Mining sector top share picks

A conveyor belt transports ore to a crusher at a gold and copper mine in Australia.

An upgraded Glencore (LSE:GLEN) target price is among the changes made by a City bank after it today backed copper market fundamentals to stay strong heading into 2027.

Deutsche Bank named Glencore as one of its metals and mining sector top picks, alongside Anglo Teck ahead of the imminent merger of Anglo American (LSE:AAL) with Canada’s Teck Resources.

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The bank has lifted its Glencore price target by 50p to 680p, which compares with last night’s closing price of 573.5p and September’s multi-year peak of 629p.

The shares have surged 73% since 21 November, which takes into account their drift in recent weeks due to the sector-wide impact of rising bond yields and a stronger dollar.

However, Deutsche Bank said: “While macro risks are elevated, we believe copper fundamentals are strong, with the market potentially facing an acute squeeze over the coming quarters.”

The bank has lifted its 2027 copper price target to $14,500 (£11,000 ) a tonne from $12,500 previously and nudged up its estimate for aluminium to $3,050 a tonne.

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The copper price broke away from gold for the first time in years when the US-Iran war led to a 20% correction for the price of the yellow metal but copper held steady.

The strong performance continued in August as US investors priced in a potential universal US tariff on copper imports, as well as trade restrictions in the Democratic Republic of Congo.

Demand drivers, meanwhile, include copper’s end-uses in relation to the AI-led grid and electricity generation build-out.

Glencore’s copper growth plans are regarded as key to a re-rating after the company last year set out its ambition to double output to 1.6 million tonnes by 2035.

The company, whose other key commodities are thermal coal, coking coal and zinc, is due to make its debut on the Australian stock market on Wednesday 14 October.

The secondary listing is seen as supportive given the read across to the premium multiple of the exchange’s other diversified stocks with meaningful copper exposure.

Deutsche Bank said: “We continue to see a compelling bottom-up story for Glencore.

“Near-term progress on divestments should support higher shareholder returns; the ASX listing could drive a modest re-rating over time; copper volumes should lift materially over the next 12-18 months and we believe Rio Tinto merger talks could be revived at some stage.” 

In the build-up to the ASX listing, Glencore published a note on Friday updating the long-term earnings guidance range in relation to the company’s commodity trading arm.

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This now stands at between $2.8 billion and $4.2 billion, up from $2.3 billion and £3.5 billion previously. It also raised its near-term estimate for the 2026 financial year to more than $5 billion, having delivered a 142% jump in half-year earnings to $3.3 billion.

Bank of America, which has retained its 650p target price, said the new long-term guidance reflected the impact of commodity prices on readily marketable inventories as well as the pass through to customers of higher financing costs.

It added: “Commodity traders, including Glencore, need to earn more to offset higher costs.

“That said, given its scale, diversity, and banking relationships, we believe the company stands to benefit, in relative terms, from higher finance costs - i.e., financing costs more for everybody, but the hit to Glencore will likely be smaller.”

Meanwhile, Deutsche Bank has lifted its price target on Anglo American by 200p to 4,700p as the expected year-end completion of the Teck tie-up moves into view.

The merger of equals is set to propel the company up the global copper rankings to fifth behind Codelco, BHP Group Ltd (LSE:BHP), Freeport and Zijin Mining Group Co Ltd Class H (SEHK:2899).

Anglo shares have rallied by 45% since mid-March to trade at 4,152p but had been as high as 4,306p on 8 September.

Among other changes, Deutsche Bank has lifted its price target on Rio Tinto  Ordinary Shares (LSE:RIO) by 200p to 7,600p but continues to have a Hold recommendation.

The diversified miner’s shares are up 15% since March but had been as high 8,308p in early June, which compares with last night’s close of 7,164p. Antofagasta (LSE:ANTO) has a Sell recommendation and price target of 3,600p, having fallen from 4,485p in February to yesterday’s 3,829p.