Johannesburg - Glencore Xstrata was unfazed by risks in the South African mining industry as the global commodities trader debuted on the JSE with a secondary listing yesterday.
Trade in the shares was brisk and volumes were high.
Glencore Xstrata, which owns 25 percent of Lonmin, the third-biggest platinum producer, said it would sell its stake in the near future because platinum was not part of its bulk commodity strategy.
“We have always said at some stage we will dispose of our interest in Lonmin. We have to decide when the right time is,” chief executive Ivan Glasenberg said in Johannesburg yesterday.
The fourth-biggest mining company was the most active share on the JSE after opening at R54.60. It closed at R53.87 with 35 million shares traded.
Glencore Xstrata has its primary listing in London and has another secondary listing in Hong Kong.
Glasenberg said the company was ready to take advantage of opportunities that might arise in the bulk commodities sector of South Africa, including coal.
Glencore Xstrata has a diversified portfolio across 50 countries that includes ferrochrome, copper, platinum, coal, oil and gas. It was formed out of a merger between Glencore and Xstrata on May 2, and its particular strength is in trading commodities.
The company operates chrome mines in Steelport, Limpopo, where it dismissed 1 000 employees for going on a wildcat strike earlier this year.
“South Africa has not been bad,” Glasenberg said when asked about the country’s regulatory environment.
He said governments had to improve regulatory certainty for the mining sector. “Countries are free to change the rules. We have to know the rules upfront. We are investors, we have an obligation to our shareholders and we have to justify our investments.”
Asked about the government’s plan to make coal a strategic mineral, Glasenberg said more clarity was needed.
“If the government wants coal to be a strategic mineral, it is okay. What does it mean? Will they [the government] tell us at what price to sell the coal?”
Unlike its competitors, Rio Tinto and Anglo American, Glencore Xstrata has no exposure to iron ore. Glasenberg said the company would find opportunities in the metal.
Glencore is now a large component of the all share index (Alsi) and Top40 index.
“So all the South African Alsi [and] Top40 index funds, unit trusts and exchange-traded funds will have to buy Glencore. My guess is that is where most of the buying is coming from today,” Peter Major, a mining analyst at Cadiz Corporate Solutions, said yesterday.
Glencore Xstrata’s market capitalisation of £42.4 billion (R702bn) makes it the JSE’s third-largest share behind British American Tobacco and SABMiller. Glencore Xstrata is the third mining listing on the JSE so far this year after Giyani Gold and Sibanye Gold.
Hanré Rossouw, Investec Asset Management’s head of commodities for frontier and emerging markets, said the company would be searching for opportunities to further invest in South Africa through mergers and organic growth.
Glencore Xstrata is the biggest mining company in Africa, with about 10 percent of its profit coming from South Africa and 20 percent from the rest of Africa, including copper projects in the Democratic Republic of Congo and Zambia.
“Our listing on the JSE not only deepens our relationship with South Africa,” Glasenberg said, “it highlights our confidence in Africa as a place to invest”. - Business Report