On Wednesday, UBS reaffirmed its Buy rating on Anglo American (JO:AGLJ) PLC (AAL:LN) (OTC: NGLOY) with a consistent price target of GBP25.00. The firm highlighted that Platinum Group Metals (PGMs) continue to play a crucial role in the company's financial performance, despite a downturn from peak levels.
PGMs currently represent the third-largest commodity segment for Anglo American, contributing approximately $1.3 billion to the company's EBITDA in 2024, which accounts for around 12% of the group's total. This marks a significant decrease from the $7.1 billion, or 36%, contribution when PGM prices were at their peak in 2021.
Anglo American's listed subsidiary, Amplats, in which it holds a 79% stake, is seen as having a sustainable competitive edge owing to its low-cost operations and high productivity. The analyst firm attributes this advantage to the unique qualities of the Mogalakwena mine, which is an open-pit operation with low costs and a long lifespan. The mine's efficiency is further enhanced by Anglo American's management strategies that prioritize value and efficiency.
The Mogalakwena mine's distinction is not just in its cost-effectiveness but also in its longevity and scale, which are unparalleled in the industry. The emphasis on a value-driven approach and operational efficiency by Anglo American's management is supported by the company's overall strategy, which has a positive impact on Amplats' performance.
Despite the reduction in EBITDA contribution from PGMs since their peak, Anglo American's PGM segment remains a significant part of the business. The price target set by UBS reflects confidence in the company's ability to maintain its competitive position within the PGM market and to continue generating substantial earnings through its operations.
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