Quality at a discount: The quietest ASX debut of 2026 might be its best opportunity

While the market has been obsessing over whether Firmus will list this month, one of the world’s biggest miners has quietly joined the boards this week. Glencore (ASX:GLC) is a global diversified miner and commodity trader, with its two biggest businesses in copper and coal. It already has a significant Australian footprint as the country’s largest coal miner, and Rio Tinto (ASX: RIO) shareholders will know the name too: the two companies walked away from a merger earlier this year that would have created the world’s largest miner.

At Blackwattle Mid Cap Quality, we view the market through a quality lens, targeting the market leaders in each sector. We believe our singular focus on quality is our competitive advantage: identifying quality early, spotting businesses where quality is improving, and backing those where it endures.

“We view Glencore as a prime example of enduring quality. A long-life, low-cost mining asset base with significant expansion potential, complimented by the pre-eminent global marketing & trading business, allowing high returns and cash generation to be sustained well into the future.”

We discuss the 3 key reasons why Glencore is a Quality Business with significant upside:

An underrated marketing business that is a genuine competitive advantage

Glencore’s marketing and trading arm is a global powerhouse in metals and minerals. Glencore describes it as the “FedEx of metals and minerals”: it moves more than US$200 billion of physical commodities each year through a global logistics and trading network. It earns its profits from arbitrage (location, timing, quality and blending spreads) rather than from unhedged bets on commodity prices.

Mining-focused investors often dismiss the business as a low-quality “black box” and a distraction, and it has historically weighed on Glencore’s valuation multiple. We see it the opposite way. In our view it is a key competitive advantage, providing:

• A steadier earnings stream. Marketing earnings have a correlation of below 40% with commodity prices, compared with over 60% for the global miners.
• Downside protection. Marketing has delivered positive EBIT in every year since 2008. Its only significant drawdown came during the GFC, when EBIT fell to US$1.6 billion but stayed comfortably profitable.
• Upside when markets are volatile. Arbitrage opportunities multiply when commodity markets are dislocated. Marketing EBIT reached US$6.4 billion in 2022, almost double its long-term guidance midpoint of US$3.5 billion, and Glencore is guiding to more than US$5 billion in 2026.

The business also shapes how the mining business is operated, with real-time insights into physical markets helping Glencore decide which tonnes are worth producing and when, rather than chasing volume for its own sake.

“Glencore’s marketing and trading business provides a defensive, highly cash-generative earnings stream with significant upside when markets are volatile. Just as importantly, it keeps the whole group focused on value over volume”.

A world-class copper portfolio with industry-leading growth

Copper is Glencore’s largest commodity. Its asset base, spread across Latin America and Africa, puts it among the world’s top copper producers, and it has the strongest growth outlook of the major miners.

The standout asset is Collahuasi in Chile, a high-grade, long-life operation widely regarded as one of the best copper mines in the world. Glencore owns 44%, alongside Anglo American as the other major partner, and Collahuasi was one of the key attractions behind BHP’s pursuit of Anglo American in 2024.

The real differentiator for Glencore’s copper portfolio is growth. Most major miners are struggling simply to hold copper production flat. Glencore, by contrast, is targeting more than 1 million tonnes a year by the end of 2028, up from around 800,000 tonnes today. That growth comes largely from brownfield expansions of existing Latin American mines, which carry less execution risk than greenfield projects. Beyond that, its pipeline offers a pathway to roughly double production to around 1.6 million tonnes by 2035.

“Glencore’s copper portfolio is the crown jewel of the business, and it was the focus of the Rio Tinto merger talks. Its near-term growth targets are relatively conservative, and the longer-term prize is a doubling of production by 2035”.

Quality at a discount

On valuation, Glencore stands out from its peers, which we view as an attractive opportunity given the underlying quality of the business. On broker estimates, Glencore trades on around 4.9x FY27 EV/EBITDA, against 8.1x for BHP (ASX: BHP), with a free cash flow yield of around 11%, more than double BHP’s 5%.

That quality has started to shine through in 2026, with strong operational momentum. The marketing business has just upgraded its earnings guidance to more than US$5 billion for the year, and the copper business is on track to reach a run-rate of more than 1 million tonnes a year by the end of 2028.

Some argue the discount is deserved because of the marketing business and Glencore’s larger coal exposure. We disagree on both counts. We see marketing as a competitive advantage, not a liability. Coal, while unfashionable, is a highly cash-generative business, and the steelmaking coal assets offers a more attractive long-term exposure than the iron ore that dominates its peers’ earnings.

The result is a valuation gap that we believe is too wide. Glencore currently trades at a discount of over 5 P/E points to BHP, matching the widest gap of the past decade. On the two previous occasions the gap reached this level, it closed within 12 to 18 months.

“The wide valuation gap, quality copper assets with best-in-class growth, and now a secondary listing on the ASX are likely to put Glencore back in the M&A crosshairs, as its ASX-listed peers keep searching for scale in copper”.

Quiet arrival, big opportunity

Glencore offers a rare combination: a defensive, hard-to-replicate marketing business, a world-class copper portfolio with growth its peers can’t match, and a valuation near its widest discount to BHP in a decade. Its ASX listing may have been quiet, but we don’t expect the market to overlook it for long.

Quality investing

At Blackwattle, we are constantly looking for mispriced, high-quality businesses with internal levers to drive returns. These businesses are exceptional at generating shareholder returns, so when we find one, we aim to be long-term shareholders and capital partners, allowing our portfolios to capture their compounding outperformance through market cycles.

Stay up to date with our insights on quality investing by hitting follow below.

Tim Riordan & Michael Teran