DB-Antofagasta PLC Downgrade to Sell：competition for the copper crown-20260107

Downgrade to Sell: competition for the copper crown

ANTO doubled in value in 2025 and decoupled from the copper price through H2(Fig 1), reflecting operational challenges at other major producers and scarcityvalue in good quality, lower risk copper companies. Valuation is now very full,pricing in the company’s growth pipeline and discounting a long-term copper priceof ~$12,500/t. ANTO is a good operator and we remain positive on the outlook forcopper, but a key point for the market to consider is whether other large coppercompanies could become viable alternatives to ANTO within the next 6-12 months,potentially impacting its premium valuation. FCX has underperformed copperpeers since the Grasberg suspension and we expect this gap to narrow asproduction recovers, while the proposed Anglo Teck merger is progressing towardscompletion and will, in our view, create the world's premier copper company.Alongside refreshed prices (2026 copper price lifted from ~$10,600/t to ~$12,125/t)and minor operational adjustments, we increase 2026/27E EBITDA by ~21% and~7% respectively and lift our TP from £24 to £28, based on an average of our DCF(using a WACC of 8%) and our mid-cycle earnings (unchanged target EV/EBITDAmultiple of 8.0x), with the discount rate and target multiple reflecting historicaltrading ranges blended with our view on future industry and company outlook. Wedowngrade from Hold to Sell, with our TP implying downside potential of ~17%.