Anglo American Plc's (OTCPK:NGLOY) (OTCPK:AAUKF) bold tie-up with Teck Resources Ltd (NYSE:TECK) is shaping up to be more than just another mining merger—it's a copper power play that could redraw the global commodities map.
JPMorgan analyst Dominic O’Kane noted that the combined Anglo-Teck will be built on a base where copper already makes up about 66% of EBITDA. That figure could jump to 72%.
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Synergies Worth Their Weight In Copper
Unlike BHP Group Ltd's (NYSE:BHP) failed 2024 bid, which lacked operational overlap, O’Kane says Anglo-Teck's portfolio is almost engineered for synergy. Management estimates $800 million a year in savings within four years, with 80% realized by year two.
But the real kicker is copper growth—the rise from 66% to 72%. O’Kane needs Anglo to follow through on its plans to divest from coal and De Beers. That percentage could then surge even further post-2030 as production ramps at key Chilean assets.
Adjacent assets like Collahuasi and Quebrada Blanca could add 175,000 tonnes annually at an industry-beating $11,000 per tonne capital intensity, generating $1.4 billion in incremental EBITDA.
Growth economics such as these could shape Anglo-Teck into a copper empire as they sharply undercut LatAm's typical $40,000 per tonne costs. Anglo-Teck could have a scale and cost advantage that rivals won’t be able to match easily, noted O’Kane.
Low Debt, High Payouts, And A Bet On Prices
The merger isn't just about growth; it's also about cash returns, says O’Kane. Anglo plans a $4.5 billion dividend for its shareholders, funded largely by Teck's balance sheet, leaving pro forma leverage at less than 1x EBITDA in 2027—even before any proceeds from coal and diamond asset sales.
While the plan carries some risk if commodity prices tumble, the capital discipline and balance sheet strength should cushion shocks, he notes.
In a sector where scale often comes at the expense of synergy, Anglo-Teck may have cracked the code: a low-capital copper growth engine that could make it the envy of global miners.
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