Vale plans Hong Kong share listing

The Business of Mining - thebusinessofmining.com | September 24, 2010 | 10:05 am

“Vale, the Brazilian mining giant, plans to list shares in Hong Kong as the company seeks closer ties with investors in China, the world’s largest net iron ore importer by volume and its biggest market by far. This is a coup for the city’s stock exchange, which faces fierce competition from Singapore and Shanghai and is trying to attract more non-Chinese businesses.


It has been particularly successful with resource companies, which have become increasingly reliant on China’s heavy demand for natural resources to power their growth. ‘Asia is the main market for our products and is becoming increasingly important,’ Vale said in a statement about the planned listing.”

Source: Financial Times, September 24, 2010

Observations:

  • The Hong Kong stock exchange (HKEx) has performed a role in the listing of Rusal, IRC and smaller mining companies. Other resources companies listed in Hong Kong are Sinopec, China Resources, China Coal, Chalco and PetroChina.
  • Vale has listings in Sao Paolo, New York, Madrid and at Euronext with a total market capitalization of $158bln on an enterprise value of $169bln.

Implications:

  • In the recent special on the “Top 10 Priorities for Vale’s CEO Roger Agnelli” on this site, strengthening the ties with China was identified as one of the top priorities. The share listing in Hong Kong set up not to raise more money for the company, which has a lot of cash already, but merely to improve contact with investors, clients and government in the Far East.
  • The company is currently buying back shares, signalling that M&A moves that would prevent BHP’s acquisition of PotashCorp are unlikely. Future share issuing might well be performed on the Hong Kong exchange as this would provide Chinese investors a change to improve ties with the company.

©2010 | Wilfred Visser | thebusinessofmining.com