Could Glencore really ditch the so-called ‘home of mining’ the London Stock Exchange?

Activist investor Tribeca sent jitters through the City yesterday with the claim that London had lost its lustre for the likes of Glencore. 

The London Stock Exchange, the Aussie hedge fund said, was no longer the “home of mining”. And to realise its true potential, Glencore should ditch its City hub and abandon much-touted plans to spin off its coal business.

The calls mirrored a similar move to that of FTSE 100 mining giant BHP in 2022 when it cancelled its London listing to head down under.

BHP was one of the comparators picked out by Tribeca as it pointed to the fact that Glencore had delivered returns of nine per cent since listing in 2011 against 95 per cent for BHP and 126 per cent for Rio Tinto.

Since the beginning of the year, shares in Glencore have fallen around 11 per cent and have struggled against a backdrop of turbulent commodity prices and uncertainty over the future of its coal business.

But the accusation against London in particular is likely to unsettle City watchers. For all the hand-wringing over the future of London as a listings venue, the capital’s role as a hub for the so-called old economy stocks of heavy industry has been largely unchallenged.

As the Chartered Governance Institute said yesterday, “mining is one of the UK’s greatest success stories”, and an exit from Glencore would be a “major setback.” 

Scores of mining behemoths still populate London’s markets, however, and the suggestion of a swap for Glencore fell on largely deaf ears yesterday.

“Glencore has always said it will look at ways of maximizing value, but any idea of listing on the ASX is nonsensical,” a market source told City A.M.

Ben Davis, an analyst at Liberum, added that he doesn’t “expect much appetite from management” to switch its base to Australia. 

“[It’s] unclear why Australia would need an even more heavy weighting to the mining sector than it already has, and questionable what valuation uplift it would deliver,” he added.

While Glencore’s sluggish share price has naturally attracted the attention of activists, the performance is also a symptom of the industry’s external headwinds. Lower commodity prices, for instance, have dented profits, particularly in its coal portfolio.

“A change of listing won’t magically fix these,” added Sophie Lund-Yates, an analyst at Hargreaves Lansdown.

More pressing, she says, is the uncertainty over the future of Glencore’s coal arm. Tribeca is calling on Glencore to retain the division, which it has said it will spin off following the acquisition of Canadian firm Teck Resources’ coal business last year.

Glencore paid $6.9bn (£5.4bn) in cash for a 77 per cent stake in Teck’s coal business that supplies the steel industry. Japan’s Nippon Steel and South Korea’s Posco own the rest. The deal valued the business at $9bn (£7.1bn).

The call from Tribeca runs counter to its campaign against miner Teck, which it previously pushed the firm to carve off its coal and oil sands business.

Glencore boss Gary Nagle has been insistent the firm will ultimately do what its shareholders decide.

“When we announced the transaction, we said our intention was to spin out, and that is our intention, but it’s always subject to what our shareholders want,” he said at the firm’s full-year results earlier this year.

He added: “We will consult with our shareholders, and it’s the decision of the shareholders ultimately to do that.”

While the future of its coal business will sit in the hands of investors, for now, its London base seems secure.