12/05/2011 - 00:00

Glasenberg to win big from Glencore float

12/05/2011 - 00:00

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Andrew Forrest may have a big number in his ‘wealth column’, but he’s down 2-0 against an old foe.

Glasenberg to win big from Glencore float

IVAN two, Andrew nil. That’s not a football score; it’s the score in a competition that started exactly 10 years ago between two of the world’s richest people – Ivan Glasenberg and Andrew Forrest.

Mr Glasenberg, subject to the successful float of the company he runs, the commodities trading giant Glencore, should soon be a $10 billion man, eclipsing Mr Forrest’s meagre $6 billion.

In dollar terms, that makes Mr Glasenberg, with his 15.8 per cent stake in Glencore, the winner over Mr Forrest, who sits comfortably atop his 30 per cent stake in iron ore miner, Fortescue Metals Group.

It was back in May 2001 that Mr Glasenberg scored his first win, playing a key role in pushing the FMG boss out of the deeply troubled Anaconda Nickel.

Tense meetings of Anaconda investors over several days culminated in a showdown at Perth’s Parmelia Hilton hotel, with Mr Glasenberg, then a junior executive at Glencore, working with his boss, Willy Strothotte, to show Mr Forrest the door.

At the time, no-one suspected that it was the best thing that could have happened to Mr Forrest.

He had promised to turn Anaconda into the world’s biggest nickel miner using a tricky processing technology that dissolves nickel ore in a high-pressure acid bath – the same process that made BHP Billiton look second rate at the failed, sold, and soon to be resurrected Ravensthorpe nickel project.

But, after years of trying, the Murrin Murrin project of Anaconda never got far beyond 65 per cent of its design capacity, and then only in fits and starts, prompting Glencore and the big mining group, Anglo American, to oversee a shareholder revolt, which ended with Mr Forrest’s exit.

Using his payout from Anaconda, Mr Forrest went on to found Fortescue, and claim several titles, including Australia’s richest man, and chief thorn-in-the-side of the local iron ore leaders BHP Billiton and Rio Tinto.

Now Mr Glasenberg is back to haunt Mr Forrest by being able to point to a notional cash pile, which, in theory, is close to double that of the man he helped depose a decade earlier.

The super rich do not, of course, behave in such a crass fashion as to compare personal bank accounts. They show off their money in other ways – the size of their boats, Swiss lakeside mansions, ski chalets, and private islands.

If asked, they would claim that none of their trinkets and trophies has been acquired to show off. They’re fibbing.

The truth about the super rich is that they are no different to anyone else, always happy to brag about their wins and display their prizes. Never happy to talk about their losses.

In the silent competition between Messrs Forrest and Glasenberg, and with money the only way of keeping score, it looks like Mr Glasenberg is about to claim his second big win over Mr Forrest.

Whether that happens depends on the Glencore float, which has been looking somewhat unstable thanks to heavy recent selling of commodities that has put a dent in the theoretical $61 billion value of Glencore.

But, once the dust settles and speculators are blown out of the way, the underlying strength of the Glencore business will shine through – perhaps even reporting fat profits from the sell-off by displaying its traditional fleet-footed ability to take positions in a deal whether asset values are rising or falling.

No mine? Yes minister

NO-ONE has dared to publicly defend the company proposing to develop a coal mine in Western Australia’s Margaret River vineyard district for fear of being attacked by celebrity chefs and rich retirees.

There is, however, something strange and amusing about the way the state government has gone about its work of banning the coal proposal, almost as if taking its lines from that fabulous television comedy, ‘Yes Minister’.

What the government has done is adopt a super-cautionary principle, perhaps for political reasons, to make a problem go away, in much the same way the fictional bureaucrat Sir Humphrey Appleby killed off a proposed chemical plant in a marginal electorate.

His approach was to take a report that cleared the plant, and arrange for the inspecting scientist to include the words: “It would be irresponsible to deny that after further research its manufacturing (of the chemical) might be found to be associated with health risk”.

In other words, if we wait long enough something might happen, with the logical extent of that form of thinking requiring everyone to take precautions against a meteor storm.

In the case of the Margaret River coal proposal, the bureaucratic wording in killing the mine was: “Even though some of the significant impacts, or risks, may be presented as being manageable because of their low probability of occurring, the environmental consequences of some low probability event may be so serious, widespread or irreversible that the proposal, taken as a whole, on balance .... etc etc”.

Perhaps a coal mine in Margaret River would be a blot on the landscape, but the reason for rejecting it comes straight from a comedy script – and that’s a very poor way to run a government.

Busted

NEW ways to make money are emerging every day, some not very nice, such as the advent of internet-trawling, copyright bounty hunters.

A US development, naturally, the game works like this. A law firm scans websites, especially bloggers, looking for reproduced photographs, illustrations and articles, lifted from conventional news media.

Once spotted, the lawyers obtain copyright from the original source, such as a newspaper, and sue the blogger, generally settling out of court and splitting the proceeds with the newspaper.

Nifty and nasty.

Ironic piece

HAREBRAINED job of the week is on offer at Melbourne’s Monash University where a position is open for a researcher into ‘peace economics’.

According to Monash, the job will focus on: “The relationship between economics and positive peace-building outcomes for the global challenges faced today”.

Really? Someone is going to find a way to link the words peace and economics while sitting in a comfy office in a university named after an Australian who made his name killing Germans in WWI.

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“It is better to live rich than to die rich.”

Samuel Johnson

 

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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