Anglo American (AAL): Is it the right time to buy this mining share?

FTSE100 listed and one of the leading global metal and mining company Anglo American Plc (LON: AAL), has confirmed that it is in preliminary discussion with Vale S.A. regarding a partnership to jointly develop Vale’s Serpentina project, which is located adjacent to the company’s integrated Minas-Rio iron ore project in Brazil.

The discussion is currently in the preliminary stage, and no agreement has been signed yet. However, Vale said the potential deal could benefit the Serpentina project. It could leverage Anglo American’s infrastructure from the Minas-Rio project, including a 529 km long transportation pipeline and port situated in Rio de Janeiro state.

Anglo American Plc’s production and financial performance

The company is into the exploration and production of diamonds, iron ore, copper, and many other industrial metals. For the nine months ended 30 September 2021, the mining company reported a 33% rise in diamond production to 24.6 Mct. The economic recovery after the Covid-19 pandemic has resulted in a consumer demand boost from key markets like the US and China, leading to higher production output. The company’s iron ore production rose by 7% to 48.8 Mt.

For the six months ended 30 June 2021, the company reported a 114% rise in revenue at USD 21,779 million, driven by higher production and recovery in commodity prices in international markets. As a result, the company’s underlying EBITDA rose significantly by 262% at USD 12,140 million. Following the good half-yearly performance, it decided to return USD 4.1 billion to its shareholders through a dividend and share buyback program.

Should you invest in Anglo American stocks?

The metal and mining company offers an excellent investment opportunity through its diversified mining operations across the different industrial base and precious metals.

The company expects higher production volume in the coming financial year. In 2021, the company’s major gains came from firming commodities prices. As per the market experts, the rise in commodity prices is expected to stay in 2022, which will further boost the company’s growth prospects.

About stock performance

(Image Source: Refinitiv)

The company’s stock has shown good performance in 2021, delivering a 25.68% return to its shareholders. The share price currently trades at GBX 3,046.50, up by 0.20% on 29 December 2021 at 10:15 am GMT+1, with a market cap of £40,838 million.

The current dividend yield of the company stands at 8% as of 29 December 2021.