Copper growth, asset disposals, and ASX listing form Glencore's upcoming catalysts

Overview

The report summarizes feedback from Deutsche Bank's investor meetings with CEO Gary Nagle and CFO Steve Kalmin after Glencore released its H1'26 interim results. Management believes overall operations are in good shape, the marketing business is particularly strong, and the copper growth strategy is progressing as planned. Deutsche Bank views asset disposals, enhanced shareholder returns, the ASX secondary listing, and potential industry consolidation as key catalysts, and maintains its Buy rating.

Core views

First, the marketing business significantly exceeded expectations, driven by energy trading, supporting full-year earnings and cash flow. Second, the recovery in grades at Collahuasi, production ramp-up at Katanga, and progress on multiple copper projects will drive meaningful copper production growth over the next 12 to 18 months. Third, the sale of partial interests in DRC copper-cobalt assets and other potential disposals could reduce net debt and expand room for shareholder returns. Fourth, the ASX secondary listing is expected to broaden the Australian investor base, improve valuation, and increase shareholder overlap for potential future industry consolidation. Fifth, RIO merger talks may still restart in the future, but they are not a necessary condition for the current investment thesis to play out.

Analysis framework

The report combines management roadshow feedback with bottom-up fundamental analysis, assessing earnings trends through operating performance, production and cost guidance, marketing profits, working capital, asset disposals, and capital allocation, and evaluates the potential path for valuation rerating through a catalyst timeline.

Methodology notes

• Fundamental analysisBottom-up company analysis

  Deriving the company's earnings and cash flow outlook from business segments, assets, and project progress.

  The analysis focuses on the impact of marketing profits, copper production growth, unit costs, capital expenditure, net debt, and asset sale proceeds on shareholder returns.

• Event-driven analysisCatalyst analysis

  Identifying company events that may change earnings expectations or valuation levels.

  Key catalysts include the sale of DRC interests, the ASX listing in October 2026, recovery in Collahuasi grades, copper project approvals, and potential M&A discussions.

• Research analysisManagement roadshow feedback

  Using information obtained from meetings with senior management to verify operating trends and strategic execution.

  Based on the CEO and CFO's comments on operations, disposals, capital allocation, costs, and project progress, the report updates its assessment of the company's short-, medium-, and long-term outlook.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Glencore (GLEN.L)

  Core subject of the report; Deutsche Bank maintains a Buy rating.

  Strengths

  Strong profitability in the marketing business, abundant copper resources and project pipeline, and asset disposals with the potential to release cash and enhance shareholder returns.

  Weaknesses

  Short-term copper cash costs are rising, and the business portfolio is highly sensitive to commodity prices, the energy trading environment, and complex jurisdictions.

  Comparison

  The proposed ASX listing may help the company narrow its valuation discount relative to Australian mining stocks and enhance its appeal as a scarce local copper investment target.

  Risks

  Delays in asset sales or project approvals, copper production ramp-up falling short of expectations, sustained high costs, and weak coal price performance.

• Copper

  The main driver of Glencore's medium- to long-term production growth and valuation rerating.

  Strengths

  Recovery in grades at Collahuasi, production ramp-up at Katanga, and multiple development projects support the 2029 and 2035 production targets.

  Weaknesses

  2026 group copper cash cost guidance has been raised, and some projects remain in the land acquisition, permitting, or investment decision stages.

  Comparison

  Copper investment targets are relatively scarce in the Australian market, which may enhance Glencore's investment appeal after its ASX listing.

  Risks

  A pullback in copper prices, persistently high DRC input costs, project approval delays, and production recovery slower than planned.

• Thermal coal

  An important earnings and cash flow business for Glencore, while also affecting its investor coverage and valuation.

  Strengths

  Energy market disruptions can create profit opportunities for coal and related marketing businesses, while ESG pressure has eased compared with the past.

  Weaknesses

  Thermal coal prices during periods of energy market disruption have still performed below some investors' expectations.

  Comparison

  Strong Indonesian exports and high domestic production in China make the current market environment different from 2021 to 2022.

  Risks

  Changes in Indonesian export policy, strong domestic supply in China, and long-term energy transition pressure.

• RIO

  Potential strategic merger target, but there is currently no confirmed transaction.

  Strengths

  A potential merger could create greater scale, synergies, and a stronger growth portfolio.

  Weaknesses

  Both parties may need to advance their respective asset disposals first, and uncertainty remains around transaction structure and distribution of benefits.

  Comparison

  Glencore's ASX listing could increase Australian investors' familiarity with the company and increase shareholder overlap between the two parties.

  Risks

  Failure to restart talks, difficulties in regulatory and shareholder approvals, and inability to realize synergy value as expected.

Key data

• Rating and target priceBuy; target price 630 penceBased on the reference price of 566 pence on 2026-08-06, this implies upside of approximately 11.3%.
• H1'26 marketing EBITUSD 3.3 billionClose to twice the upper end of the company's full-year guidance range of USD 2.3 billion to USD 3.5 billion, mainly driven by strong energy trading.
• 2026 marketing EBIT expectationCompany guidance of USD 4.7 billion to USD 5.0 billion; Deutsche Bank forecasts slightly above USD 5.0 billionThe company's guidance for the second half is USD 1.4 billion to USD 1.7 billion.
• Potential DRC asset transactionOverall enterprise value of the two mines of around USD 9.0 billionThe company plans to sell 40% of the relevant interests in Mutanda and KCC, which is expected to generate around USD 2.5 billion to USD 3.0 billion in cash proceeds for Glencore.
• Copper production growth targetsAround 840,000 tonnes in 2026, 1.1 million tonnes in 2029, and 1.6 million tonnes in 2035Growth depends on the advancement of assets and projects including Collahuasi, Katanga, Coroccohuayco, MARA, and El Pachon.
• Collahuasi production contributionSupports group copper production exceeding 900,000 tonnes in 2027 and reaching around 1.0 million tonnes in 2028Grade improvements are expected to begin emerging from late 2026, and the asset is planned to return to full production in 2028.
• 2026 group copper cash cost guidanceRaised from 185 cents/lb to 225 cents/lbThe increase is mainly due to temporary increases in sulfur and acid costs in the DRC and the impact of cobalt inventory accounting.
• H1'26 increase in non-readily marketable inventory working capitalUSD 1.9 billionOf this, around USD 1.2 billion is expected to reverse relatively quickly after the energy trading environment normalizes.
• Timing of ASX secondary listingTargeting listing approval in October 2026The company plans first to seek inclusion in the ASX 200, then the ASX 100, and potentially the ASX 50 over the longer term.

Impact & implications

If the asset sales are completed as planned, Glencore could receive substantial cash proceeds, reduce net debt, and enhance its capacity for dividends or buybacks; recovery in copper production and long-term expansion would increase the company's earnings leverage to copper prices; strong marketing profits could cushion some pressure from mine costs. The ASX secondary listing may expand investor coverage and narrow the valuation discount relative to Australian mining stocks. If these catalysts materialize concurrently, they could drive upward revisions to earnings expectations and valuation levels.

Risks

• The sale of DRC interests continues to be delayed due to factors such as travel restrictions, or the final valuation and cash proceeds are lower than expected.
• Recovery in grades at Collahuasi, production ramp-up at Katanga, and approval or construction progress for other copper projects fall short of plan.
• The Strait of Hormuz and trade flows fail to normalize, keeping input costs such as sulfur and acid at elevated levels.
• Energy trading conditions weaken, causing marketing business profits and working capital reversal to come in below expectations.
• Strong Indonesian exports and high domestic production in China continue to pressure thermal coal prices.
• The ASX listing, index inclusion, or potential RIO merger fails to deliver the expected valuation uplift.
• Changes in commodity prices, exchange rates, and operating jurisdictions adversely affect earnings, cash flow, and asset valuations.

What to watch

• Whether the terms for the sale of interests in Mutanda and KCC can be finalized within 2026, as well as the final valuation and cash proceeds.
• Progress of the ASX secondary listing in October 2026 and the likelihood of inclusion in the ASX 200 after listing.
• Recovery in Collahuasi grades from late 2026 onward and whether restrictions from desalination facilities can be lifted.
• Marketing EBIT in the second half of 2026 and the pace of reversal of USD 1.2 billion in working capital.
• Whether DRC copper cash costs can decline rapidly as trade flows normalize.
• Whether Coroccohuayco can receive project approval in late 2026 or early 2027.
• Permitting progress for MARA and El Pachon and potential investment decisions after 2028.
• Indonesian coal export policy, China's domestic coal production, and thermal coal price performance.
• Whether merger discussions between Glencore and RIO restart after both parties make progress on asset disposals.