Berenberg backs Anglo American after Teck deal, cuts Glencore on copper risks

Investing.com -- Berenberg upgraded Anglo American Plc to “buy” from “hold” rating and downgraded Glencore plc to “hold” from “buy” rating, reflecting diverging outlooks between the two diversified miners. 

The brokerage cited strong merger execution and copper growth potential at Anglo American , while warning that Glencore faces operational pressure to meet copper production targets into year-end.

Berenberg lifted its price target for Anglo American to GBp3,000 per share, valuing the stock at 1.56x NAV and 7.7x EBITDA, and reduced Glencore’s target to GBp350, valuing it at 0.91x NAV and 3.4x 2026E EBITDA. 

The brokerage said it is taking “a conservative view into year-end” on Glencore after the recent share price rise linked to the Anglo-Teck merger.

The analysts said Anglo American’s merger of equals with Teck Resources, announced in September 2025, is “game-changing,” creating one of the world’s top copper producers. 

The combined entity, to be named ‘Anglo Teck,’ is expected to produce 1.3-1.4mtpa of copper, driven by synergies between Anglo’s 44%-owned Collahuasi mine and Teck’s adjacent Quebrada Blanca operation in Chile.

Berenberg estimates the combination could deliver $1.7 billion in synergies through shared ore processing and a further $800 million per year in recurring pre-tax synergies, alongside a $200 million one-off cash benefit. 

The brokerage noted that copper will contribute about 60% of EBITDA between 2025 and 2033, with iron ore providing roughly 25%. The analysts said the deal also includes a $4.5 billion special dividend for Anglo American shareholders.

“We applaud management’s execution of strategy and think that, assuming the deal closes, ‘Anglo Teck’ will have growth and momentum to outperform,” Berenberg said.

For the third quarter, Berenberg expects Anglo American’s production report, due October 28, to show 175kt of copper, 1.9mt of metallurgical coal, 14.5mt of iron ore, 5.4mct of diamonds and 9kt of nickel, though it warned of possible downside in coal guidance due to operational headwinds.

By contrast, the downgrade of Glencore reflects skepticism about its ability to meet full-year copper guidance of 850-890kt. 

The brokerage forecast 224kt in the third quarter versus 176kt in the second, leaving 282kt needed in the fourth quarter to meet even the lower end of guidance, a potential quarterly record.

“Any slips will likely be viewed as a negative,” Berenberg said, flagging copper as the biggest risk to Glencore’s production guidance. 

It forecast 11.5kt of cobalt, 255kt of zinc, 47kt of lead, 163koz of gold, 4.9moz of silver, 7.8mt of metallurgical coal, and 22.7mt of thermal coal for the quarter.

Berenberg reduced Glencore’s EBITDA multiple to 8x from 9x, citing stable but unspectacular marketing conditions. 

The brokerage said the company may have room for “one last USD1bn buyback funded by its Bunge stock,” but added that absent a coal rally, shareholder returns are likely to remain limited.

Glencore will host its capital markets day on December 3, expected to focus on copper growth and updates on cobalt export quotas from the Democratic Republic of the Congo.