Glencore and Rio Tinto among FTSE 100 miners hit by downgrades

A £1.9 billion takeover swoop for Centamin (LSE:CEY) today kept gold’s record price in the spotlight at a time when the City is pushing back on the outlook for other commodities.

Deutsche Bank this morning downgraded its price targets for Anglo American (LSE:AAL), Glencore (LSE:GLEN) and Rio Tinto Registered Shares (LSE:RIO) as it said recent economic data pointed to a “synchronous downturn” in industrial activity across China, the US and Europe.

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It has now delayed expectations for a recovery in base metal prices into 2025, although the bank still expects an eventual rebound in demand outside China to tighten key markets such as copper, aluminium, metallurgical coal.

The bank adds that surplus conditions in iron ore are likely to persist into next year, keeping the price near to the top of the industry’s cost curve.

It has reduced its 2025 copper price estimate from $10,500 a tonne to $9,600, having seen the price fall since May to near $9,000. The iron ore estimate is down from $110 a tonne to $105.

The near-term caution resulted in Deutsche Bank making price target cuts of between 3% and 7% on four of the FTSE 100’s mining stocks.

Despite the downgrades, it continues to position for a sharp recovery in the shares of Glencore and Rio Tinto following falls of more than 20% so far this year.

Glencore, whose valuation has declined amid the absence of top-up shareholder distributions, is backed with a 35% upside to a new price target of 500p.

Iron ore specialist Rio Tinto is seen rising 31% to 6,000p, with Anglo American the third of the bank’s FTSE 100 Buy recommendations based on a 35% upside to 2,700p.

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Antofagasta (LSE:ANTO), which has four copper mines in Chile, is regarded as more richly valued based on Deutsche Bank’s Hold recommendation and forecast rise of 19% to 2,000p.

The group’s Los Pelambres and Centinela mines are also responsible for significant volumes of gold, the price of which today remained near a record $2,500 an ounce due to expectations for a series of US interest rate cuts.

Gold is sensitive to the monetary policy outlook as higher rates dent the appeal of holding non-yielding bullion, although this relationship has been tested in recent years.

And in the build up to November’s election, it’s likely that investors have built gold positions ahead of potential tariff and tax policy changes in any Trump presidency.

The gold price momentum has underpinned a 90% rise in the shares of Hochschild Mining since February while fellow FTSE 250-listed Centamin was up more than 60% by last night.

Its shares today reached their highest level in four years after New York-listed Anglogold Ashanti (NYSE:AU) pitched a cash and shares proposal 37% higher at an implied 163p, or £1.9 billion.

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Centamin’s flagship Sukari asset, which is Egypt's largest and first modern gold mine, will increase the bidder’s annual gold output by about 450,000 ounces to more than three million.

AngloGold Ashanti was formed in 1998 out of the gold mining interests of Anglo American and the 2004 merger with Ashanti Goldfields. Centamin shareholders will be left holding 16.4% of the combined business should the recommended deal reach completion