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Published 23 March 2011 14:43, Updated 24 August 2011 17:16
Perth billionaire Andrew Forrest, who has spent a lot of time of late resting in his beachfront Perth mansion, always attracts widespread media attention.
Many other extremely wealthy mining executives, however, have managed to escape the limelight, yet they have rich stories to tell.
More than one-quarter (59) of those on the BRW Executive Rich list have built personal fortunes from mining.
Their stories reveal the changing shape of the economy and give an insight into where the new mining opportunities are.
Take, for example, the hard-working executives who sit behind Forrest controlling Fortescue Metals Group, the third force in iron ore behind diversified giants Rio Tinto and BHP Billiton.
Fortescue’s director of development, Peter Meurs, worked in several roles with mining engineering and construction group Worley Parsons before joining the Fortescue business in May 2010 when the company was hatching plans to increase its exports to more than 155 million tonnes a year by the middle of 2012 from 55 million tonnes a year.
Meurs took control of the company’s expansion projects and has built a stake in Fortescue worth more than $51 million.
Russell Scrimshaw, Fortescue’s executive director of sales and marketing, has also done very well since joining the company. He has amassed a bundle of shares worth some $55 million.
Scrimshaw previously held executive positions within the Commonwealth Bank of Australia, Optus, Alcatel, IBM and Amdahl USA.
But his tenure with Fortescue has been particularly rewarding as Fortescue’s share price has risen more than 380 per cent from just 25¢ since he swapped his role as non-executive director in July 2005 for an executive director’s seat. Although Scrimshaw would surely be more than delighted with his $55 million stake in the company, it is not quite what it used to be.
His holding would have been worth more than $100 million if he had sold at a peak $12.78 a share before the global financial crisis struck in late 2008.
Some of the more enthralling case studies among mining’s über-wealthy involve those who got in at the bottom and rode the mining boom all the way to the top against the odds.
One such success story involves Lynas Corporation’s executive chairman, Nicholas Curtis, who went against the might of China when he committed to developing rare earth projects in Western Australia.
For decades, China had dominated supply of rare earths, an obscure commodity used in everything from car batteries to wind turbines and missile guidance systems.
Panic ensued when the superpower slashed export quotas of rare earths recently. Global manufacturers and governments scrambled to secure supply. The price of rare earths rocketed and Curtis was summoned to the White House and the Pentagon in Washington DC.
Lynas and Curtis are poised to cash in.
Curtis’s stake in the rare earths miner is now worth more than $45 million after the company’s share price shot up more than 300 per cent over 12 months from 47¢ to more than $2.05 a share.
Lynas’s rare earths deposit is scheduled to enter production in the third quarter of 2011.
Australian listed uranium producer Paladin Energy has experienced something of Lynas’s success in recent times, although its share price history is as volatile as the price of uranium.
Despite concerns about uranium meltdowns in Japan, global demand for uranium continues to increase. China has been stockpiling fuel for its growing nuclear energy needs, pushing uranium prices from under $60 a pound in July 2010 to above $72 a pound and back down below $66 a pound in recent weeks.
Listed in Australia in 1994, Paladin accumulated a portfolio of uranium projects during a sustained downturn in global uranium markets. The company has committed up to $125 million for the further expansion of its Langer Heinrich mine in Namibia, Paladin’s flagship, which will increase production to 5.2 million pounds of uranium each year.
Paladin managing director John Borshoff founded Paladin and was appointed to the board in September 1993.
His shareholding is riding the volatile tide of investor sentiment towards uranium and has grown to more than $121 million in recent weeks.
It takes remarkable vision and a good dose of favourable timing to cash in on mining booms and busts. Bob Gavranich, a senior manager and co-founder of mining services group Mineral Resources, is an example of an über-wealthy executive who has managed to time his investments to perfection.
Since its foundation in 1993, Mineral Resources has grown through strategic business development, consolidation and acquisition. It boasts several divisions, including Crushing Services International, polyethylene pipeline technology group PIHA, Process Minerals International, as well as investments in aspiring iron ore producers Polaris Metals and Mesa Minerals.
As general manager of the PIHA business, Gavranich, is estimated to have about $117 million of shares in Mineral Resources.
The value of his shares has increased about 71 per cent over the past 12 months as Mineral Resources’ market capitalisation ballooned to more than $2 billion.
Although Gavranich’s earnings can’t be sneezed at, they are overshadowed by the value of fellow Minerals Resources executive director and co-founder Christopher Ellison’s shares.
Ellison’s stake in Mineral Resources has grown to about $370 million. The pair also make a tidy sum from remuneration each year. Ellison earned $412,717 in the 2009-10 financial year and Gavranich was paid $416,357.
Although many of mining’s rich and famous can be unearthed in Perth’s glamorous suburbs, an equal measure of mining magnates call the east coast home.
Whitehaven Coal founders Tony Haggarty and Andy Plummer are one of the mining industry’s famous millionaire pairs that have carved out names for themselves. Haggarty and Plummer are quite the team when it comes to coal deals, having sold Excel Coal to Peabody Energy in 2006 for the princely sum of $1.8 billion.
After the successful sale of Excel, Haggarty and Plummer are poised to sell their Whitehaven assets in NSW and have whittled down a list of indicative bidders.
Shares in Whitehaven have increased by 41.8 per cent in the past 12 months, taking the company’s market capitalisation to more than $3.3 billion.
The pair are set for a lucrative pay day when they sell down, with both partners holding about $240 million worth of shares in the budding coal producer.
White Energy founder Brian Flannery is not far behind Haggarty and Plummer with about $78 million of shares in his coal business. However, White Energy’s share price collapsed in November 2010 when the company signed an agreement giving the company the exclusive right to acquire 100 per cent of Cascade for $500 million.
Shares in the company slid from more than $4 a share to below $2.80 a share in a matter of months. With quality coal resources growing scarce, mining executives are now also building their wealth through overseas developments.
Take Mozambique coal producer Riversdale Mining for example.
Chairman Michael O’Keefe spotted some quality coking coal resources in the African nation and has increased the company’s market capitalisation to more than $3.7 billion.
Riversdale was the target in one of the mining industry’s merger and acquisition deals of the year in 2010 when Rio Tinto lobbed an impressive $16 a share bid for the company, which has since been lifted to $16.50 a share.
Shares in Riversdale have increased by more than 81 per cent over the past 12 months as a result of the Rio Tinto bid and O’Keefe’s shareholding was worth more than $50 million when Rio Tinto made the aggressive offer.