Anglo American's shrinking market value could eject the global miner from London's blue-chip equity index at the next reshuffle in March, potentially triggering a broader sell-off.
Plunging commodity prices last year shrank Anglo's market capitalisation to $5.6 billion (3.9 billion pounds) as its shares fell 76 percent to record lows in 2015, making it the worst performer in the benchmark FTSE 100 index.
This compares to 31 billion pounds in 2011 and more than 9 billion in 1999, when the stock was listed in London.
The recovery in recent days is fragile and unlikely to last as prices of industrial commodities such as platinum, copper and iron ore produced by Anglo are still under pressure.
The risk of demotion may spark a sell-off that could be exacerbated by tracker funds rebalancing portfolios to account for Anglo's fall from grace.
"Anglo has been out of favour which has may force the issue," Macquarie analyst Alon Olsha said, when asked if Anglo could keep its place in the index. "Anglo is facing very challenging conditions and the market is questioning the credibility of the restructuring plan."
The company said in December that it would offload three-fifths of its assets.
The FTSE 100 reweighting due on March 18 will be based on March 2 closing prices. If a company falls to 111th position or below, it will be removed from the index.
Anglo is hovering near the bottom of the list.
The mining component in the FTSE 100 fell sharply to 3.6 percent in January from 15 percent at its peak in 2010, data from the London Stock Exchange showed.
"The investment proposition is quite weak at the moment ... some companies are at a liquidity risk," said PwC UK mining leader Jason Burkitt. "You don't want to (try to) catch a falling knife, better to wait until it starts to rise."
Miners across the globe now account for less than one percent of total market cap, the lowest in 15 years, according to Citi analysts.
As of today, Anglo is still the sixth-largest mining company by market capitalisation after BHP Billiton, Rio Tinto and Glencore.
"The action plan to respond to this downturn is probably going to decide whether they will stay in the FTSE," said Hanré Rossouw, portfolio manager at Investec Asset Management.
Anglo has suspended its dividend until the end of this year and announced plans to cut its workforce to 50,000 from 135,000 and reduce its assets to no more than 25 from 55.
It is expected to outline which mines will be sold or shut down during its financial results later this month.
But its turnaround plan has failed to impress investors, given the large debt load.
"The case of Anglo is difficult because they have strong liquidity, they've got bank facilities and that gives them the ability to muddle through, potentially for another four years," Investec's Rossouw said.
"But some investors are asking them to get capital now before things get worse... because for Anglo's balance sheet to be sustainable through the cycle they need to reduce the debt level by $3 or $4 billion at least."
The cycle will be dictated by the pace at which miners cut output to offset slowing demand in top consumer China.
"We haven't even seen negative demand from China yet and you still have accelerating supply in some of the key commodities," Liberum Capital analyst Richard Knights said.
"If you are a generalist investor, it definitely means you'll spend less time thinking about the mining sector because if it rallies it means less for your performance versus the benchmark as it becomes a smaller part of the index."