Glencore (ASX: GLC) is trading on the ASX
Glencore PLC, the ~GBP68bn Swiss based miner started trading on the ASX at 11am this morning, in CDI form, initial trades have been around ~$11.30 with the 8c spread illustrating it’s going to take time to “bed in”. Questions are being asked around whether some monies with flow from BHP into GLC.
Glencore (GLC) and BHP (BHP) are two of the world’s largest diversified miners, but with very different business models.
- BHP focuses on operating high-quality, long-life mining assets, while Glencore combines mining with one of the world’s largest commodity trading businesses, buying, selling and transporting commodities globally.
This explains Glencore’s annual revenue approaching US$300bn versus BHP’s ~US$59bn, although trading’s thin margins mean the revenue gap significantly overstates the difference in profitability. Their commodity exposures also differ significantly.
- BHP remains heavily exposed to iron ore, although copper now generates more than half its EBITDA.
- Glencore has greater exposure to thermal and metallurgical coal, alongside copper, zinc and nickel, with trading providing additional earnings opportunities during periods of market volatility.
Glencore is targeting copper production above 1 million tonnes by 2028, potentially lifting its contribution to ~50% of EBITDA by 2030.
- On a like-for-like basis, Glencore screens cheaper than BHP which is one f the main reasons its dual listed on the ASX.
In summary, BHP offers a simpler, higher-margin mining business, while Glencore provides broader commodity exposure, significant trading earnings and growing copper production.
We believe Glencore’s ASX listing offers an interesting alternative to BHP, although its more complex business model makes headline valuation comparisons potentially misleading – we prefer the “Big Australian” BH until further notice.
