ii view: Anglo American diamond production sparkles
Pushing a refocus towards industrial commodities and with a series of business deals expected to complete in early 2027. Buy, sell, or hold?
20th October 2026 13:54
by Keith Bowman from interactive investor
Third-quarter production update to 30 September
- Copper production down 5% from a year ago to 175 kilo tonnes (kt)
- Iron ore output down 4% to 13.8 million tonnes (mt)
Guidance:
- Now expects annual diamond output of 25 to 28 mn carats, up from a previous 21 to 26 mn
Chief executive Duncan Wanblad said: “Our merger with Teck to form a copper-focused global metals and minerals champion continues to progress and integration planning is now at an advanced stage. We continue to engage constructively with China’s anti-trust regulator, with this being the final outstanding regulatory milestone required for completion.”
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ii round-up:
Commodity-refocusing miner Anglo American (LSE:AAL) today maintained full-year production guidance although upped hopes for annual diamond output as it continued to seek a deal for the De Beers diamond business.
Third-quarter copper production of 175 kilo tonnes (kt) missed estimates of 184 kt, hindered by bad weather in Chile. Iron ore output for the quarter of 13.8 million tonnes (mt) exceeded hopes of 13 mt.
Shares in the FTSE 100 company rose 1.5% in early UK trading having come into this latest news up by a quarter so far in 2026. Shares for miner and energy trader Glencore (LSE:GLEN) are up by two-fifths during that time, while shares for silver miner Fresnillo (LSE:FRES) have fallen by a fifth. The FTSE 100 index is up by close to a tenth year-to-date.
An ongoing refocus of Anglo’s commodity portfolio includes strengthening copper production via a merger with Canada’s Teck Resources Ltd Class B (Sub Voting) (NYSE:TECK), selling steelmaking coal operations and parting company with the De Beers diamond business.
Expected annual diamond output of 25 to 28 mn carats is up from a previous 21 to 26 mn carats with projected unit costs of $70 per carat down from a previous $80 prediction.
Anglo continues to expect full-year copper output of between 700 to 760 kt, a potential gain from last year’s 695 kt. Annual unit cost hopes of $139 per cubic pound (c/lb) are down from a previous $145 c/lb.
Forecast annual iron ore output of 55 to 59 mt is potentially down from last year’s 60.8 mt.
A merger with Teck is still expected to complete in Q1 2027, with the sale of steelmaking coal also expected to complete then, and a deal for De Beers still a work in progress.
ii view:
Started in 1917, Anglo today employs around 26,000 people. Copper generated most sales during 2025 at 42%. That was followed by iron ore at 34%, diamonds at 18%, manganese at 3%, others at 2% and crop nutrients at 1%.
For investors, war-induced higher energy prices pressuring inflation could yet see interest rates move higher, dampening future commodity demand. An estimated future price/earnings (PE) ratio above the three and 10-year averages may suggest the shares are not obviously cheap. A yet to be fully agreed trade deal between the US and China could yet hurt commodity demand, while the weather can, and has, during this latest quarter hinder output.
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On the upside, an ongoing transformation should eventually leave Anglo refocused on commodities including copper, which is much used across electronics and energy transition items. A diversity of commodities and geographical production locations persists. Group net debt of $8.6 billion (£6.45 billion) compares to a stock market value of $54.4 billion, suggesting a robust balance sheet, while an estimated future dividend yield of around 1% is not to be ignored.
In all, and despite ongoing risks, this refocus towards core industrial commodities is likely to keep fans of this major global miner firmly supportive.
Positive
- Transforming commodity portfolio
- High focus on controllable costs
Negative
- Uncertain global economic outlook
- Higher ocean freight rates
The average rating of stock market analysts:
Strong hold
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