 Anglo American (AAL) rejected the combination proposal from BHP, which included two separate demergers of Anglo-American Platinum and Kumba Iron Ore. Given the AAL’s EBITDA structure, the main business interest could be its copper business. In 2023, AAL generated 32% of its underlying EBITDA from copper, 40% from iron ore sales,12% from PGMs and 13% from coal. Among all AAL businesses, copper showed robust performance with a 48% increase in underlying EBITDA in FY23, primary due to the ramp-up at Quallaveco, a Peru-based AAL subsidiary, from 102kt in 2022 to 319kt in 2023. Quallaveco reported a decrease in unit cost from 136$c/lb to 111$/lb, compared to 200$/lb in the Chile business last year. In 2023, AAL experienced cyclical lows in its PGMs and diamond businesses, which affected the mining group’s valuation. DeBeers, a leading global diamond producer controlled by AAL, reported a 95% drop in EBITDA, while PGMs EBITDA declined 73% YoY in FY23. BHP may upgrade its $39bn offer by the end of May 2024. In our view, aside from BHP, AAL’s product mix would also fit Glencore and Rio Tinto (Fig.26). However, a smaller M&A partner for would likely be more attractive to AAL.  The challenging macroeconomic and geopolitical environment resulted in a weak performance of AAL in 2023, with accumulated net debt reaching $10.6bn, making the company a potential acquisition target. In 2023, AAL reported a 13% decline in revenue to $30.65bn and a 31% drop in underlying EBITDA to $9.96bn. The production guidance for 2024 is expected to decline across most segments compared to 2023: diamonds from 30-33Mct to 29-32Mct in 2023, copper from 840-930kt to 730-790kt, nickel from 38-40kt to 36-38kt, PGMs from 3.6-4.0Moz to 3.3-3.7Moz, and steelmaking coal from 16-19mt to 15-17mt. In 2023, the company reported realized price drops of 25% for DeBeers, 25% for nickel, 37% for the PGMs basket, and 21% for steelmaking coal. Although the price environment improved for diamonds in 1Q24, it remains challenging for AAL’s other products. Consequently, AAL plans $1bn p.a. in sustainable opex savings and a $1.6bn p.a. cut in capex from 2024-2026, along with some asset optimization. The growth prospects include increasing copper output to 1mt p.a. by the mid-2030s, ramping up the polyahalite project to produce up to 13mt p.a. output by mid-2030s, and increasing high-quality iron ore production up to 60mt p.a. at Minas-Rio and 40mt at Kumba. The PGM business aims to reduce AISC by 8% to $1,050/oz in 2024. The company plans restructuring at Amplats and Kumba, including job cuts.  We update our models for AAL, Kumba Iron Ore and Anglo-American Platinum. The production guidance for PGMs appears relatively flat, despite the reported deficit in platinum, palladium and rhodium markets in 2023. Long-term drivers like strict global emissions legislation stimulating demand from the automotive industry, hydrogen fuel, and jewellery, remain compelling. However, weak macro conditions are impacting short-term trends. The diamond market remains weak, challenged by synthetic diamonds and changing consumer preferences, but it’s supported by the lack of new discoveries and restrictions on Alrosa products. The nickel market offers good long-term opportunities, though producers face challenges like increased secondary sourcing and upgrades to lower-quality production facilities. Iron ore and copper markets have a positive long-term outlook for the company, though they could be volatile in the short term. Destocking in the PGM and copper markets might support prices and production trends in 2024. We maintain our Hold recommendation for Anglo American Platinum, raising our DCF-based 12-month price target from ZAR704 to ZAR877. For Kumba Iron Ore, we increase our target price from ZAR571 to ZAR614 while maintaining our Hold rating. We maintain our Hold recommendation for Anglo American and adjust the target price from GBP17.7 to GBP24.4 following adjustments in capex, opex cuts, and product prices. The AAL stock may experience higher volatility during the bidding period. We believe AAL may receive another proposal from BHP or another bidder, given its high-quality asset base and favorable timing for mining M&A.