Stock Analysis & Valuation Anglo American plc (AAM.SW)

• Previous Close: CHF35.20
• Sector Valuation Confidence Level: Moderate

Valuation method	Value, CHF	Upside, %
Artificial intelligence (AI)	18.90	-46
Intrinsic value (DCF)	12.93	-63
Graham-Dodd Method		n/a
Graham Formula	4.90	-86

Strategic Investment Analysis

Company Overview

Anglo American plc (AAM.SW) is a globally diversified mining company headquartered in London, United Kingdom, and listed on the Swiss Exchange (SIX). Founded in 1917, the company explores and produces a broad portfolio of essential commodities, including diamonds (through De Beers), copper, platinum group metals (PGMs), metallurgical and thermal coal, iron ore, nickel, polyhalite, and manganese. Anglo American plays a critical role in the global supply chain for industrial and precious metals, serving industries such as automotive, construction, energy, and jewelry. The company operates across multiple continents, with key assets in South Africa, Chile, Brazil, and Australia. Its diversified business model helps mitigate risks associated with commodity price volatility. Anglo American is also committed to sustainable mining practices, focusing on reducing carbon emissions and improving community engagement. As a major player in the Basic Materials sector, the company’s performance is closely tied to global economic growth and industrial demand.

Investment Summary

Anglo American plc presents a high-risk, high-reward investment opportunity due to its exposure to cyclical commodity markets. The company’s diversified portfolio provides some resilience against price fluctuations in any single commodity, but its 2023 net loss of CHF 3.07 billion and negative EPS (-CHF 2.53) highlight operational challenges, including cost inflation and lower diamond demand. However, strong operating cash flow (CHF 8.1 billion) and a solid liquidity position (CHF 8.17 billion in cash) offer financial flexibility. The dividend yield (CHF 0.606 per share) may appeal to income-focused investors, but the high beta (1.78) indicates significant volatility. Long-term prospects depend on commodity price recovery, successful cost management, and progress in Anglo American’s sustainability initiatives, particularly in copper and PGMs, which are critical for the energy transition.

Competitive Analysis

Anglo American plc competes in the capital-intensive and cyclical mining industry, where scale, operational efficiency, and resource quality are key differentiators. The company’s competitive advantages include its diversified asset base, strong positions in copper (a critical metal for electrification) and PGMs (used in catalytic converters and hydrogen technologies), and ownership of De Beers, which dominates the diamond market. However, Anglo American faces intense competition from larger peers like BHP and Rio Tinto, which benefit from greater economies of scale and lower-cost iron ore operations. Anglo American’s coal exposure (metallurgical and thermal) is a growing liability due to decarbonization trends, though its copper and nickel assets align with long-term demand for green metals. The company’s South African operations carry geopolitical risks, while its smaller size relative to mega-miners limits bargaining power with suppliers and customers. Cost control and technological innovation (e.g., hydrogen-powered trucks in Chile) are critical to maintaining margins. Anglo American’s sustainability commitments, including a carbon-neutral target by 2040, could enhance its appeal to ESG-focused investors but require substantial capital investment.

Major Competitors

• BHP Group (BHP): BHP is the world’s largest miner by market cap, with dominant positions in iron ore, copper, and coal. Its low-cost iron ore operations in Australia provide a competitive edge over Anglo American, but BHP has less exposure to PGMs and diamonds. BHP’s stronger balance sheet allows for higher M&A flexibility. Weaknesses include reliance on China-driven demand and environmental controversies.
• Rio Tinto (RIO): Rio Tinto rivals Anglo American in copper and iron ore but lacks exposure to diamonds and PGMs. Its Pilbara iron ore operations are among the lowest-cost globally, giving it an advantage over Anglo’s smaller-scale assets. Rio’s aluminum business diversifies its portfolio but is energy-intensive. The company faces reputational risks due to past governance failures.
• Glencore (GLNCY): Glencore’s integrated trading and mining model differentiates it from Anglo American. It is a leader in coal and copper but has minimal exposure to diamonds or PGMs. Glencore’s trading arm provides earnings stability but carries higher regulatory scrutiny. Its aggressive M&A strategy poses integration risks.
• Vale S.A. (VALE): Vale is a iron ore powerhouse with lower production costs than Anglo American, but it lacks diversification into other commodities like diamonds or PGMs. Vale’s tailings dam disaster in 2019 continues to weigh on its ESG reputation. The company is expanding into nickel and copper to align with green energy trends.
• Sibanye Stillwater (SBSW): Sibanye is a major PGM and gold producer, competing with Anglo American in South Africa. Its focus on precious metals provides leverage to gold prices but lacks Anglo’s copper or diamond exposure. Sibanye’s high-cost South African operations and labor disputes are persistent challenges.