It was perhaps expected that Anglo American’s extensive strategic transformation would encounter challenges eventually. Soon after the latest analysis, two significant issues came to light for the FTSE 100 mining company.

Firstly, on March 31, a fire erupted at Anglo’s Moranbah North steelmaking coal mine located in Queensland, Australia, resulting in an operational shutdown. Subsequently, on April 2, President Trump announced global tariffs that included no exemptions for diamonds, creating further uncertainty in the market.

These incidents are unfortunate for Anglo, which is currently engaged in selling its steelmaking coal and De Beers diamond businesses as part of a comprehensive strategy to streamline its vast global operations. This approach was developed during last year’s efforts to fend off a takeover bid from BHP, and under the leadership of CEO Duncan Wanblad, Anglo is refocusing its efforts towards copper and iron ore mining, along with a budding fertilizer mining sector. Selling off its many “non-core” assets is crucial for this realignment.

Despite the fire at Moranbah North, Anglo believes this will not hinder its plans: it entered into a binding agreement last November to sell its Australian coal mines to Peabody Energy for as much as $3.8 billion. However, Peabody has indicated that the circumstances resulting from the fire represent a “material adverse change,” and has warned that it may terminate the agreement unless these issues are resolved. Anglo, in response, has asserted that they are making progress towards resuming operations and maintains that no material adverse change exists per the contract.

The resolution of this situation remains uncertain. Ideally, Anglo will be able to quickly restart operations at the mine, resolving the issue. However, the worst-case scenario could lead to a protracted arbitration dispute. A more likely outcome could involve Anglo making concessions, such as adjusting payment terms; analysts from Jefferies suggest potential modifications could involve increased deferred payments and reduced upfront cash. Nevertheless, they anticipate the agreement will proceed under the original terms, suggesting that the conflict may not be as severe as it seems.

Regarding diamond sales, Trump’s tariffs on imported diamonds into the United States present yet another complication for an industry already grappling with a prolonged downturn. The specifics on the tariff rates for diamonds remain unclear, considering that a typical De Beers diamond might originate from Botswana, be processed in India, and sold in Belgium—potentially involving multiple trips to the U.S. for certification. Any imposed tariff will undoubtedly complicate the industry’s efforts to convince consumers to choose expensive natural diamonds over more affordable lab-created alternatives.

The industry remains hopeful that rationale will prevail, particularly as there are no diamond mines within the U.S. borders. Yet, this administration has not always adhered to logic. Launching an IPO for De Beers amidst these uncertainties seems improbable, making it increasingly challenging to secure favorable conditions for a trade sale. However, rapid divestiture of De Beers wasn’t anticipated by many, and buyers, particularly sovereign wealth funds, may still find the brand appealing.

If Anglo can navigate these challenges over time, how will the streamlined version of the company perform in a post-tariff landscape? Both copper and iron ore experienced a sharp decline in prices due to concerns that tariffs would impede global economic growth, though there has been some recovery as the U.S. begins establishing trade agreements. Copper, in particular, remains vital to the global energy transition, maintaining its long-term prospects in the market—elements that attracted BHP’s interest last year.

Anglo’s renewed focus on copper is already showing promise with investors. Its valuation, measured by enterprise value in relation to projected earnings before interest, depreciation, taxes, and amortization (EBITDA), has risen from approximately 5.4 times at the beginning of the previous year to about 7.3 times now. In contrast, its FTSE 100 counterparts, like Rio and Glencore, are trading at a valuation of barely over 5 times. Ultimately, Anglo aims for a valuation closer to that of specialized copper producers, which typically command around a 10 times multiple. In this context, any short-term setbacks due to recent difficulties may present a buying opportunity.

Advice: Consider buying. Reason: Short-term issues do not undermine the long-term attractiveness of copper investments.