Activist demands Glencore move its primary listing from London to Sydney

An activist investor has called on Glencore to shift its primary listing from London to Sydney and abandon a plan to spin off its profitable coal business.

Tribeca Investment Partners, an Australian hedge fund, wrote to Glencore’s board this week with a list of proposals to boost the share price, which it said had lagged behind rivals since the Swiss commodity giant’s public offering in 2011, according to a letter seen by the Financial Times.

Apart from keeping hold of the coal division and transferring Glencore’s main listing to the Australian Securities Exchange, the hedge fund recommended increasing dividends by discontinuing share buybacks and divesting a minority stake in its lucrative trading division via an initial public offering.

“Glencore’s share price has underperformed its peers,” Ben Cleary, portfolio manager of Tribeca Global Natural Resources, wrote in the letter. “It is through these actions that the company can increase shareholder return and close the valuation gap.”

Tribeca said Glencore had provided shareholder returns of 9 per cent since listing in 2011, versus 95 per cent for BHP and 126 per cent for Rio Tinto.

The activist’s push adds to pressure on London as mining companies look to other bourses such as New York, Sydney and Toronto to gain higher valuations, after BHP shifted its primary listing to Australia in 2022.

“London is no longer the home of mining,” wrote Cleary, who added that Glencore’s progress under chief executive Gary Nagle to lower carbon emissions at its mines would be better recognised by investors outside of Europe.

“The LSE has a comparatively low appetite for mining investment and is no longer suitable as the company’s primary bourse,” he added.

Tribeca controls approximately $300mn of Glencore through shares and derivatives, according to a person familiar with the matter. The hedge fund has waged successful activist campaigns against other mining groups, asking BHP to sell US shale assets and Teck Resources to split up its metals division and energy operations made up of coal and oil sands.

Its demand for the Swiss group to retain its coal business, which will be bulked up after completing a $6.9bn acquisition for 77 per cent of Teck’s steelmaking coal unit later this year, casts fresh doubt on the biggest shake-up at the commodity behemoth since 2013 when it merged with Xstrata.

The group first revealed in April its intention to break up its commodities empire by spinning off the coal division, which it planned to do within two years after the completion of the Teck deal, subject to shareholder feedback.

Glencore declined to comment on the letter. Nagle said at the company’s full-year results last month that spinning out the coal business “is our intention but it’s always subject to what our shareholders want”.

The company has long insisted that publicly listed mining groups are better placed to responsibly run down coal mines as the world decarbonises, rather than selling them to privately held companies that escape scrutiny.

One of its rationales for the proposed coal spin-off is to secure a higher valuation for its portfolio of copper, cobalt, nickel and zinc mines as the company has argued that their value is dragged down bundled together with the out-of-favour fossil fuel mines.

However, some analysts question the share price impact of thermal coal divestments of industry peers Anglo American and Rio Tinto, arguing that the moves have not lifted their shares.