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Anglo American shares have resumed their envious 3-month uptrend (+230% from Jan lows) with investors clearly subscribing to the view that smaller and less-diversified is now better in this new world of lower commodity prices. The $1.5bn sale of one of its largest Brazilian businesses (niobium and phosphates, to China Molybdenum) kicks off and takes it half-way towards completing this year’s $3bn programme of weight loss (half its businesses!) as the dual-listed miner continues its mammoth restructuring to secure reincarnation from the commodity cycle trough. The disposal will serve to cut Anglo American’s debt and bolster the embattled miner’s balance sheet, much to investor glee, leaving it in a much stronger and leaner position both operationally and financially. The bounce off technical support yesterday continues, with circa 15% upside available to last week’s highs at 815p. Additional support today via USD weakness (courtesy of BoJ rather than Fed) coupled with some welcome commodity price stability.
Mike van Dulken, Head of Research, 28 April
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