Rio Tinto, a major mining company, is currently under scrutiny regarding its dual listing structure on the London Stock Exchange (LSE) and the Australian Stock Exchange (ASX). The company’s board has strongly advised its shareholders to dismiss a proposal put forth by Palliser Capital, a hedge fund based in London, to review the dual listings.

Since December 1995, Rio Tinto has maintained this dual listing structure, which allows it to trade on both the LSE and the ASX. The company has emphasized that it has already conducted a thorough evaluation of its current structure and engaged with various stakeholders, including Palliser Capital. Rio Tinto firmly stated that unifying the dual-listed companies (DLC) structure is unnecessary for providing strategic flexibility and could potentially harm shareholder value.

Palliser Capital, holding approximately $300 million in Rio Tinto shares across both listings, has persistently advocated for consolidating Rio Tinto’s primary listing in Australia, arguing that this move would enhance the company’s share price. However, Australian shareholders have expressed concerns that such a consolidation could diminish the company’s value.

Rio Tinto currently has around 371.2 million shares listed on the ASX and 1.25 billion shares on the LSE. Despite Palliser’s assertions that the dual-listed structure has led to a $50 billion loss in investor value, Rio Tinto has remained steadfast in defending its current setup. An internal review conducted by the company reaffirmed the effectiveness of the DLC structure in benefiting both the company and its shareholders.

The broader context of this debate includes the recent decision by BHP, another mining giant, to abandon a similar dual-listing structure in 2022 in favor of a primary listing in Australia. If Rio Tinto were to follow suit, it would not only impact its own operations but also have implications for the FTSE 100, London’s key stock market index, which has been facing challenges with declining listings and corporate exits.

The London Stock Exchange has experienced a notable trend of companies delisting or relocating their primary listings elsewhere, with concerns mounting over its competitiveness and attractiveness to major corporations. For instance, Glencore, a Swiss mining and commodities trading company, is contemplating shifting its primary listing to New York or another location to potentially enhance its valuation.

As Rio Tinto prepares for its upcoming shareholder meetings in London and Australia, the outcome of the discussions surrounding its dual listing structure will not only shape its future trajectory but also have broader implications for the London Stock Exchange and the global mining industry as a whole.