Glencore is preparing to spin-off its portfolio of mining royalties into a new company later this year in a bid to attract outside investors with an eye on an eventual stock market listing, according to people with knowledge of the discussions.
The plan will see Glencore seed the new company with royalty agreements worth in excess of $300m, while looking to attract a strategic partner to fund further deals that see the mining and trading house provide financing to junior miners in return for a slice of their revenue and exclusive marketing deals.
Glencore is keen to recycle the blueprint it used to raise cash from its agriculture business while at the same time creating a standalone company, Glencore Agriculture, through a $3bn deal with two Canadian pensions funds.
In order to finance new royalty agreements, Glencore would sell a stake in the new vehicle to a strategic investor, possibly a pension fund or sovereign wealth fund.
The royalty agreements would help Glencore secure additional supplies of copper, cobalt, nickel and zinc producers for its giant trading division, which has long set it apart from rivals in the mining industry.
Glencore declined to comment.
News of the royalty vehicle was first reported by the Global Mining Observer, an industry newsletter.