The Post-BHP Strategic Reassessment of Anglo American: Merger with Teck Resources as a New Growth Catalyst

In the wake of shifting dynamics in the global mining sector, Anglo American PLC (AAL) has embarked on a strategic reassessment that positions it as a pivotal player in the critical minerals race. While the company's recent financial performance and intrinsic value suggest it is undervalued, the proposed merger with Teck Resources introduces a transformative catalyst that could redefine its long-term growth trajectory. This analysis evaluates Anglo American's standalone fundamentals and explores how the Teck merger, if finalized, could unlock new value for shareholders.

Anglo American's Standalone Intrinsic Value: A Case for Undervaluation

Anglo American's first-half 2025 results underscore its operational resilience. The company reported $27.3 billion in revenue and $8.5 billion in underlying EBITDA for the period, reflecting its focus on portfolio simplification and operational excellence. Analysts at AlphaSpread estimate the intrinsic value of AAL shares under a Base Case scenario at 3,892.21 GBX, significantly above the current market price of 2,716.55 GBX-a 30% discount-based on a blend of discounted cash flow (DCF) and relative valuation models. This suggests that the market may be underappreciating Anglo American's strategic pivot toward sustainable mining and its robust cash flow generation.

The company's Sustainable Mining Plan, which targets a 30% reduction in greenhouse gas emissions and improved water efficiency by 2030, aligns with global decarbonization trends, enhancing its long-term appeal to ESG-focused investors. Furthermore, Anglo American's emphasis on high-margin copper and critical minerals positions it to benefit from the energy transition, a sector projected to drive demand for base metals over the next decade.

The Teck Merger: A Strategic Leap for Scale and Synergy

The proposed merger with Teck Resources, announced in September 2025, represents a bold strategic move to consolidate Anglo American's position in the global mining landscape. This "merger of equals" is expected to create the Anglo Teck group, a $53 billion entity with enhanced exposure to copper-a metal central to renewable energy infrastructure-and a diversified portfolio of critical minerals.

Teck's Q3 2025 results highlight its operational strength, with adjusted EBITDA of $1.2 billion driven by higher copper and zinc prices. The combined entity is projected to realize annual pre-tax synergies of $800 million by the fourth year post-merger, with 80% of these gains achievable within two years. Additionally, Anglo Teck aims to optimize adjacent assets such as Collahuasi and Quebrada Blanca, targeting an incremental $1.4 billion in annual EBITDA by 2030–2049. These synergies, coupled with a broader geographic footprint, could enhance operational efficiency and reduce capital intensity.

Proxy advisory firm Glass Lewis has endorsed the deal, citing its "reasonable terms" and the opportunity for Teck shareholders to join a "larger, more diversified critical-minerals group" with stronger growth prospects. Shareholders of both companies will vote on the merger on December 9, with regulatory approvals still pending from China, the U.S., and Canada. If successful, the merger would create one of the largest copper producers globally, better positioned to navigate commodity price volatility and geopolitical risks.

Balancing Risks and Rewards

While the merger offers compelling growth potential, investors must weigh execution risks. Integration challenges, regulatory hurdles, and the need for significant capital expenditures to unlock synergies could test management's capabilities. Moreover, the current undervaluation of Anglo American's shares-based on standalone metrics-suggests that the market has yet to fully price in the merger's upside.

However, the alignment of interests between Anglo American and Teck, supported by Glass Lewis's recommendation, indicates a strong likelihood of shareholder approval. The combined entity's enhanced scale and focus on copper-a metal with inelastic demand in the energy transition-could justify a premium valuation over time.

Conclusion: A Dual-Driven Growth Story

Anglo American's intrinsic value, as calculated by analysts, already signals a compelling investment opportunity. The proposed merger with Teck Resources, if executed successfully, could amplify this potential by creating a more resilient, diversified, and capital-efficient entity. For investors, the key lies in monitoring the December 9 shareholder vote and regulatory developments while keeping a close eye on the company's progress toward its sustainability and operational targets. In a sector increasingly defined by scale and strategic foresight, Anglo American's post-BHP reassessment may well position it as a leader in the critical minerals era.