On Friday, Berenberg raised the price target for Anglo American (JO:AGLJ) PLC (AAL:LN) (OTC: NGLOY) to GBP21.00 from the previous GBP20.00 while maintaining a Sell rating on the stock. The adjustment follows Anglo American's second-quarter operational results, which were reported on July 18 and met or exceeded the firm's expectations in several key areas.
The company's latest quarterly performance showed stronger than anticipated volumes in copper, platinum group metals (PGMs), and nickel. Conversely, the production figures for iron ore, diamonds, metallurgical coal, and manganese aligned with expectations. Despite these results, Berenberg has not shifted its stance on the mining giant's shares.
Anglo American has revised its metallurgical coal guidance downward to 14-15.5 million tonnes from the previous range of 15-17 million tonnes. This revision is attributed to the repercussions of an explosion and subsequent fire at the Grosvenor mine in Australia.
The company anticipates that the procedures required for safe re-entry into the mine will span several months, which could likely lead to a reduction in the 2025 guidance.
In addition to the changes in coal guidance, Anglo American has also increased its cost guidance from USD 115 per tonne to a range of USD 130-140 per tonne. However, there was a silver lining as the company announced a roughly 8% reduction in nickel cost guidance due to lower input costs.
The diamond market's current weakness has prompted Anglo American to consider further volume reductions. This strategy is aimed at managing elevated inventory levels and maintaining control over working capital amidst challenging market conditions.
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