Business is a fun game to play for Bruce Walter

Roots in The Salvation Army run four generations deep for mining entrepreneur and dealmaker Bruce Walter, the chairman of Toronto-based WW Mines.

When Walter’s great-grandfather died in a typhoid epidemic in London in the late nineteenth century, his great-grandmother was left to raise four children on her own, and friends suggested she turn to The Salvation Army for help.

The Protestant Christian church known for its philanthropy and charity work was set up in 1865 in the east end of the city by William Booth, a Methodist minister, and his wife Catherine. Walter’s great-grandmother met the Booths and became a Salvation Army officer herself, eventually moving to India where she worked as a missionary until she died.

Walter’s great aunt and her husband founded The Salvation Army’s work in China in 1916 – setting up an orphanage for boys in Beijing, among other charitable work – before they were forced out when the Chinese Communist Party seized control of the country in 1949.

And an uncle ran The Salvation Army’s work in Africa while his parents also served as missionaries, including a stint in India where the young Walter lived until the age of three.

But for Walter, who at 53 is among the most successful dealmakers in Canada, a career in The Salvation Army was not to be.

“I never considered becoming a minister,” he says. “I’m not cut out to be nice to people all the time.”

Sometimes it’s hard to tell whether Walter, with his dry sense of humour, is being serious or not. But then his more contemplative side kicks in: “I am sure my upbringing in The Salvation Army has affected both my world view and my attitude towards business. I would like to think it has led me to always deal with people fairly and honestly. Perhaps more importantly, it has taught me that there are a lot more things in life than business.”

That may be true. But Walter has excelled in the business world nevertheless – whether it was in the battle earlier this year for control of Baffinland Iron Mines (BIM-T) and its massive Mary River iron ore project, or the 1990 takeover fight for Sherritt Gordon, now Sherritt International (S-T).

“He is a very, very smart guy,” Ian Delaney, Sherritt’s chairman, president and chief executive, says. “He’s a great tactician. He thinks things through.”

Walter met Delaney in the late 1980s after working at law firm Davies, Ward & Beck for five years and yearning for something a little different.

“It wasn’t that I was ever unhappy in law,” Walter, who had quickly risen through the ranks to become a partner at the prestigious Toronto firm, recalls. “But at the end of the day, I don’t care what the rate is – working by the hour is a lousy way to run your life.”

At Davies, Ward & Beck, Walter created a number of large takeover deals. He also got to know Peter Munk, founder and chairman of Barrick Gold (ABX-T, ABX-N), when the law firm was involved in the gold producer’s acquisition of the Goldstrike mine in Nevada in 1986. The high-profile business deals Walter was involved in as a lawyer, and his MBA degree, whet his appetite for more. Walter received his Bachelor of Laws and Master of Business Administration degrees from York University in 1981. He also holds a Ph.D. in law from the University of Cape Town.

“I saw a lot of people doing very well for themselves, and pretty soon you realize that the principals in the deals are the ones making the big money,” he says. “The professionals around the table may be really smart guys and doing all right for themselves, but ultimately it’s a service business and that’s what you do. I felt I wanted to take a shot at being a principal and see how that works.”

When Walter got wind that Munk was planning to set-up Horsham Corporation, he knew that was the place he wanted to be. So on a hot summer day in June 1987 Walter called on Delaney, then Horsham’s new president and chief executive, at the company’s temporary offices at the corner of King Street and Bay Street in downtown Toronto.

“He spent the first hour telling me he had no interest in getting involved with a lawyer,” Walter recalls of that first meeting with Delaney. “He was looking for an investment banker and he was pretty sure that was the direction he wanted to go.”

By the end of the second hour, however, the two men shook hands, and in many ways have been partners in a number of ventures ever since.

When asked about that first meeting with Walter, Delaney said: “He knew more about corporate finance than most investment bankers.”

One of the highlights at Horsham was its acquisition of Clark Oil, a mid-sized oil and gas refiner and distributor in the U.S.

Horsham bought the oil company out of bankruptcy court for US$1.5 billion, in a deal that Walter describes as a “very successful investment.”

After three years at Horsham, both men left to form Delaney, Walter & Company. Within months Eric Sprott approached them to take a look at Sherritt Gordon Mines, a company in which Sprott had placed a third of the shares with institutional clients, the majority of whom were unhappy with the company’s performance.

Walter and Delaney launched a proxy battle and took over Sherritt in September 1990, making Walter president of a publicly listed company at the age of 32. “I had never held a corporate job before and suddenly I had a management team reporting to me whose average age was probably sixty,” he says.

It was also Walter’s first foray into geopolitics. As president he was involved in building Sherritt’s relationship with the Cuban government from the ground up, developing joint-venture agreements and creating a business model that would allow the Canadian company to invest and develop its projects in the country.

“It was a fascinating introduction to geopolitics, as we both figured out how to establish relations with a regime that had no understanding of doing business outside of the Soviet sphere,” he says, adding he had the opportunity to meet Castro in private meetings on several occasions.

“Learning how to deal with people with radically different world views and adjusting for that was certainly key,” he says, “and having had the opportunity to spend time with an important historical figure like Castro was certainly a very interesting experience. Castro is a very impressive man . . . both charming and extremely well-informed.”

Delaney, Walter & Company also held a large stake in Plaintree Systems, a private company building ethernet switches. In 1993 Walter moved to Boston to set-up a U.S. base for Plaintree. He stepped down as Sherritt’s president, but assumed the role of vice-chairman. Walter was later forced to sever his ties with Sherritt completely in 1986 when the U.S. passed its Helms-Burton Act, which permitted lawsuits against companies that do business in Cuba. Walter took Plaintree public on Nasdaq before returning to Canada in 1996, where he remained chief executive of the technology firm until Plaintree sold a 25% stake to Nortel in 1998.

In 1999 Walter joined BMO Nesbitt Burns as managing director of mergers and acquisitions and co-head of the firm’s media, telecoms and technology division. But like law, Walter says, working at BMO was still working in a “service business.” So when Delaney approached him to take a look at Dynatec (DY-T), where Delaney was chairman, he leapt at the opportunity. Delaney believed Dynatec could be a lot more than it was, Walter says, and suggested that he sit down with Bob Dengler, Dynatec’s founder, and see what they could do together with the company.

“After I met Bob, I was convinced that Dynatec represented a tremendous opportunity and decided the best way to get involved was to get in with both feet,” he recalls. “Bob and I basically ran the company for five years. He was chief executive until he turn
ed 65, which had been his plan all along, and then we flipped titles and he became vice-chair and I became chief executive for the last few years.”

In 2003, Dynatec earned a 53% stake in the Ambatovy laterite nickel project in exchange for $20 million in feasibility studies. “If we had tried to do the deal we did with Phelps Dodge six months or a year later we wouldn’t have had a chance, because the nickel market had started to move and prices were going through the roof,” Walter says of the project in Madagascar.

Walter attributes Dynatec’s lucrative investment in Ambatovy – among the largest undeveloped nickel projects in the world – to good luck and timing. By chance, Dengler had been seated next to the president of Phelps Dodge, which owned Ambatovy, at a mining dinner, and had made it known that Phelps was interested in doing something with it.

As president and chief executive of Dynatec, Walter was also involved in the creation of FNX Mining, in which Dynatec held a 24.5% stake. In 2010 FNX Mining merged with Quadra Mining and the new company was renamed Quadra FNX Mining (QUX-T).

Walter’s career took a turn in 2008 when Patrick James, who was on the Dynatec board and was also chairman of Centerra Gold (CG-T), asked him to get involved with the company, which owns 100% of the Kumtor gold mine in Kyrgyzstan, and the Boroo gold mine and the Gatsuurt gold project in Mongolia.

“I must admit I would have had a tough time pointing out the Kyrgyz Republic on a map before joining the Centerra board, and I probably still would have trouble spelling it, but that’s a different story,” Walter, who took the job of vice-chairman, says.

Despite the challenges of operating in the former Soviet Republic, Walter maintains that the mine – the largest gold mine operated in Central Asia by a Western company – has barely lost a day of production over the last 14 years. Last year the mine – 350 km southeast of the Kyrgyz capital of Bishkek and 60 km north of the Republic’s border with China – produced 567,802 oz. gold.

“The irony is that there’s probably been less disruption there than any jurisdiction you can come up with in Canada,” he reflects. “Relative to what Newfoundland or Alberta have done changing the rules of the game, the Kyrgyz have been far more transparent and open in dealings in terms of the regime and how we’re working with them than I would find in many jurisdictions in North America . . . Is everything going along exactly the way we want it at Centerra? No. But I’d probably give you that answer about any business I’m involved in on any given day.”

As for Mongolia, Walter concedes it’s a “tough jurisdiction” because the country has a very diffuse political power base. “In Mongolia you can’t say, ‘this is the person I need to negotiate a deal with, and let’s get on with it,’ because a lot of the power base is shifting behind the scenes and you don’t necessarily see it happening. So it makes it a little more challenging,” he explains. “The trick is not to get yourself over-committed and always be a solid corporate citizen – transparent and upfront with the government.”

But it was the takeover battle for Baffinland Iron Mines and its huge Arctic iron ore deposit earlier this year that
has proven to be among the most exciting and challenging of his career. After a four-month battle for Baffinland and its promising Mary River project with rival ArcelorMittal (MT-N), Walter masterminded a joint offer for Baffinland with the steelmaker that surprised almost everyone. In January the two companies made a joint offer for Baffinland of $1.50 per share, valuing the company at  $590 million.

Walter set up Nunavut Iron Ore to go after Baffinland in August 2010 and was backed by Houston-based Energy & Minerals Group, a private investment firm with a family of funds worth $2 billion that invest in the energy and mineral sectors.

“They have been terrific partners to work with in dealing with Baffinland,” Walter says. “We’ve pretty much got the funding we need in place for the entire project now, and they have lots of money under management to work with us on other deals.”

Walter admits the fight for Baffinland was “one of the more intriguing” ones.

“Our legal firms more than earned their keep on this one because there wasn’t a time until right at the very end that we weren’t conducting negotiations on multiple fronts,” he explains. “There were a lot of moving pieces in this thing and a lot of players who could potentially have come in and played a role . . . Let’s just say that what was visible publicly was 25% of what was going on.”

Arcelor now owns 70% as operator of the project, and Nunavut Iron anticipates spending $1.5 billion for a 30% stake.

“We’ve got enough to keep our attention, but fortunately not enough that requires day-to-day monitoring for us, so that is
exactly where we want to be,” Walter says, adding that some of the key people Arcelor has put in place were exactly the same ones he would have targeted to hire if they had nailed 100% of the project.

“We’re quite comfortable they have a first-class team, and we’re charging ahead right now,” Walter says. “We’re spending an awful lot of money on engineering, with a view to being in a position by the end of the year to have made a decision on what the final scope of the project will be, what the staging will be, and what the next steps will be.”

When looking back on his career, Walter muses that Ambatovy “was every bit as complex” as Baffinland and “had numerous twists and turns,” while the early days at Sherritt “had their own set of issues that made it interesting.” And at the end of the day, he maintains, he would hate to think that he had spent 25 years at one job feeling bored and stagnant.

“I’ve never stayed anywhere more than five years,” he admits. “It wasn’t a plan. It was just how the stages seemed to have worked out.”

While some may call that a short attention span, Walter would argue it’s about variety, seeking new challenges and having his priorities straight, like raising four daughters, working on his golf game, serving on the National Advisory Board of The Salvation Army and recognizing that every minute in life counts.

“Never think that life centres around business,” Walter, who lost a brother to pancreatic cancer, says. “I mean, business is an interesting game. It’s fun to play, it can be rewarding. But never make it your life.”