Category: Market News

Cobalt Holdings is set to launch its IPO on June 5, backed by Glencore. The company eyes $230 million in fundraising, amidst a significant oversupply in the cobalt market. With Glencore as a cornerstone investor, Cobalt Holdings anticipates growth driven by rising battery demand, albeit with potential risks from technology shifts and political changes in supply-dependent countries.

Cobalt Holdings, prepared and backed by mining giant Glencore, is set to begin trading on the London stock market tomorrow, June 5th. This initial public offering (IPO) is significant as it aims to match the success seen by other company floats, like Yellow Cake Ordinary Shares, valued at around £1 billion. The company plans to raise approximately $230 million, that’s about £170 million, marking the largest flotation in London this year and the biggest for the mining sector since 2018.

The IPO will kick off with conditional trading at an initial price of $2.56, with full trading expected to begin next Tuesday. Of the total 90 million new shares, some are reserved for retail investors, alongside institutional backers. Glencore, a major player in the market, has not only invested but has also entered a supply agreement allowing Cobalt Holdings to purchase $200 million worth of cobalt metal in its first year, followed by another $160 million each year over the next five years, amassing a potential total of up to $1 billion.

Cobalt Holdings is strategically positioned as battery demand drives a significant portion of global cobalt consumption—around 75%. Cobalt also has applications beyond batteries, including in turbine generators and various aerospace and defense technologies, noted for their reliance on this high-temperature and corrosion-resistant element. Interestingly, the current oversupply in the cobalt market presents an opportunity for the company to buy at prices below the long-term average.

Currently, cobalt prices hover around $34,000 per tonne, significantly lower than the peak of $85,000 reached in 2008, with some forecasts suggesting a rise to about $56,000 per tonne by 2034. The firm is capitalizing on this moment, asserting that demand has already doubled from 2015 to 2024 and is expected to see further growth of over 54% from 2024 to 2031, especially with new export restrictions recently imposed by the Democratic Republic of Congo (DRC), affecting supply.

Jake Greenberg, the CEO of Cobalt Holdings, expressed confidence in the company’s position: “We anticipate that supply and demand will come back into balance over the coming years and will create the necessary conditions to incentivize investment in new mines and refining capacity in the West,” emphasizing the broader need for an energy transition.

Given his previous experience with Yellow Cake, Greenberg has reason to be optimistic. Yellow Cake had a tremendous success trajectory after its IPO. However, the Cobalt flotation does come with risks, such as the emergence of alternative battery technologies that might not rely on cobalt and political factors that might impact supply chains from nations like the DRC. It’s clear investors should weigh their decisions carefully before diving in.

This article is intended for informational purposes only and does not constitute investment advice.

B&M (LSE:BME), the discount retailer, reported a 10% drop in share prices due to lower than expected UK sales for the year. The company attributed a 3.1% drop in like-for-like sales to unfavorable weather and the timing of Easter. New CEO Tjeerd Jegen faces challenges as the industry grapples with rising costs and cautious consumer spending. B&M’s sales increased 3.7% overall, but analysts noted the absence of sales guidance for the upcoming year may disappoint investors.

iscount retailer B&M has reported a significant decline in their annual underlying UK sales, missing projected targets and leading to a more than 10% drop in share prices. In a statement released on Wednesday, the company indicated that higher operational costs would burden profits throughout the upcoming financial year, raising concerns across the retail sector amidst tough economic conditions.

As British retailers gear up for what is expected to be a challenging year, factors like rising taxes and increased wages are adding strain. Shoppers, increasingly cautious about their spending habits due to economic uncertainty, have impacted sales results. Particularly affected are discount chains like B&M, Poundland, and Primark, which cater to Britain’s most economically vulnerable consumers and are facing their own issues.

Recently appointed CEO Tjeerd Jegen, who is set to officially take charge later this month, faces a daunting task. The company’s share price has already plummeted over 40% from where it stood in 2022, prompting analysts to scrutinize their strategic response. Jegen is expected to address the problems impacting the retail group promptly, as the pressure mounts.

B&M’s report revealed a 3.1% decline in UK like-for-like sales for the fiscal year ending March 29, primarily attributed to unseasonable weather and Easter timing. Although B&M did not disclose specific sales targets, some analysts believe that the first quarter of the new financial year might show improvement thanks to better weather and increased consumer demand.

Nevertheless, Jefferies analysts expressed disappointment regarding the absence of sales guidance as the new year begins. A continual squeeze on living costs deeply affects low-income consumers, increasing the urgency to lure them back into stores with competitive pricing. To this end, RBC Capital Markets analysts suggest that enhancing the in-store experience may help B&M attract price-conscious shoppers.

Looking ahead, B&M anticipates an increase of approximately £75 million ($102 million) in its underlying fixed cost base for the upcoming fiscal year. This increase is largely due to changes in the minimum wage legislation in the UK. While B&M executives did not elaborate on specific strategies, they articulated a goal to minimize the cost impact on customers during discussions with analysts.

In terms of overall performance, B&M achieved annual sales growth of 3.7%, bringing total revenue to £5.6 billion. This increase was mainly fueled by new store openings and a robust performance in France. Core profit saw a slight uptick of 0.6% to £620 million, which fell short of Panmure Liberum’s expectations of £625 million but surpassed Jefferies’ estimate of £616 million.

Amid these changes, B&M plans to relocate its parent company’s domicile from Luxembourg to Jersey within the current year, marking another significant shift for the retailer. At an exchange rate of $1 to £0.7387, the implications of these figures are significant in both financial and operational contexts, as B&M navigates these turbulent market conditions.