Johannesburg - Glencore Xstrata’s plan to obtain a secondary listing on the JSE during the fourth quarter of this year is expected to be a much-needed boost for competitiveness of the South African mining sector.
The listing comes at a time when the industry is plagued by violent strikes, job losses, increasing costs and policy uncertainty, which have contributed to investor jitters.
The global commodities trader and metals producer was likely to do more deals in South Africa once it listed on the JSE, Albert Minassian, a mining and metals analyst at Investec, said yesterday.
Minassian stressed that the Swiss-headquartered company’s intended listing on the JSE “makes sense” in the light of the interests the group had in South Africa, including a 24.5 percent stake in Lonmin.
The third-biggest platinum firm was shaken by violent unrest in August last year in which more than 44 people, including workers, policemen and security guards, were killed.
The JSE was consulting with Glencore Xstrata on its listing application, Patrycia Kula, a business development manager at the exchange, said.
Kula said Glencore Xstrata, which is primarily listed in London with a market value of £42.4 billion (R66bn), would become the third-largest company on the JSE, exceeded only by British American Tobacco and SABMiller. Its market capitalisation would be twice the size of Anglo American’s.
“A listing of this size means a lot for the JSE in terms of trading volumes and will result in allocation changes for those funds that track the various indices. This is further proof that South Africa is an attractive listing destination for other resources companies with African assets.”
Giyani Gold, a Canadian-based exploration firm, and Sibanye Gold, which was spun out of Gold Fields local assets, have been the two mining listings on the JSE so far this year.
Sibanye began trading in February at a price of R13.05, with 731.6 million shares issued on the day of listing. The stock closed at R12.01 yesterday.
Giyani is a thinly traded security, which listed on AltX in June with an issue of 54.6 million shares.
Glencore Xstrata has not said how many shares would be issued and was not available for comment yesterday.
Minassian said it was a sensible possibility for Glencore Xstrata to show interest in acquiring Anglo, which Xstrata planned to take over five years ago before this year’s merger with Glencore. “Although it makes sense for Glencore to look at acquiring Anglo, it does not mean it is feasible to do so as Anglo is in a better position than it was two years ago.”
Minassian speculated that the company could also have plans to expand its South African interests, which include ferrochrome, platinum and thermal coal operations.
The London-listed company said in a statement last week: “Africa is an important and growing market for the group and South Africa has a strong institutional investor base.”
Glencore acquired Xstrata for $29 billion (R283bn) in May, making it the third-biggest global mining house.
The group’s South African projects include the Helena underground chrome mine on the eastern limb of the Bushveld Complex, the Wonderkop ferrochrome plant in North West, the Eland platinum mine, and the Goedgevonden thermal coal complex in Mpumalanga. - Business Report