Swiss miner and commodities trader Glencore (LON:GLEN) and Canada’s third largest pension fund are launching a new base-metals royalty firm, named BaseCore Metals, the companies said Tuesday.
Glencore Canada and the Ontario Teachers’ Pension Plan, which manages benefits for retired for schoolteachers of that Canadian province, will have a 50-50 ownership in the new company.
Rumours of Glencore planning a spin-off of its mining royalties portfolio into a standalone company had been circulating for months.
The company’s plan is to emulate the model of companies such as Canada’s Franco-Nevada (TSX, NYSE:FNV), which does not own any mines but instead makes money by reselling a percentage of other firms’ output.
Those so-called “streaming” firms typically provide a chunk of cash upfront to mining companies to secure a certain supply of precious metals down the road. These kinds of deals have become increasingly popular, especially between 2014 and 2016, when miners faced greater difficulty raising cash on stock and bond markets amid a global slump in commodity prices that dragged their value.
More to come…