Glencore plc (LON:GLEN) is reportedly looking to spin-off its portfolio of mining royalties into a new company to pursue deals in copper, zinc, nickel and cobalt across the world.
The mining giant will seed the new business with at least £300mln of royalty agreements in a bid to attract outside investors with a view to an eventual market listing, the Global Mining Observer reported.
Glencore will also seek a strategic partner to fund further deals that see the mining and trading house provide financing to junior miners in return for a cut of their revenue and exclusive marketing deals.
Glencore would sell stake in the new company to a strategic investor, such as a pension fund or sovereign wealth fund, in order to finance new royalty agreements.
The royalty agreements would support Glencore in securing extra cobalt, copper, nickel and zinc producers for its trading division, which ships commodities around the world.
The group is said to be considering modelling its plan on firms that don’t own any mines but make money by “streaming” supply from miners for resale in return for loans to fund capital projects.
Canada-based Franco-Nevada has such a business model and has outperformed many mining companies on large returns.
The spin-off could be launched by the end of the year. Glencore declined to comment on the report.
Shares in Glencore rose 1.6% to 321.85p in afternoon trading.