News, Culture & Society

ALEX BRUMMER: Natural disaster brewing in Britain’s mining sector

London has proven a magnet for tech-related floats in 2021. In the first half of the year there were 49 listings on AIM and the main market, and they are still coming fast.

Latest to join the rush towards an initial public offering (IPO) is Czech-based Eurowag, which provides transport payments and other services to smaller companies across the Continent.

It chose to list in London because it is ‘top notch’, and has snagged City grandee Paul Manduca as chairman.

The departure of mining giant BHP from the FTSE 100 means that some UK funds will not be able to hold a dividend stock at a time of a global metals surge

Valued at an estimated £1.7billion, the Eurowag decision to float comes hard on the heels of the announcement of life sciences group Oxford Nanapore. 

In the wings waiting for lift-off are several other fintech players including Klarna, Revolut, Monzo and Atom Bank, all with their eyes on the City.

Fortune magazine describes London as ‘2021’s hub for hot new tech IPOs’. As welcome as this renaissance is, and as great is the potential, it will do little to enhance the UK’s reputation if big battalion shareholders sit on their hands while behemoths flee these shores.

The departure of mining giant BHP from the FTSE 100 – where it vies with Astrazeneca for top slot – to a new home in Sydney is a travesty. 

It means that some UK funds will not be able to hold a dividend stock at a time of a global metals surge. 

Moreover, hiding away in Oz, way out of sync with New York and London time zones, is bad for liquidity and ESG transparency.

What makes BHP’s exit particularly embarrassing is that it is effectively a capitulation to the agitation of activists Elliott Partners. 

Former Aviva investment chief David Cumming, in an interview in the Sunday Telegraph, expresses surprise that there hasn’t been resistance to BHP ‘beetling off to Australia’ and warns against Rio Tinto, with history in the UK dating back to 1873, doing the same.

Legal & General, which holds just under 1.9 per cent of BHP, has publicly expressed its disappointment at the shift. 

The danger to the London Stock Exchange is that its reputation as a natural resources champion is undermined. As home to Anglo-American, Glencore, Vendanta Resources and many others, the LSE’s heft in the sector is considerable and covers far-flung operations, including Chile and Mongolia.

There has been intense speculation that Rio Tinto, after the destruction of the sacred Juukan Gorge and its run-in with indigenous people in Australia, might be tempted to move Down Under to relieve political pressure. 

Chief executive Jakob Stausholm, who succeeded to the job after the blast disaster, backs keeping the quote in London. An Aussie successor to chairman Simon Thompson might see things differently.

The lack of a campaign to keep BHP in London is surprising. In the recent past, Unilever, Smith & Nephew and plumbing group Ferguson have all looked at shifting their main quote to other markets. They have been cut off at the pass.

BHP should never have been allowed to desert. Any effort to switch Rio to Oz would be a bitter blow and betrayal of heritage which must be stoutly resisted.

Click bait

Primark-owner ABF long has maintained that online home delivery doesn’t make a great deal of sense because of its low-price fashion offerings.

In spite of the stop-go trading of the pandemic in 2021, it has pressed ahead with store expansion, opening 15 outlets, including four in the US, with Philadelphia the latest addition.

Profit guidance for the full year has been raised, but a combination of supply issues and Covid means fourth quarter same store sales have plummeted, sparking a share sell-off.

As always, AB’s food businesses, with sugar among the stars, is there to better balance outcomes.

It is intriguing that Primark is upgrading its digital presence and recruiting new talent. A stronger and brighter online sales presence points to a click-and-collect option before too long.

Private grief

As if it didn’t have enough resources already, private equity outfit CVC, currently stalking La Liga in Spain, has increased its firepower by snapping up Glendower, a spin-off from Deutsche Bank.

Together, the enlarged outfit will have assets of £96billion. In typical private equity style, none of the financial details of the transaction are disclosed. That’s a lot of new resources in secretive hands.

Read more at DailyMail.co.uk