IRJ onsite roundup: Mines & Money Hong Kong

The success of the Mines & Money conferences in the past few years is well-documented, and if the turn out for the 2011 Hong Kong conference, held from March 22 to 25, is any indication, long may its run continue. Some 2,000 individuals made their way to this year’s event, the fourth ever held, which given Hong Kong’s ongoing moves to establish itself as a prime place for miners to list on the Hong Kong Stock Exchange (HKEx), carried even more weight than the major Asian summit might typically afford.

The master class delivered by HKEx during the event has proved impressive, detailing to attendees why companies might look at listing the various benefits associated with resources companies on the exchange and plans in place to expand on what is currently offered. Additionally, many used the event as a platform to make some bold and headline grabbing statements.

Most watched

Ever an individual to gain a crowd’s attention, Ivanhoe Mines Chairman Robert Friedland announced that the tsunami which has devastated in northeast Japan will be “insanely bullish for copper” given the construction and rebuilding work that will ensue. Friedland described the demand for copper created by work necessary to get that portion of the country back up and running as “an orgy” and “the cutest girl at the dinner” which sparked mass media pick up on quotation of his address.

His flair and excitement about copper’s long-term outlook was echoed by CRU Consulting’s Allan Trench, who deemed himself to be bullish on the wider metals sector and on the Asian economy, before offering up a play on former British Prime Minister Margaret Thatcher’s infamous words when he uttered, “this market is not for turning.” In company news, Friedland said that Ivanhoe’s Oyu Tolgoi copper mine in Mongolia is on track to commence production as early as next year. With every discussion of iron ore comes the name synonymous, Andrew Forrest—CEO of Fortescue Metals. During the conference Forrest stated that he believes iron ore prices will stay strong until at least 2012 owing to good market fundamentals and demand outstripping supply. For gold, some of the biggest comment came from Rob McEwen, Chairman of Minera Andes and U.S. Gold. McEwen says that within the next three to four years, gold may hit $5,000 an ounce with countries such as China, Russia and India buying up to bolster their exchange reserves.

In focus: Mongolia

With swathes of foreign firms looking to perform dual listings using the Mongolian Stock Exchange (MSE) its head of administration, Saruul Ganbaatar, announced that it hopes to reach a market capitalisation of $15 billion by 2015. Mongolian Mining Day was eagerly attended, and two events, The Indonesia and Mongolia Mining Investment Summits, aimed to expand on why the listing was a good option for miners. The workshops proposed how companies ought to approach the region as well as its potential to drive up to its 2015 target from last year’s market cap of $1 billion. The IPO of Mongolian state-owned Erdenes Tavan Tolgoi was another subject garnering great interest, with the company’s CEO Enebish Baasangombo telling Reuters that while the listing may possibly be announced as early as June, discussion is still underway as to whether this will take place on stock exchanges in Hong Kong or London. Of the Mongolian miners exhibiting, a couple of groups have gained column inches. Sharyn Gol Coal mine, a 1960s coal mine and the biggest riser on the MSE this year, has increased its reserve and extended the project’s mine life to 60 years. Another company whose presentation caught the eyes of many was Hunnu Coal. Hunnu targets a Honk Kong listing this year, as well as first production.

The money in Mines & Money

The subject of Chinese growth was a central part of proceedings, and opening the second day, Jing Ulrich, Managing Director of China Equities and Commodities for JP Morgan, told onlookers that the nation’s moves in its rate of corporate savings ensures there can be no future GFC scenario for companies choosing to invest there.

Speaking to Metal Bulletin, Andrew Ferguson, CEO of Apac Resources, took a skeptical approach to any perceived boom to date and said that many resource investments are currently overvalued. As capital injections into the mining sector soar and investors continue to play hungry, prices are being pushed up and project valuations are scaling higher too, he explained to the newswire.

Ferguson says that he left February’s Indaba conference “very worried about the world,” commenting on the appetite for risk today.

Also considering risk and investment philosophies today, Mike Stirzaker, Investment Director of private equity manager Pacific Road Capital, has said that our perceptions are shifting and it is growing ever harder to invest in highly legislated developed economies—and ever easier to invest in third-world nations.

With every year and location, the Mines & Money series of events brings a lot of poignant topics to a head. This round covered everything from commodities pricing and who’s in the driving seat on bullish sectors, to the problems facing Australia in light of ongoing carbon tax discussion, and on to the great potential for economies such as Mongolia to be a growth story in the coming decade. The next meet, in London on December 6, will likely provide the next forum for delegates all over the world to convene and further discuss the industry’s most pivotal issues—and there is every chance that by the time the Hong Kong’s 2012 event takes place, a lot more miners will be calling the country home to their investments.

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