The FTSE 100 may have been volatile lately, but it’s still flirting with record highs. One company, battered and bruised after a couple of rough years, might now be engineering one of the most fascinating comeback stories in recent memory.
Transformation
The company in question is miner Anglo American (LSE: AAL). For years, it was criticised as a sprawling conglomerate struggling to define its identity.
It’s now in the middle of a multi-year transformation, refocusing on premium iron ore and copper. This year, it spun off its platinum group metals business into Valterra Platinum and announced the sale of its nickel operations.
The biggest strategic move, however, came with the announcement of a proposed mega-merger with Teck Resources. Touted as a “merger of equals” it undoubtedly sent shockwaves through the mining world and has the potential to put the company at the forefront of the copper boom.
Supply and demand mismatch
Copper isn’t just another industrial metal. It’s the wiring of the electrification megatrend. EVs, grid upgrades, energy storage, wind and solar projects – and the sprawling new data centres powering AI – all need it.
Yet demand keeps climbing while supply is lagging behind. Ore grades are declining and the low-hanging fruit has long been mined. Major new discoveries are rare, and miners are growing increasingly risk-averse.
It’s easy to see why supply is constrained. Mining is a tough business that struggles to attract talent. On top of that, strict government permitting and local opposition mean that turning a new discovery into a fully operational mine can take decades.
I’ve long argued the world is quietly walking into a structural copper deficit. The proposed merger isn’t just a big deal on paper – it’s a calculated bet to put the company on the winning side of that imbalance.
Diamonds
Copper may grab the headlines, but its De Beers operation remains a wildcard.
The market has been under pressure. Lab-grown diamonds are eating into sales, squeezing margins, and retailers are favouring cheaper alternatives.
Anglo remains committed to selling De Beers, but buyers with the right expertise and capital are few and far between. As long as the market stays weak, a sale looks unlikely.
That said, natural diamonds have something synthetic ones can’t replicate: uniqueness. That very quality captured public attention when Taylor Swift recently showed off her engagement ring, reminding investors that demand for the real thing can still flare unexpectedly.
Bottom Line
The story isn’t just about a comeback – it’s about scale, strategy, and positioning. The Anglo-Teck merger will create one of the world’s top five copper producers. Existing shareholders will own 62.4% of the new combined company.
Six huge copper assets with a combined annual production of 1.2m tonnes, rising to 1.35m tonnes by 2027, will provide it with extraordinary scale.
Copper is set to dominate the company’s future earnings, underpinning a long-term growth story as global demand for electrification, renewables, and AI data centres surges.
I expect the road to remain bumpy. But that is par for the course when it comes to investing in miners. For investors focused on the long-term, I think Anglo American shares are worth investigating further.
