Anglo American H1 Earnings Call Highlights

Key Points

• Strong first-half financial performance: EBITDA rose 31% to $4.1 billion, underlying earnings increased 60% to $1 billion, and net debt fell to $8.2 billion. Copper accounted for roughly 70% of EBITDA, supported by higher prices and stronger by-product credits.
• Portfolio restructuring is advancing: Anglo American agreed to sell its steelmaking coal business for up to $3.9 billion, is pursuing a sale of its nickel operations for up to $500 million, and is seeking a trade buyer for De Beers. It also cut 2026 capital-expenditure guidance by $400 million to $3.2 billion, including lower De Beers spending after pausing Venetia production.
• Teck merger and copper growth remain key priorities: Anglo American and Teck are preparing for integration and expect their merger to close later this year or early next year, pending Chinese regulatory approval. The company is also advancing copper expansion projects, including a Los Bronces-Andina plan expected to add 120,000 tonnes of annual production.

Anglo American LON: AAL reported higher first-half profit and cash generation as stronger copper prices, by-product credits and cost control supported its simplified portfolio, while the company continued work on asset sales and its planned merger with Teck.

Chair Stuart Chambers said the company had made “excellent progress” in safety and that the benefits of its portfolio restructuring were beginning to appear in financial results. He said the planned combination with Teck, which would create Anglo Teck, could close later this year or early next year, subject to final regulatory approvals. Chambers said he would hand the chair role to Teck Chair Sheila Murray upon completion of the merger, while Anglo American Chief Executive Duncan Wanblad is expected to lead the combined company.

Profit growth led by copper portfolio

Finance Director John Heasley said the simplified portfolio, focused on copper and premium iron ore, generated EBITDA of $4.1 billion, up 31% from the prior year. The portfolio’s EBITDA margin was 46%, underlying earnings rose 60% to $1 billion, and return on capital employed increased four percentage points to 19%.

Continuing operations produced EBITDA of $4 billion, up 35%, while group earnings per share totaled $0.58. Anglo American declared a dividend of $0.23 per share, consistent with its 40% payout policy.

The company said its commodity-price basket increased 22%, driven primarily by copper, while iron ore prices declined modestly. About 70% of the simplified portfolio’s EBITDA came from copper. Revenue increased 22%, and copper production totaled 344,000 tonnes in the first half, keeping the company on track for full-year guidance of 700,000 to 760,000 tonnes.

Net debt declined to $8.2 billion from $8.6 billion at the end of December, though Heasley said the reduction reflected some favorable timing effects. Net debt to EBITDA stood at one times. EBITDA of $4 billion translated into $3.5 billion of cash flow from operations and $1.2 billion of sustaining attributable free cash flow.

Heasley cautioned that working capital, cash taxes and distributions to minority shareholders were likely to increase in the second half as certain timing benefits reverse.

Costs and capital expenditure

Total operating costs in the simplified portfolio increased by $0.6 billion to $4.8 billion, reflecting foreign exchange, inflation, fuel and freight costs, as well as higher activity at Los Bronces and manganese operations. Copper unit costs nevertheless fell 12% to $1.36 per pound after by-product credits and treatment and refining charge effects.

The by-product credit totaled $0.6 billion, compared with $0.3 billion a year earlier, and was driven by molybdenum and silver revenues in Chile and Peru. Iron ore unit costs increased 17% to $41 per tonne.

The company reduced its 2026 capital expenditure guidance for the continuing portfolio by $0.4 billion to $3.2 billion. The reduction included project cost efficiencies at Minas-Rio and Quellaveco, as well as a $300 million reduction in expected De Beers spending following the planned temporary suspension of production at Venetia.

Anglo American said Venetia production would be paused for about two years, with underground project spending rephased. Heasley said the action would preserve cash, reduce capital expenditure and remove loss-making carats from production while maintaining the asset’s longer-term potential.

Operations and copper growth projects

Wanblad said operations remained stable despite weather-related disruptions. At Collahuasi in Chile, an environmental tribunal set aside the permit for a desalination plant in May, five years after it was issued. Production has not been affected because the operation has alternative water sources, and Anglo American said it hoped a review of the environmental authority’s decision would allow the plant ramp-up to restart later this year.

Collahuasi is transitioning through lower-grade and oxidized stockpiles, though recoveries improved in the second quarter. The operation is expected to access fresh ore in the fourth quarter. Wanblad said the company remained confident in its 2027 and 2028 copper guidance despite more complex faulting expected in the next mining phase.

Quellaveco remained the group’s largest cash-flow contributor, and Wanblad said the initial investment in constructing the mine had now been repaid. The company completed plant debottlenecking work and expects processing capacity to approach 150,000 tonnes per day, with water remaining the principal constraint.

Anglo American also received final regulatory approval for a joint mine plan between Los Bronces and Codelco’s neighboring Andina mine. The plan is expected to add average annual copper production of 120,000 tonnes, shared equally by the parties, with environmental permits targeted by 2030.

The company continues early-stage work toward integrating Collahuasi and Quebrada Blanca. Wanblad said the project could potentially add 175,000 tonnes of annual copper production for about $2 billion of capital expenditure, though discussions with partners and technical work remain ongoing.

Portfolio sales and Teck merger preparations

Anglo American announced the sale of its steelmaking coal business to Dhilmar for up to $3.9 billion and is targeting completion by the first quarter of next year. The transaction includes $2.3 billion upfront and contingent payments tied to steelmaking coal prices, tested quarterly over five years.

The company is also pursuing the sale of its nickel business to MMG for up to $500 million. Wanblad said Anglo American had seen positive momentum in the European Union antitrust process and was optimistic that the sale could close in coming months.

For De Beers, the company said it was pursuing a trade sale rather than a capital-markets listing. Wanblad said Anglo American did not believe market conditions supported an initial public offering and that it was working to conclude a sale on acceptable terms during the second half of the year.

On the Teck merger, Wanblad said teams from both companies had established an integration management office and were preparing the business for day-one operations, including planned listings in New York and Toronto. The final required approval is from China’s State Administration for Market Regulation. Wanblad said the companies continued to expect completion later this year or early next year.

About Anglo American (LON:AAL)

Anglo American is a leading global mining company focused on the responsible production of copper, premium iron ore and crop nutrients – future-enabling products that are essential for decarbonising the global economy, improving living standards, and food security. Our portfolio of world-class operations and outstanding resource endowments offers value-accretive growth potential across all three businesses, positioning us to deliver into structurally attractive major demand growth trends. Our integrated approach to sustainability and innovation drives our decision-making across the value chain, from how we discover new resources to how we mine, process, move and market our products to our customers – safely, efficiently and responsibly.

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