Anglo American: coal sale and Teck merger, not EBITDA growth, drive the valuation

On July 30, 2026, Anglo American reported first-half 2026 results. Underlying EBITDA from continuing operations rose 35% to $4.0 billion, but the net loss was $0.9 billion due to the coal business impairment. At the current price, the share looks unattractive: the portal's model implies -41% upside.

Key takeaways

— Underlying EBITDA rose 35% to $4.0 billion, driven by copper and cost savings

— Net loss of $0.9 billion reflects the coal business impairment ahead of sale

— Net debt fell to $8.2 billion, but the ratio to EBITDA is 1.29 on an LTM basis

— Interim dividend rose to $0.23 per share, but dividend yield is only 0.67%

— Steelmaking Coal sale and Teck merger are key events, but their effect is already priced in

Attractiveness

Key figures, USD bn

Underlying EBITDA rose 35% to $4.0 billion, driven by copper and cost savings

For the first half of 2026, underlying EBITDA from continuing operations was $4.0 billion, up from $3.0 billion a year earlier. The 35% increase was driven by favourable copper prices, which added $1.2 billion, as well as the realisation of cost-out programme benefits and actions to reduce losses at De Beers.

The copper segment contributed $2.9 billion of underlying EBITDA with a 60% margin, confirming copper's role as the main driver. Copper production was virtually flat at 344 kt, but a 39% rise in copper prices offset lower sales volumes in Chile and Peru.

Other segments were more modest: iron ore – $1.2 billion, manganese – $98 million, while De Beers and Crop Nutrients remained EBITDA-negative. Overall, the picture shows the company moving toward a higher-margin portfolio.

Net loss of $0.9 billion reflects the coal business impairment ahead of sale

The first-half 2026 report shows a loss attributable to shareholders of $0.9 billion, significantly narrower than the $1.9 billion loss a year earlier. The main reason is the reduction in the carrying value of Steelmaking Coal to reflect the agreed sale terms, resulting in an impairment of $0.9 billion ($0.7 billion after tax).

This is a one-off, non-cash effect related to exiting the coal business. The sale of Steelmaking Coal to Dhilmar provides for up to $3.875 billion in cash, including $2.3 billion upfront and potential payments linked to coal prices.

Excluding special items, underlying earnings from continuing operations were $0.8 billion, indicating that operating activities remain profitable. The loss is the price of portfolio transformation, not a deterioration of the business.

Net debt fell to $8.2 billion, but the ratio to EBITDA is 1.29 on an LTM basis

At the end of H1 2026, Anglo American's net debt was $8.2 billion, down from $8.6 billion at end-2025. The reduction was driven by strong operating cash flow of $3.5 billion for the half and disciplined capital expenditure.

However, on a trailing twelve-month basis, the net debt / EBITDA ratio is 1.29 – a level, not an improvement or deterioration, as the prior value is unknown. The company reports a 1.0x ratio on a continuing basis, but that is not comparable to the LTM figure due to different bases.

Given the upcoming Teck merger and De Beers sale, leverage remains moderate. Group liquidity stands at $15.5 billion, providing ample coverage of short-term obligations.

Interim dividend rose to $0.23 per share, but dividend yield is only 0.67%

The Board approved an interim dividend of $0.23 per share, consistent with the policy of paying out 40% of underlying earnings. This is a significant increase from $0.07 a year earlier, reflecting improved profitability.

However, the trailing twelve-month dividend yield is only 0.67% – low for a mining company. This is because payouts are tied to earnings, which have not yet recovered to historical levels, while the market capitalisation stands at $63.2 billion.

For income-oriented investors, the current yield is hardly attractive. The stock's main value lies in the growth potential after the asset sales and the Teck merger are completed.

Steelmaking Coal sale and Teck merger are key events, but their effect is already priced in

Anglo American continues its transformation: the sale of Steelmaking Coal for up to $3.875 billion has been agreed, the De Beers sale is advancing, and integration with Teck is well advanced. The merger is expected to complete between September 2026 and March 2027, pending anti-trust approval from China.

These events shape the company's future – a focus on copper, premium iron ore and crop nutrients. However, the market is already pricing in these expectations: the shares trade at an EV/EBITDA LTM multiple of 11.35, which is above historical levels for the mining sector.

On the portal's model, based on current commodity prices and a target EV/EBITDA, the share's upside potential is minus 41% from the current market capitalisation. This suggests the market is too optimistic about future synergies and portfolio improvement.

Valuation on the latest reported figures

Bottom line

Anglo American reported strong H1 2026 results with underlying EBITDA up to $4.0 billion, confirming the effectiveness of its copper focus and cost-cutting programme. However, the net loss of $0.9 billion due to the coal impairment and the low dividend yield of 0.67% make the share unattractive for conservative investors. At the current EV/EBITDA LTM of 11.35 and a -41% upside on the portal's model, the market has already priced in expectations from the Teck merger and asset sales. The verdict is unattractive: until evidence emerges of successful deal completion and sustainable free cash flow growth, upside potential is limited.