Mining and finance veteran George Jones has established two major businesses and, at the age of 62, is helping to build a few more.
Two years ago, George Jones came away from the takeover of iron ore miner Portman Mining with a small fortune. But, instead of retiring in comfort he went looking for new opportunities, and has found them with abundance.
In the past 18 months he has become chairman of three emerging companies – budding Mid West iron ore miner Gindalbie Metals, aspiring African iron ore miner Sundance Resources, and South American gold explorer Mundo Minerals.
In addition, he puts substantial time into several philanthropic pursuits.
Mr Jones’ life became particularly busy last July when he added executive duties at Gindalbie to his chairman’s role, but that will change shortly.
He expects to relinquish his executive role in August, when Gindalbie and its Chinese partner Ansteel are planning to make a final decision on their $1 billion Karara iron ore project.
“I’m now 62 going on 63 and I don’t want to be quite as busy as I have been,” Mr Jones said.
Surprisingly, Mr Jones also admits that he does not support companies having an executive chairman, arguing that Gindalbie was a special case.
“I don’t agree with executive chairmen but I saw the need for it in this case,” he said.
“A lot of things needed to happen and the board asked me to take on that role.
“I’ve done it and I’m now in the process of backing out of it. I’m not doing it for the salary I can assure you. The sooner it ends the better.”
Mr Jones has been involved in the iron ore industry for more than 15 years and retains great enthusiasm for its prospects.
“I’m a great believer in the iron ore industry, I think it’s a wonderful business to be in,” he told WA Business News.
“I like building things but its hard to acquire assets that are already in good shape; you have to get hold of them and make that happen, and that’s what we are doing with Gindalbie and Sundance.”
Shedding the executive role at Gindalbie – which will be easier following the recruitment of Garrett Dixon as managing director – still leaves plenty on Mr Jones’ plate.
He is confident the Karara project will proceed, and expects its output will double after five years of production.
Sundance is conducting a drilling program at its iron ore deposit in the west African country of Cameroon after completing a $30 million capital raising last year.
Development of the Mbalam project would cost about $3 billion, putting it on a par with Fortescue Metals Group’s Pilbara iron ore project.
Mr Jones’ third company, Mundo Minerals, has completed a $20 million initial public offering and is pursuing development of gold projects in Brazil and Peru.
Mr Jones’ ability to pick up three board positions in rapid succession says a lot about his track record in business, which has been achieved against the odds.
Raised in a children’s home, Mr Jones served in the army in Vietnam before working in a bank until the age of 35.
He has packed a lot of commercial activity into the subsequent years.
In 1980, he and Terry Strapp jointly established Fincorp, which has grown to become Oakvale Capital, Australia’s largest independent provider of financial risk management services.
That was followed by success with Consolidated Resources (acquired by Mt Edon), a rare failure with Consolidated Gold (into administration when the gold price plunged) and big success with Portman Mining.
Mr Jones took Portman a start-up to a substantial iron ore exporter worth more than $600 million when it was acquired by US company, Cleveland-Cliffs.
Mr Jones’ main focus during the past eight months has been Gindalbie, which he believes is not properly understood.
“Every chairman worth his salt would think his company is under-rated,” he said.
“I do think the market doesn’t fully understand Gindalbie yet. They don’t understand the quality of the ore body and the quality of our partner. That will come in time.”
Its partner in the Karara project, AnSteel, is the second largest steel producer in China with annual output of 20 million tonnes.
It is spending $US3.5 billion on a new steel mill complex in northern China, which will include the pellet plant Gindalbie originally planned to build in the Mid West of WA.
“A key element of this project is the personal relationship I have with AnSteel,” Mr Jones said.
“They are a very senior organisation and I was dealing directly with the president, who I have known personally for over 12 years.”
Mr Jones said Chinese companies such as AnSteel had a very long-term planning horizon.
“They think long term, 100 years plus, and they want security of supply in future.”
This time horizon affects their investment decisions.
“I think they assess risk pretty well…and they have got the capacity to make things work because of the sheer scale of what they are doing,” Mr Jones said.
“They won’t do a project at any cost; but they may be prepared to accept a lower return in the short term for strategic reasons.”
Mr Jones believes traditional financial analysis tools, like net present value and internal rates of return, becomes worthless beyond 10 years.
Hence projects like Karara, which has an expected mine life of at least 40 years, should be subject to a more strategic assessment.
One of the challenges for Gindalbie, in terms of winning investor support, is that it plans to mine magnetite ore, which needs secondary processing, whereas all existing operators in Australia mine hematite ore, which is shipped directly to steel mills.
Mr Jones said magnetite may be new for Australia but it was the main feedstock for AnSteel, which had been mining it current magnetite deposit since 1919.
It plans to source about 70 per cent of the feed for its new steel mill from Gindalbie.
“It is quite an essential part of their production train and that is a key attraction to us,” Mr Jones said.
“When it gets tough we will still get buffeted by the price but we will always have the customer because we are part of their supply chain.”
Gindalbie recently announced it was deferring completion of the Karara feasibility study by about six months, until August.
The company insists this is good news. It was driven in large part by the increased size of its iron ore resource, and Gindalbie still aims to start production in late 2009.
“We are firming everything up, we are not just wanting expressions of interest and airy fairy numbers,” Mr Jones said.
“A lot of the components will be sourced out of China and we will get firm quotes for everything before we sign off.”
Overcoming a tough start to life
George Jones’ tough start in life has motivated the mining veteran to be a big supporter of charities.
His philanthropic activities include serving on the board of Parkerville Children’s and Youthcare, the children’s home where he spent most of his youth.
“The Aboriginals call it the stolen generation, and they used to do the same thing to white people as well,” Mr Jones told WA Business News.
“The government felt that your parents weren’t appropriate, so they used to take you off.
“They used to do that to white people and I’m one of those.”
Mr Jones doesn’t mind talking about his upbringing, nor does he dwell on it.
“I was born into a situation and you deal with it as best you can. You just get on with it,” he said.
“It gives you a bit of a hard casing, which probably holds you in good stead.”
He notes that many other people born in the 1930s and 1940s had a tough start to life but achieved great success.
“I definitely come from that background but I think a lot of people do.
“It took me longer to get going. If I could have started with a university degree, perhaps I’d be further down the track.”
The quietly spoken Mr Jones is modest when describing his philanthropic activities.
“I sort of do my little bit to help out along the way,” he said.
His main initiative was putting $2.7 million into a family foundation, with the income distributed to charities every year.
Mr Jones is chairman of the finance and investment committee at Parkerville, which has cottages for distressed children but operates mainly as a service provider.
“I really enjoy being involved,” he said.
He is also chairman of the Ear Science Institute of Australia’s fundraising campaign, which is seeking to raise money for a $20 million building in Nedlands.
