Global mining juggernaut Glencore made a significant entry onto the Australian Securities Exchange (ASX) this week, with more than $130 million worth of its shares trading on its debut. The listing provided a much-needed boost for the local sharemarket, which has contended with a dearth of fresh listings and the recent high-profile collapse of Firmus’ proposed $44 billion float. Glencore is a diversified natural resource company, extracting and processing a wide range of commodities including copper, cobalt, zinc, and coal. It operates globally, playing a significant role in the world’s supply chains for essential materials.
By the close of the first day, Glencore’s Australian shares, traded via chess depositary interests (CDIs), accounted for approximately 0.5 per cent of its entire register. The CDIs, which offer holders beneficial rights to Glencore’s UK-traded shares on the London Stock Exchange, ended the session up 1.3 per cent at $11.23. Glencore chief executive Gary Nagle has expressed ambitions for this figure to swell to a fifth of the company over time. Analysts suggest this move could broaden Glencore’s investor base, potentially lowering its cost of capital and facilitating inclusion on the S&P/ASX 200 Index as early as March.
The ASX has carved a niche as a destination for resources companies, making it an attractive secondary listing option. Success stories like Capstone Copper, which saw its local shareholding triple from 9 per cent, and NexGen Energy, whose Australian register grew from almost nothing to over a fifth, demonstrate this potential. However, not all dual listings thrive, with some experiencing “flowback” where CDIs convert back to shares on more liquid overseas markets, as seen with Newmont and past delistings like Singtel and Janus Henderson. Herbert Smith Freehills partner Rodd Levy noted that a 25 to 50 per cent decline in CDIs is often observed in the initial months, as investors seek optimal trading conditions.
Despite these historical challenges, Glencore’s strong debut is seen as a positive sign. Morningstar senior market strategist Lochlan Halloway noted that where a foreign company actively chooses to list on the ASX, success is more common. This successful entry comes at a time when the ASX has grappled with fewer new listings, influenced by regulatory burdens, an abundance of private capital, and market volatility, making Glencore’s arrival a significant development for Australia’s financial landscape.
