London’s biggest mining IPO since 2018 concerns cobalt

Metal investment company Cobalt Holdings is targeting June for an initial public offering (IPO) in what would potentially be the mining industry’s largest stock debut in London since before the pandemic.

The U.K.-based company, which buys and stores physical cobalt, aims to raise about £174 million (C$323 million). A centrepiece of the IPO is a six-year supply agreement with Glencore (LSE: GLEN), which includes an upfront $200 million (C$280 million) purchase of 6,000 tonnes of cobalt at a discounted price. That volume represents about a third of the projected global cobalt surplus in 2025, according to Benchmark Mineral Intelligence.

As part of the deal, Glencore will also take a 10% stake in Cobalt Holdings. New York-based investment firm Anchorage Capital is expected to acquire a 9.5% stake, committing $23 million and agreeing to supply up to 1,500 tonnes of cobalt in 2031.

“We believe now is the right time to build a strategic stockpile of cobalt,” Cobalt Holdings CEO Jake Greenberg said in a filing. 

Cobalt Holdings argues the current oversupply is temporary and presents a buying opportunity. The Democratic Republic of Congo, which supplies at least 70% of global output as the world’s leading producer of the battery metal, restricted exports in February for four months after prices sank to a century-low of $9.50 per pound. They have since recovered to around $15 per lb. though still less than half of their 2022 peak of $36 per lb. and the DRC says it may coordinate with Indonesia on export quotas. 

Shrinking LSE

The IPO is also seen as a win for London’s struggling equity markets. In recent years, several U.K. companies have shifted listings to New York or European exchanges in search of higher valuations. Others have been taken private or acquired by foreign firms, shrinking London’s public market footprint.

Auditing giant EY reported that 88 companies delisted or transferred their primary listing from London’s main market last year, the highest number since 2009.

Cobalt Holding’s IPO may be the largest in mining since Kazatomprom (LSE: KAP), the world’s largest uranium producer, based in Kazakhstan, entered the market in November 2018. The Kazakh sovereign fund Samruk-Kazyna floated 15% of Kazatomprom in a dual listing on the LSE and Astana International Exchange. The IPO raised about $451 million, valuing the company at around $3 billion. 

Another notable IPO at the time was for Yellow Cake (LSE: YCA), which has the same founder, Greenberg, as Cobalt Holdings. The company raised about £151 million in 2019 to store the physical metal in a similar business model. It now has 21.7 million lb. of uranium oxide in storage with a net asset value around $1.41 billion. 

Cobalt Holdings says it offers investors direct exposure to cobalt without the risks associated with mining operations. The metal remains an essential material in electric vehicle battery production. While many lower-cost EVs now use lithium iron phosphate (LFP) batteries, longer-range vehicles still rely on nickel-manganese-cobalt (NMC) chemistry. Among those metals, cobalt is the most expensive, which continues to drive innovation and cost-reduction efforts across the industry.