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The Spiritual Tycoon Spies The Prize

Published 8 years ago
By Forbes Africa

Robert Friedland was ranked 347 on last year’s FORBES’ ‘400 Richest Americans’ list with his net worth of $1.3 billion. What’s more, Friedland is looking at developing a platinum group metals (pgm) project on the northern limb of the Bushveld Complex—the geological formation, which hosts the world’s greatest known pgm resources.

This investment may be good news for South Africa but some industry watchers may wonder what Friedland has been smoking. Not only are the platinum mines the battleground for the on-going industrial relations confrontations in the mining industry but platinum market and business fundamentals have been hammered.

Further, the platinum-bearing Platreef of the northern limb is geologically very different to those of the western and eastern limbs of the Bushveld Complex, where nearly all the operating platinum mines are situated.

So far, only one mine has been successfully established on the northern limb and that’s Anglo American Platinum’s (Amplats) Mogalakwena open-cast operation. That mine is situated on the highest grade section of the Platreef, on ground that Anglo acquired back in the 1920s.

Friedland’s new company, Ivanplats, which was listed on the Toronto Stock Exchange in October through an initial public offering (IPO) was valued at around C$2.5 billion.

The IPO prospectus noted that: “Two large urban communities and additional smaller communities inhabit portions of the Platreef project… a significant relocation of communities would be required at the company’s expense to enable open-pit mining of the ATS and AMK deposits, which could be prohibitively expensive.”

The prospectus added that certain members of these communities have in the past and may in the future unlawfully and illegally disrupt prospecting or mining operations, as Amplats discovered last year. Further, on instruction from the Department of Mineral Resources (DMR), Ivanplats has agreed to stop making payments under the agreements effective November 1. Ivanplats is currently in negotiations with the community leaders to amend these agreements in accordance with recommendations made by the DMR.

There is a risk of further disruptions from the communities and, while any such disruption would likely be unlawful and entitle the company to seek legal remedies, it may cause delays, which could have a material adverse effect on Ivanplats business, financial condition, results of operations or prospects. Replying to emailed questions, an Ivanplats spokesman tells FORBES AFRICA that the company is now planning an underground mining development and the area of the deposit, that is to be mined, is largely free of development.

“The planned mine would be a highly-mechanized, underground operation accessed through shafts in open ground, designed to have minimal impact on nearby communities.

“Although the Platreef Project still is in the pre-feasibility stage, Ivanplats already has established a presence in communities in the vicinity of its Platreef project through the establishment of community liason offices.”

The Platreef project is one of two big possible developments Ivanplats is considering. The other being the Kamoa Copper Project in the Democratic Republic of Congo (DRC).

Both are at the resource delineation and upgrading stage and there’s no decision yet on which could get the go-ahead first, although the spokesman says that each is being advanced independent of the other.

Regarding the Platreef, the spokesman says Ivanplats plans to apply for a mining right, conduct additional drilling and, subject to approvals, sink an exploration shaft into the deposit this year.

Asked why Ivanplats was investing in South Africa at this point, despite the overwhelmingly negative news flow, the spokesman replied: “The company is very confident of South Africa’s future as one of the continent’s internationally recognized economic leaders… All proposed major new mine developments, by their very nature, must include assessments of longer term outlooks on investment climates and host-nation environments. Ivanplats is not pre-occupied by present views and events, as you term them, for any single nation. There are other, positive, views on opportunities for projected economic and social advances in the future.”

Friedland has made controversial decisions very successfully before, such as with his last venture, Ivanhoe Mines, which developed the huge Oyu Tolgoi Copper Project in Mongolia. That is now controlled by Rio Tinto.

The media shy man is an enigma of sorts. According to his FORBES profile, he attended Reed College in Oregon and studied Sanskrit and Buddhism in India, after graduating with a degree in political science.

This probably accounts for the strange “No comment,” he gave me when I first tried to question him on Ivanplats five years ago at the Cape Town Mining Indaba conference. He inclined his head, made the Indian “Namaste” spiritual greeting sign with his hands and said: “Forgive me but I do not want to talk about it,” before diving into his waiting limousine.

I have heard him speak on several occasions at the Diggers and Dealers Mining conferences in Western Australia as well as at the Mining Indaba.

At his best—such as addressing Diggers and Dealers in the early days of Oyu Tolgoi—he is a spellbinding speaker combining a comprehensive grasp of his subject, with the oratory of a master politician and the conviction of an evangelical preacher.

At his worst—such as the keynote presentation he gave to the Mining Indaba in 2011—he comes across as patronizing, delivering a minimum of information with a maximum of hype and arrogance.

When, on that occasion, I asked him from the floor, why he had given out so little real information his reply was: “I do it to irritate people like you”.

He can also be highly amusing, such as in 2005 when he told Diggers delegates that Ivanhoe faced the ‘Princess Leia’ and ‘Darth Vader’ options in finding a JV partner.

‘Princess Leia’ involved linking up with one of the “better-looking” copper-end users such as Mitsui. While going the ‘Darth Vader’ route meant bringing in a major mining group such as “One of those companies that use letters for their names and want to control the world’s supply”.

He did not have to name Rio Tinto (RTZ); we all got it. But it was at that same conference that another story about Friedland did the rounds, which also drew on a Star Wars analogy.

According to an industry insider, you knew the crucial moment in any negotiation with Friedland had arrived when, “He fixes you with his Jedi mind-$%@* stare”.

Irrespective of how it all works out in the end on the Platreef, this one is going to be interesting and South Africans have a ringside seat for Friedland’s latest venture.

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Related Topics: #Anglo American, #Investment, #March 2013, #Metals, #Platinum, #Richest Americans’ list, #Robert Friedland.