EMEA Diversifieds Q2’26 into the print: valuation support emerges but cost inflation set to bite. Place Anglo American on -ve CW

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EMEA Diversifieds Q2’26 into the print: valuation support emerges but cost inflation set to bite. Place Anglo American on -ve CW

Iron Ore to Neutral: after Catalyst Watch is our short-term conviction indicator for our

a ~25% fall since Feb the shares are now ~15% below our ZAR 314/sh PT. coverage universe. It is an optional indicator our research

analysts can apply to a stock in their coverage into a specific

• M&M has underperformed MSCI Europe ~10% since pre-Iran: Since 9 eventbased inonordernear-termto articulatefundamentals.short termAspositivitysuch, it canor cautiondiffer from

March we have recommended reducing exposure to M&M due to risk of: the analysts’ published ratings, which are sector relative and

longer term in nature.

monetary policy tightening, lower economic growth and metals prices, and

higher cost inflation. Since a YTD peak on 2 June, M&M is -20% and is lower

this week on renewed Middle East tensions.

• Diversified Miners’ earnings are in a downgrade channel: Mark-to-market

earnings have been trending lower since May due to lower metal prices, higher

costs and FX. At current commodity prices we estimate MtM downgrade risk

to consensus earnings: our Anglo American 2026E MtM EBITDA is -6% vs

BBG consensus, Glencore -1%, Rio Tinto +5%, BHP +1%. We expect Q2

reporting is likely to trigger negative 2026E earnings revisions. The magnitude

of share price declines in the last 1 month suggest earnings downgrades are

expected, but 2026E earnings are yet fully de-risked due to cost guidance.

• Costs our key concern for H1 results… We estimate 2026 US$ cost bases are

~5-10% higher vs pre-conflict and expect upside risk to most Miners’ 2026 cost

guidance. We forecast Anglo American and Glencore will be most negatively