Spotlight on safety

As the world celebrated the incredible rescue of 33 Chilean miners trapped underground for 69 days, the death toll from a gas blast that ripped through a coal mine in China’s Henan province rose to 37. With millions of people watching the Chilean mine rescue, there is now an enormous opportunity to advocate for greater safety in the industry. Admittedly the groundswell of sympathy for the plight of the common miner may be fleeting — but the time is ripe for miners, employers, regulators and governments around the world and in particular in underdeveloped countries to press for safety improvements that will help keep miners alive.

• On the home front there have been some noteworthy developments in the ongoing saga over the future of fertilizer icon Potash Corp. of Saskatchewan. On Oct. 15, Reuters reported that according to its sources, Chinese chemical giant Sinochem had decided not to launch a counter-offer for the company. (Sinochem never publicly said it would.) Nevertheless that leaves the field wide open for late-stage counterbids to BHP Billiton’s hostile US$38.6-billion offer for the company, which is set to expire on Nov. 18.

• One interesting idea now circulating is that Canadian pension funds may join hands to foil BHP by investing in what The Globe and Mail is describing as a “blocking stake.” Canada’s national newspaper, citing unnamed sources, is claiming that Alberta Investment Management Co. is leading discussions with pension funds about the possibility of taking a 30% equity investment in Potash Corp. to keep the company in Canadian hands. The plan includes a guarantee that the fertilizer maker will give China 100% of the output from one of its larger mines. But even the sources admitted that the idea had a “fairly low probability” of success.

On Nov. 3 the federal government is supposed to weigh in on whether it thinks a BHP takeover would be of net benefit to Canada. But if you ask one of Potash Corp.’s major shareholders the same question the answer is a resounding “no.” Stephen Jarislowsky, the company’s third-largest shareholder with nearly nine million shares, told the Canadian Broadcasting Corp. in an interview that he wants to see the company remain in Canadian hands. “Nobody else in the world gives their raw materials away and doesn’t have control over them,” he said. Jarislowsky, a Montreal-based billionaire, founded an investment firm, Jarislowsky Fraser.

• The week also saw the return of mining mogul Robert Friedland as chief executive of Ivanhoe Mines in a move that signals the progress of both a company and a country.

Friedland’s original departure from the position was in 2006, after rowdy street protestors in Mongolia’s capital of Ulaanbaatar burned his effigy. That anger was sparked by comments made by Friedland at an investor forum in North America where he allegedly made Mongolia sound like a backwoods ripe for Western companies’ pickings.

The larger context of the tensions, however, was that a former communist country, with crippling poverty, was just beginning to come to terms with open markets and the foreign investment in its natural resources that they bring.

Those growing pains were also apparent at the time in the form of a proposed windfall tax, which threatened to choke off all foreign investment, and the long delays in getting an investment agreement signed with Ivanhoe. Facing such a stormy situation, it was deemed best to have Friedland retreat as the public face of the company in Mongolia. While he kept a firm grip on Ivanhoe through his position as chairman and as a key shareholder, the chief executive duties were handed over to former Freeport-McMoRan Copper & Gold executive John Macken.

Fast forward four years and the windfall tax has been repealed and Ivanhoe, along with its partner at the project, Rio Tinto, finally hold the coveted investment agreement, which has cleared the way for the development of what will be one of the world’s foremost gold and copper mines.

Speaking at the Denver Gold Forum in September this year, any vestiges of the old comments about Mongolia as an investment destination were long gone. Instead, Friedland emphasized Oyu Tolgoi’s role in wealth creation in the country and the vast economic potential of Mongolia thanks to its proximity to the Chinese market.

His return to take the managerial reins illustrates that Mongolians are still listening to his speeches from across the ocean, only now with a far more favourable disposition.