The Hong Kong stock exchange is rushing to turn itself into a hub for international mining stocks, and global miners are lining up - lured by the current investor zeal for stocks on the local market.
Since January, nine mining companies from outside China have either tapped the market or disclosed details of planned share sales, mostly initial public offerings. The latest two hopefuls are LontohCoal, a South Africa-headquartered coal miner whose main asset is in neighbouring Zimbabwe and which wants to raise up to US$500 million through an IPO, and Kazakhymys, a London-listed copper miner in Kazakhstan, which plans a secondary listing of its shares that could involve a share sale.
Brazil's Vale, one of the world's biggest iron ore producers, has also signalled its intent to get closer to it big customer, China, with a secondary listing in Hong Kong in the form of depositary receipts. The company is already traded in Sao Paulo, New York and Madrid and on Euronext.
It's the China card that Hong Kong hopes to capitalise on: the fact that the mainland is, and is likely to remain, a big importer of such commodities as coal and copper. But the biggest overseas mining hopefuls have had to pull their deals or reduce their scope.
That is because investors, unfamiliar with overseas mining plays - especially companies with no profit track record - have so far proved skittish. Three global miners have listed through IPOs and two of them are trading below their IPO price.
'It is fair to say these international [mining] listings have not been a great success,' says Warren Gilman, the Hong Kong-based head of commercial banking at Canadian International Bank of Commerce.
In contrast, he says, 'Hong Kong investors have received Chinese mining companies very well.' An array of Chinese miners, from coal to gold producers, is listed on the Hong Kong exchange. Many of those companies, however, came to the market with proven track records. And they carry the cachet of being located in China.
