29/10/2009 - 00:00

Proximity to the action pays off for Stokes

29/10/2009 - 00:00

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The state’s iron sector has attracted another major player in the local business scene – Kerry Stokes.

ANDREW Forrest and Gina Rinehart are not alone in making fat profits from continued expansion of Western Australia’s iron ore industry, with Kerry Stokes, a man better known as a media mogul and tractor salesman, last week joining the two local billionaires in the field.

Over a busy 10 trading days on the Australian Securities Exchange, Mr Stokes added about $23 million to his already large personal fortune thanks to a sharp rise in the share price of Iron Ore Holdings (IOH), a company in which he has a 52 per cent stake.

Little known outside the specialised world of the Pilbara minerals industry, IOH is one of the small companies which a few years ago snapped up valuable exploration tenements from under the noses of the region’s big boys of mining, BHP Billiton and Rio Tinto.

For much of the past year the share price of IOH has limped along at less than 50 cents, hitting a rock bottom 9.6 cents on December 22 last year. The sickly share price improved dramatically earlier this month when another Pilbara explorer, United Minerals Corporation (UMC), received a takeover bid from BHP Billiton.

While UMC, the takeover target, rose from 91 cents to $1.27, IOH (which is yet to be a takeover target) rose from 60 cents to 98 cents, boosting Mr Stokes’ fortune by $23 million.

The reason IOH rose in sympathy with UMC is that the two companies have much in common, including a common director in Malcolm Randall, and deposits of iron ore that the major miners find tempting because they are close to their existing operations.

UMC was irresistible to BHP Billiton because its Railway ore body lies adjacent to one of BHP’s biggest mines, making it a cheap and easy (bolt on) acquisition.

However, the $204 million offered for UMC raised eyebrows, not because it is the first time an iron major has moved to buy an iron minor in the Pilbara, but because the price sets a new benchmark for an undeveloped iron ore deposit.

Mr Stokes’ company, IOH, might be in a similar position. Its Iron Valley project is roughly the same size as Railway (160 million tonnes of high-grade ore) and has three interesting neighbours – BHP Billiton, Fortescue Metals Group, and Rio Tinto.

There are no indications that IOH is a takeover target, yet, or that Mr Stokes wants to sell. But given the location of the Iron Valley ore, and a number of other projects it is working on, any of the three major miners could be interested.

If that happens, then it would be fun to eavesdrop on the conversation around the boardroom table of WA Newspapers Holdings where Mr Stokes sits alongside the chief executive of Rio Tinto Iron Ore, Sam Walsh, the same chap who authorised Rio Tinto to acquire ore from IOH’s small Phil’s Creek project, subject to a final sales agreement.

Joining the dots, or linking the common interests of people in Perth, always provides Bystander with some lighter moments.

Bauxite’s bright glow

IRON ore is not the only commodity attracting Perth’s corporate high flyers. Bauxite, the dull red ore that eventually becomes aluminium, has also become somewhat of a favourite, perhaps because it too might be sold by a minnow to a major.

A secondary asset of UMC, which BHP Billiton will almost certainly offload, is the Gardner Plateau bauxite deposit being explored with the Norwegian aluminium, oil and electricity specialist, Norsk Hydro.

Located close to the better-known Mitchell Plateau bauxite deposits of Alcoa and Rio Tinto, the Gardner Plateau project is currently being “reviewed” by UMC and Norsk, code for sale or mothballing.

A more ambitious approach to bauxite can be found in the plans of Bauxite Resources, which is in the process of sending a trial shipment of its Darling Range material to China, and the even more ambitious career move by former Woodside and Fortescue Metals finance director, Michael Minosora.

The fast-moving Mr Minosora has bobbed up at Atlantic, a one-time pearl farmer, which is now planning to develop a bauxite deposit in Vietnam. His vision, according to a statement filed at the ASX, is to build “a company with a portfolio of two to three world class resource projects”.

With a share price of around 4 cents, and a market value of $38 million, Mr Minosora has set himself quite a challenge with his latest corporate adventure.

Fishy future

FORTUNES come and fortunes go, and the world’s fishing industry regulators look like being the spoil sports who ruin the future of three of Australia’s richest families, and regular members of BRW magazine’s annual rich list.

Tuna are the problem. Specifically a shortage of the fast-swimming fish which are caught in the Southern Ocean, hauled (slowly) to Port Lincoln in South Australia, fattened, and flogged to Japan to be turned into high-priced sushi.

Unfortunately, the Commission for the Conservation of Southern Bluefin Tuna reckons stocks of the fish are nearing crisis point, potentially triggering a ban on the annual catch.

If that happens, and given that no-one has successfully bred southern bluefin in commercial numbers in captivity, three of Port Lincoln’s rich and famous could drop off the BRW list.

Sam Sarin, Hagen Stehr, and Tony Santic (of triple Melbourne Cup fame as owner of Makybe Diva) all have their wealth built on ownership of tuna catching and fattening “quota” issued by the commission.

No quota. No fortune.

So very PG

A PEPPERMINT Grove moment. In Perth’s most exclusive western suburb, where serenity rules and civilisation has reached its highest level, even the dogs are pampered.

Famed for being the only local authority in Australia that sends a man into each house to collect the rubbish bins of its rich residents (to avoid an unsightly line of bins in the street), Peppermint Grove is also the place where stray dogs are returned by a council worker.

According to the August minutes of the local council, the ranger fulfilled 34 chores that month, 16 related to car parking, and 18 related to dogs.

No infringements were issued to dog owners, just cautions, with the ranger even going as far as returning three stray mutts to their owners.

How very PG.

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“Dogs are better than humans because they know but do not tell.” Emily Dickinson

 

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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