Anglo American PLC

Overview Key strengths Key risks Long-life asset base and large scale of operations, most of which are located on the lower half of the global unit cash cost curve. Substantial minority holdings, leading to cash leakage when cash is upstreamed to the parent (about 35% of the total dividends paid). One of the most diversified miners, with a portfolio of six major commodities, with the diamond business not fully linked to the commodities cycle. Asset concentration in emerging markets, notably South Africa and Brazil. Commodity diversification, new projects, and strong liquidity alleviate some of the risks. Supportive financial policy underpinned by relatively low debt level and strong liquidity. Cyclical and capital-intensive mining industry. Forecast of strong positive free operating cash

...Elevated spot commodity prices will continue to support performance in 2023. After the peak commodity prices in 2021 (underlying EBITDA of $20.6 billion), 2022 was another robust year for Anglo American with an underlying EBITDA of $14.5 billion. We understand that the profits could have been much higher but the company faced some operational and weather impacts on its iron ore business and lower grade in Chile. When incorporating our latest working assumptions for prices and production for 2023, we expect the underlying EBITDA to reach $13.5 billion-$14.5 billion in 2023 (a slight upside from the $13 billion-$14 billion we expected in November 2022). The results this year would be supported also by the ramp-up of the Quellaveco Copper mine in Peru, which was commissioned in mid-2022. In our view, commodity prices will remain volatile and reflect the recovery of China and potential slide of the global economy into recession. On the other hand, we note the tight supply in the market and...

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