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It takes millions of years for mineral deposits to form. Miners, in relative terms, can metamorphose in the blink of an eye, depending on the latest corporate fancies.
The trend du jour is stock market relocation. Glencore is reviewing whether to shift its primary listing from London to the US, or elsewhere, to lift its valuation. It’s only sensible that Glencore would run the numbers on a move. But the peculiarities of mining make it hardly the best industry upon which to assess London’s shortcomings.
Miners have good reason to seek a share-price boost. Diversified resources companies have been drifting between two commodity “super cycles”. Many are too tied to the health of China’s economy — as BHP’s results this week showed. Despite big talk from executives about a new super cycle driven by the energy transition and artificial intelligence, this is yet to take flight.
Yet the fact this idea is being floated is distressing for London. Mining and mineral products account for nearly 6 per cent of FTSE 100 revenue, according to FactSet data.
The flight from London is a wider trend, of course. A total of 88 companies delisted or shifted their primary listing from London’s main market last year. They were replaced by just 18.
On paper, New York has an obvious lure. The London-quoted diversified miners trade at an average 28 per cent discount to US-listed miners such as Freeport-McMoRan and Newmont, on a forward enterprise value/ebitda basis. Yet such a comparison ignores that the latter are specialists. It is not clear what the tax implications or other costs of a change might be for Glencore.
Liquidity in the US markets is an attraction for companies wanting to lower their cost of capital. That said, a move across the Atlantic is no guarantee of success. US investors are primarily interested in high-growth companies, argues Joachim Klement of Panmure Liberum. Entrance to indices often requires a major US presence.
A quirk of mining companies is that while their assets are literally buried in the ground, their corporate structures can be essentially stateless. For a supermarket group such as Tesco, a move from London would never make sense. By contrast, Glencore is listed in London and Johannesburg, headquartered in Switzerland and has mines across the world. Like many of its peers, it could seek to have its shares traded almost anywhere.
Indeed, Glencore has previous form of going where the mood suits. In 2017, it cancelled its secondary listing in Hong Kong, having previously argued it brought enhanced proximity to big customers. In 2022, BHP unified its corporate structure in Australia. Rio Tinto is under pressure from an activist to do the same. As sure as commodity prices wax and wane, so too will the debate over the optimum exchange for miners.
nathalie.thomas@ft.com
