Smartest Guys in the Room: How Glencore plays the ASX

• Glencore is one of the world’s largest mining and trading companies
• It’s management are often referred to as the “smartest guys in the room”, because they have multiple angles on commodity markets
• It also backs junior companies and we’ve checked out some of Glencore’s listed investments on the ASX so you don’t have to

Glencore may not be listed in Australia. But it is a source of fascination for local resources investors.

There have been recent calls from investors for Glencore to head for Australian shores.

Listed in London, the former centre of the world’s capital from where mining money has been flowing away for years like musky sewage leaking into the Thames, the feeling is the $70bn capped commodity giant would capture a higher valuation on the resources focused ASX.

Be that as it may, Glencore has remained one of the world’s top miners and trading houses under the former leadership of Swiss-Australian billionaire Ivan Glasenberg and now CEO Gary Nagle.

And its management continue to get plaudits on their operational performance from the streets – their ability to work all ends of a deal as producer, refiner, trader and financier leading many to refer to the firm as the “Smartest Guy in the Room”.

Forgetting the ironic tinge to that phrase – also the title of a memorable book and doco about the collapse of dodgy energy grifters Enron – there are reasons to look closely when Glencore sets out its stall in an investment.

The company has a swag of mine-level investments in Australia. It’s the country’s largest thermal coal producer with 13 mines across Queensland and New South Wales, and owns the Mt Isa copper smelter, McArthur River zinc mine and Murrin Murrin nickel mine.

But Glencore’s interests in the Australian market extend to company-level investments and offtake deals as well.

That’s why it should be noted when the major mining house pops up on a small cap’s register or with a funding arrangement – Glencore has more angles on the market than anyone else, and it is betting on needing that supply.

So who on the ASX has Glencore in their corner?

Glencore PLC

With the help of IRESS, we scoured the infosphere for the latest details on which ASX companies Glencore holds shareholder status in.

For starters, there’s MAC Copper (ASX:MAC), currently in the process of being sold to South Africa’s Harmony Gold.

Glencore picked up over 20% of the miner when it sold the CSA Cobar mine into the one-time SPAC. Shareholders voted up the $1.6bn Harmony deal, though the real prize for the Anglo-Swiss miner is its life of mine offtake over the high grade ops, which ensure access to CSA’s valuable copper concentrate.

Outside of MAC, it also holds around 7.5% of Chilean copper developer Hot Chili (ASX:HCH), which holds the Costa Fuego project in the world’s largest copper producing nation.

Glencore is also on the register at Aeris Resources (ASX:AIS), a +40,000tpa copper producer with operations in Queensland and New South Wales as well as development assets in WA and Victoria.

Once a focus of OZ Minerals and BHP (ASX:BHP), Havilah Resources (ASX:HAV) had around 3% of its shares held by Glencore as of July 31 this year. Its Kalkaroo deposit in South Australia is one of the few undeveloped large scale copper opportunities in Australia.

Glencore also has a strategic position in Leeuwin Metals (ASX:LM1), around 6.3% according to IRESS, having backed the gold, iron ore and lithium explorer’s 2023 IPO.

It holds around 0.5% of Skylark Minerals, the former Ironbark Zinc (ASX:IBG), which is led by ex-Nordgold chief Nikolai Zelenski and owns copper projects in Queensland proximal to Austral Resources’ McLeod Hill deposit and heap leach facility (Austral itself is a Glencore-backed miner currently running a recapitalisation process).

And rounding off those investments in the Queensland copper scene, near the site of its Mt Isa smelter Glencore holds a 2.7% stake in 29Metals (ASX:29M), the EMR Capital backed owner of the currently suspended Capricorn copper mine, and a near 10% stake in True North Copper (ASX:TNC) – a $50m capped junior aiming to return a swag of assets in the North West Queensland copper hub to production.

On top of that, Glencore is a regular when it comes to locking up offtake and finance with other copper, battery and base metals companies. Notably, it has a life of mine offtake over concentrate from Evolution Mining’s (ASX:EVN) Ernest Henry mine.

What’s it like working with Glencore?

Talking to Stockhead, True North’s managing director Bevan Jones shed some light on what working with Glencore means for a small cap copper company.

The miner originally entered the ASX via a backdoor listing in 2023, producing copper from oxide ores via heap leaching at its Great Australia Mine.

Early travails led to a $50m recap backed by Tembo Capital, Regal Partners and Glencore.

Since the recap and relisting early this year, True North has committed to exploration at its Cloncurry project, aiming to become a key supplier to the Mt Isa smelter.

Under the terms of an offtake agreement signed before the recap, the mine can supply up to 1Mtpa of ore over its life to Glencore’s concentrator and smelter at Mt Isa.

The refinery is currently the subject of discussions between the Federal and Queensland Governments, and Glencore, about public support to extend its life beyond 2030 after Glencore shut its loss-making underground mining ops this year.

Jones says the interest Glencore has shown in True North demonstrates there is a pathway to production at Cloncurry.

“They saw us as a legitimate partner in the process to keep the smelter in operations. Looking at their conversations with the government of Queensland and the Federal Government, TNC forms part of the overall story to keep that asset going,” Jones told Stockhead.

“They were supportive of TNC and they were aware that the path to production was through the exploration restart.

“The reality is that the TNC assets around Cloncurry are the next assets to go into production in the region.

“I meet with them a couple of times a month, giving updates about where we’re headed, and it is clear that they’d prefer to see us move into operations rather than for Cloncurry to remain in care and maintenance.”

Mt Isa question

Regulatory support to keep Aussie manufacturing going as power prices climb has emerged in recent months, with Canberra, SA and Tasmania stepping in to underwrite extensions at Nyrstar’s zinc and lead smelters in Port Pirie and Hobart.

BHP closed Kalgoorlie nickel smelter and associated Kwinana refinery in the past year, with Alcoa shutting an alumina plant in Kwinana as well. Canberra is not keen on a repeat on the east coast.

Jones said the market had misread news about Glencore’s closure of its mines at Mt Isa as an indication the company was looking to get out of the business.

“Their concentrator will not be processing their own copper ore, but there (are) a number of players in the region that will be supplying into that system and TNC is one of them,” Jones said.

“We do get a little bit of instability with people thinking that our pathway to production has been closed off because of this Glencore decision.

“Well the reality is at the moment that’s not the case and they’re continuing to support a number of smaller players in the region to keep that pipeline open.”

Exploration hopes

Cloncurry has the potential to become a hub and spoke model as TNC looks to bolster its resource in the North West Queensland region.

That includes Vero at Mt Oxide, which boasts 15.03Mt at 1.46% copper (indicated and inferred) as well as 9.15Mt at 0.23% cobalt (measured, indicated and inferred), another battery metal of which Glencore is a major producer at Murrin Murrin and its copper mines in the DRC.

5000m of drilling has been completed at Mt Oxide out of a 12,000m program, which has brought the discovery of the large-scale Aquila prospect, 4km north of the Vero resource and 25km north of the Capricorn copper mine.

Standout drill hits at the system, a shallow discovery measuring some 150m wide by 2km long, have included 145m at 0.75% copper, 0.12% cobalt and 2.9g/t silver from 28m, including 53m at 1.18% copper, 0.13% cobalt and 3.6g/t silver from 86m in hole MOX232.

Another strike in hole MOX 233 identified 30m at 2.45% Cu, 0/.02% Co and 6.2g/t Ag from 20m, with hole MOX231 hitting 16m at 1.25% Cu, 0.01% Co and 1.9g/t Ag from 163m.

RC drilling has also taken place at the Cloncurry copper project, which includes the Great Australia Mine and other substantial deposits at Taipan and Wallace North, the latter a deposit in operation only last year where drill assays are pending.

All up Cloncurry hosts 12.69Mt at 0.8% copper, 0.19g/t gold and 0.01%  cobalt for 101,250t of copper metal, 76,620oz gold, 1860t cobalt and ~50,000oz of silver.

“We’re continuing to grow our mineral inventory around the Cloncurry region and we’ve got a team of people working out what is the pathway back to production using our existing reserve knowledge and also to then start to bring in the new information that we’ve got from these exploration programs,” Jones said.

En Fuego

Glencore’s investment in fellow ASX copper junior Hot Chili, meanwhile, is a nod to the scale potential of its Costa Fuego asset.

It initially took a 9.9% stake in 2021 via a $14.4m strategic investment that has since been diluted.

But its relationship with Glencore goes further, including an offtake deal for 60% of Hot Chili’s concentrate over the first eight years of its mine life. It’s a handy arrangement that reinforces Costa Fuego’s commercial credibility while maintaining funding flexibility with much of its offtake uncommitted.

And copper concentrate is expected to be a hot commodity in the years ahead. Prices are already nudging US$10,000/t for copper metal with the market in a ~250,000t surplus this year. Treatment charges are heading negative with far more smelting capacity than mined copper supply.

With few large mine builds on the horizon and demand forecast to rise 70% to 2050 due to the energy transition, it seems inevitable prices will head higher.

Hot Chili could be one of the few developers to place any dent in future deficits, with a PFS this year suggesting the US$1.27bn mine build at Costa Fuego would lead to a 116,000tpa copper equivalent operation at costs of just US$1.38/lb.

That includes 95,000tpa of copper metal, 48,000ozpa of gold, 2000tpa molybdenum and 158,000ozpa silver over a mine life of 14 years.

The project boasts a net present value after tax of US$1.2bn at US$4.30/lb copper and US$2280/oz gold, now well below current spot prices.

That’s all before considering the potential of HCH’s new La Verde copper-gold porphyry discovery, located around 30km south of Costa Fuego.

Located close to surface, mineralisation has been tracked for 1km in length and up to 750m in width.

Best drill results include 389m at 0.4% copper and 0.1g/t golf from 4m and 120m at 0.4% Cu and 0.1g/t Au from 6m deep.

Unlike most copper discoveries in Chile, Peru and Argentina, Costa Fuego and La Verde are located at low elevation in the coastal range of Chile’s Atacama region, reducing capital and operating costs compared to high altitude Andean copper porphyries.

At Stockhead, we tell it like it is. While True North Copper and Hot Chili are Stockhead advertisers, they did not sponsor this article.