The first-half reporting season has left the big miners treading water: solid enough numbers, but plenty of headaches still to work through.
For the diversifieds, the story is one of balance sheets under pressure and shifting capital priorities. Rio Tinto Ltd (LSE:RIO, ASX:RIO, OTC:RTNTF) and BHP Group Ltd (LSE:BHP, ASX:BHP), long reliant on iron ore and coal, are now diverting more money into transition metals, but near-term volume growth is thin and cash returns look modest.
BHP at least sweetened its payout ratio to 60% on the back of strong operations, while Rio stuck to 50%.
Anglo American PLC (LSE:AAL) remains UBS’s top pick. The restructuring drag lingers after the collapse of its met-coal sale to Peabody, but copper growth is the real prize, and bolt-on deals could accelerate the shift.
Glencore PLC (LSE:GLEN), meanwhile, is dangling an 8% free cash flow yield and another US$1bn of savings. The catch? It must deliver a step-up in copper output in the second half to regain credibility.
Copper producers more broadly have a tougher job. Almost every company reaffirmed 2025 guidance – but they’ll need a stronger second half to hit it.
Antofagasta PLC's (LSE:ANTO) Centinela project is on schedule, yet higher output is a must. Freeport and Teck both underwhelmed with guidance cuts and capex creep.
Southern Copper turned in another tidy quarter, but delays at Tia Maria cloud the picture. UBS has turned more cautious: Antofagasta is still a buy, but Freeport, Southern Copper and Lundin have been marked down, with KGHM slapped with a sell.
Aluminium remains a waiting game. Short-term earnings momentum is flat, but medium-term fundamentals hold up. UBS prefers Norsk Hydro, while Alcoa would get a lift if US tariffs on Canadian imports are eased.
Gold miners, by contrast, are enjoying their moment. Free cash flow hit records in the first half, balance sheets look pristine, and dividends and buybacks are flowing.
If prices hold, UBS thinks M&A chatter will pick up, though expect smaller, disciplined deals rather than empire building. The bank’s favourites include Barrick, Endeavour, Kinross and Franco-Nevada.
In short, miners are still delivering the dividends that have underpinned the sector’s appeal, but the easy money phase is over.
From here, execution on copper growth, cost control and portfolio pivots will separate the winners from the laggards.