76%.