Shares of Anglo American traded lower in London on Thursday, retreating 1.6% to 3,602 pence as investors positioned themselves ahead of the mining giant's full-year financial report scheduled for release on Friday. The pullback followed a strong rally in the previous session, during which the stock surged 4.6% and contributed to a record close for the FTSE 100 index.
The company's Kumba Iron Ore subsidiary reported its annual financial performance on Thursday, delivering adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of 31.9 billion rand, equivalent to approximately $1.8 billion. This contribution forms part of Anglo American's broader underlying EBITDA figure, which excludes one-time items. Kumba concluded the 2025 fiscal year with a net cash position of 14.9 billion rand and declared a total cash dividend of 32.03 rand per share for its shareholders.
Market sentiment toward UK-listed mining stocks has been buoyant recently, supported by softer domestic inflation data that has fueled expectations of potential interest rate cuts by the Bank of England. Additionally, rising prices for key commodities like copper have provided a tailwind for the sector. "Investors continue to allocate capital to UK assets, which are less exposed to the volatility seen in technology and software stocks and instead benefit from elevated energy and precious metal prices," noted Axel Rudolph, a senior financial analyst at IG.
Copper markets have experienced significant volatility. On Wednesday, the benchmark three-month London Metal Exchange copper contract jumped 2.2% to $12,893 per metric ton, driven largely by opportunistic buying during a period of thin trading activity due to the Lunar New Year holiday in China. Tom Price, an analyst at Panmure Liberum, commented on the unusual market dynamic, stating, "When inventories and copper prices rise in tandem, it typically signals an underlying imbalance in the market."
The earnings season for major miners is highlighting a pivotal industry trend: a strategic shift toward copper-driven growth. This was evident in Rio Tinto's results, also released on Thursday, which showed flat annual underlying earnings. Weakness in its iron ore business was partially offset by stronger copper prices, underscoring the metal's growing importance to the sector's profitability.
Anglo American's upcoming report follows a operational update earlier this month in which the company warned of a 10% reduction in its 2025 copper output and a lowered production forecast for 2026. Furthermore, management indicated that its De Beers diamond division is likely to record a loss in the coming year. The company has initiated a review of the diamond unit's carrying value, which may lead to a significant impairment charge being recognized in the full-year results.
CEO Duncan Wanblad reaffirmed the company's strategic direction, stating Anglo American remains "committed to seeing our portfolio transformation through to its conclusion." However, the market's reaction to Friday's figures may hinge on several sensitive factors. A steeper-than-expected downturn in the diamond business, weaker cash generation, or a more cautious outlook from management could unsettle investors, particularly given the stock's recent appreciation.
The broader context for mining equities remains complex, caught between supportive commodity prices and ongoing operational challenges. Anglo American's results will be scrutinized not only for their immediate financial impact but also for what they signal about the health of global industrial demand and the company's ability to navigate its strategic pivot toward future-facing commodities like copper.
