Lai See | Can Hong Kong be the world's biggest mining finance market?

Three years ago, Robert Friedland, executive chairman and founder of Ivanhoe Mines, told the Hong Kong Mines and Money conference: "Hong Kong will become the largest mining finance market in the world." Four years on this clearly hasn't happened, which has led some to wonder if it ever will.

So was this just bull market talk or is there something in it? Naturally the stock exchange would like this to be true. However, it now costs about three times more to list in Hong Kong than it does in Toronto or Sydney. Despite the higher price, the quality of the listings is not necessarily better. In any case the Hong Kong rules as they exist make it difficult for junior miners to list. Most of the mining firms listed in Hong Kong are big state-owned companies from mainland China while there is little trading in large overseas-listed companies like Glencore and Vale.

Despite its lack of success in attracting much in the way of mining capital in recent years, a PwC report written in February 2012 says: "We believe London, and increasingly, but not in the short term, Hong Kong will be the main global finance hubs for major resource companies." Others point out that there isn't the breadth of investors in Hong Kong that you get in the other main mining capital centres like Sydney, Toronto, and London which comes from financing early-stage miners, which requires greater expertise to analyse. Hong Kong's advantage is that there is a lot of capital here and it is next to mainland China, the world's largest consumer of metals. The mainland is also one of the biggest sources of outbound investment in the sector, which can benefit Hong Kong.

Friedland stands by his original forecast, but he qualified it the other night during a talk at the Asia Mining Club when he said: "I didn't say when it would happen." He added: "Hong Kong is a very important market but is still determined by what happens on the mainland. I still think Hong Kong is very well located and will ultimately become a major centre for mining financing." Maybe the next bull market will be an interesting test of this view.