Activist investor Tribeca targets Glencore over listing, coal

Activist investor Tribeca wants mining giant Glencore to ditch its London listing in favour of the ASX and retain its coal operations.

Activist investor Tribeca is pressuring mining giant Glencore to keep its coal mines and ditch its London listing in favour of the ASX.

In a letter to Glencore’s board, Tribeca Global Natural Resources Fund portfolio manager Ben Cleary says the changes could unlock the share price that has lagged BHP and Rio Tinto.

Sydney-based Tribeca had been a long-term shareholder of Glencore “to gain exposure to the company’s best-in-class management, world-leading commodity trading business and tier one coal, copper, and zinc assets.” Tribeca has launched similar actions against BHP and Teck Resources. “Asset rationalisation, bourse adjustment and the optimisation of capital returns are all suggestions we have made to BHP and Teck Resources,” the letter says. “Having largely followed these, BHP subsequently reaffirmed its position as the world’s premier mining company and Teck delivered shareholder returns of 371 per cent.”

Tribeca says it’s opposed to Glencore’s plan to demerge its combined coal and carbon steel materials business that would result from its proposed acquisition of Teck.

“We firmly oppose such divestiture and call on the card to retain these world-class assets,” the letter says. “Not only does the retention align with the company’s long-held commitment to industry leading policy, but also strategically supports its earnings profile and the delivery of value to shareholders.”

Tribeca says shifting Glencore’s primary listing to Australia - “the home of mining investment” - offered its higher valuation, broader market access, and the opportunity for strategic corporate activity.

Tribeca Global Resources Fund portfolio manager Ben Cleary

“The LSE is no longer the appropriate forum for Glencore’s shares,” the letter says. “Its mining capitalisation is 29 per cent lower than its Australian counterpart. In fact, miners make up a mere 7 per cent of the London bourse while occupying a much stronger portion of the Sydney market (16 per cent).”

Tribeca says that since listing on the London Stock Exchange (LSE) in May 2011, the total return Glencore had provided to shareholders, including buybacks and dividends, has been 9 per cent. Over the same period, returns delivered by peers such as BHP (+95 per cent), South32 (+99 per cent) and Rio Tinto (+126 per cent) have been multiple times higher.

Glencore declined to comment on the letter but pointed to comments from chief executive Gary Nagle made during its full-year results announcement last month that the company remained committed to spinning out the coal assets subject to shareholder approval.