Leading private commodities producer and marketer Glencore raised $10 billion when it went public on the London Stock Exchange (LSE) in May this year with a market cap of $60 billion. The Swiss based mega-mining investment company was the largest international listing on the LSE and the first company to gain instant admission to the FTSE100 in 25 years. The hype surrounding the deal turned the spotlight well and truly onto commodities and in particular mining IPOs, with many arguing that Glencore's IPO was as good as ringing the bell for the top of the mining boom.

And if the six months post-listing are anything to go by, it seems Glencore was ringing that bell loud and clear. All three major areas of its commodities business have been hit hard, with metals, food and energy all falling across the board (see charts below):

Energy, down 5.29%

Food, down 11.51%

Metals, down 16.10%

Some commodities have been hit even harder. Over the six months following Glencore's IPO, cotton plummeted 33%, copper fell 17%, wheat dropped 18%, coconut oil dived 42% and lead fell 19%.

Glencore shares have tanked. After listing at 530p on 19th May, today they trade at 380p, down 30%, while the FTSE is down 10% over the same period.

So what does this mean for the commodities boom and Australian mining IPOs? In short, it's not good news. The Australian materials sector (XMJ) is down 20% since Glencore listed, with mining shares across the board experiencing sharp losses. Even the big miners have been hit, with BHP down 20%, while RIO is down 22% over the same period.

Recent IPOs have foundered, with brave investors copping it on the chin. Of the 63 listings in the Materials sector since the beginning of the year, just 15 are in positive territory - i.e., 76% of the time you would have been better off taking a wait and see approach (see table below). Worse still, 37 out of 63 - a whopping 59% - have lost more than 25% and a quarter of IPOs are worth less than half their listing price.

In the table below you have to scroll down a long way until you spot a positive gain. Considering the risky nature of sinking money into an IPO, investors have been poorly rewarded.

The premise behind getting stock in an IPO is to get on board early and cheaply - before the rest of the market gets a shot at it. If this weren't the case then investors would be better off waiting until the stock listed.

It raises a number of problems with investing in mining IPOs:

1. Performance speaks for itself. Let's face it, mining IPOs have been a terrible play in 2011 with an average 19% fall in value since listing. Aside from a three solid performances from Mining Group (up 50%), Red October (up 75%) and Western Manganese (up 160%) mining IPOs have been a disastrous investment. In the current macroeconomic environment, this is unlikely to change.

2. Commodities prices have been hit hard. Even if they stabilise, many projects proposed by junior explorers and miners may no longer be feasable at current prices. The listing process takes time and projections for the miners' projects are likely to be based on higher commodities prices. If you are interested in a mining IPO, read the prospectus carefully to compare projected commodity prices to current levels, but whichever way you look at it, it's quite a risk to invest in an unknown entity that produces nothing, has no idea what its costs will be, nor how much it will get for its end product. If it finds anything, that is.

3. Many commentators are already rining the bell of the mining boom. Even if it is merely slowing down, putting your money into a junior explorer or miner should only be done with money that you can lose, because the odds are that this will indeed eventuate.

4. China data suggests the economy is slowing across several areas, including manufacturing. Lower demand from China could translate into even more depressed commodities price, a death knell for up and coming miners.

On top of all this is the Glencore factor. When a profitable private company decides to go public, are they ringing a bell at the top of the market? Historically, large IPOs and mergers have coincided with the top of the market in question. From the peak, there's nowhere to go but down and management want to get their hands on the money before it all goes south.

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