25-10-2014, 07:59 AM
http://www.glencore.com/
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Gauci has no regrets over deal that ‘made’ Glencore
THE AUSTRALIAN OCTOBER 25, 2014 12:00AM
Paul Garvey
Resources Reporter
Perth
Vince Gauci
Vince Gauci, the former managing director of MIM Holdings, in his office in Brisbane. Picture: Lyndon Mechielsen Source: News Corp Australia
IT was a deal that set Glencore on the way to becoming one of the world’s biggest and most powerful mining houses, and which forged the legendary deal-making reputations of the men behind it.
But if Vince Gauci had had his way, it never would have happened. Now, 11 years later, as Glencore eyes an ambitious takeover of Rio Tinto, which would see it overtake BHP Billiton as the biggest miner in the world, Mr Gauci has opened up on the events that played out during the controversial takeover of MIM Holdings.
First and foremost, he wants it to be known that he has not spent the past decade stewing about the outcome. “People may think I’m bitter and twisted,” Mr Gauci told The Weekend Australian. “I do not understand why people would think that way, but it was a very long time ago now and I am comfortable with the role that all individuals played in the outcome.”
Back in 2003, Xstrata — the mining arm of Glencore, which was absorbed into the parent last year — was an upstart big on ambition but light on assets.
It saw its offer for MIM as a means of growing bigger fast. The $5 billion price tag it put on MIM sounds small in the context of the world’s mining majors, but at the time it was more than Xstrata’s own market capitalisation — just as Glencore today has not let its smaller market capitalisation get in the way of an approach to the larger Rio Tinto.
Mr Gauci, who had helped navigate MIM through a range of significant operational challenges, was convinced that Xstrata’s offer did not represent fair value for the company and its upside. But his fellow board members did not agree, and he was a lonely voice of opposition as shareholders followed the board’s recommendation to approve the takeover.
The deal went through just in time for Xstrata to enjoy the spoils of MIM’s coal, copper and zinc assets as prices for those commodities began to rocket.
Not only was it a turning point for Xstrata, paving the way for a wave of acquisitions that would propel it into the ranks of the world’s major miners, it also helped enhance the reputation of Xstrata and Glencore as some of the shrewdest deal-makers.
Those deal-makers, led by Glencore chief Ivan Glasenberg, are now weighing up their next move after initial merger talks with Rio were rebuffed.
Mr Gauci, however, did not see anything magical in the approach on MIM — except for plenty of ambition. “There was nothing unusual or special about Xstrata’s negotiating strategies at the time of the MIM takeover apart from the fact that it was a very significant transaction for them,” he said.
“The MIM management team had a view about the quality of the company and the assets, and we felt that the price that Xstrata offered was too low. And that’s been proven by time.”
The only reason for his objecting to the bid was the price Xstrata was prepared to offer.
“If I felt they were paying a fair price I would have supported it,” he says. “In the end, history has shown the price was on the very low side, put it that way.”
The takeover meant Mr Gauci and MIM did not get to enjoy the spoils of the commodity boom that dominated the subsequent years, or see the rewards of the company’s efforts from the years spent overhauling its more challenging operations.
He says he holds no animosity towards anyone over the deal — either from Glencore and Xstrata, or from his own board.
“I have a great deal of respect for both Ivan Glasenberg and (then-Xstrata chief) Mick Davis and admired the courage they showed at the time,” he said.
“I always thought that Ivan played an important role in Xstrata’s development and in many ways I am not surprised to see him managing the merged Glencore-Xstrata business.”
If there is one regret from the MIM takeover, it is that it contributed to a continued void of mid-tier miners in Australia.
With North Ltd swallowed by Rio Tinto in 2000 and WMC Resources being bought out by BHP Billiton in 2005, there has been an absence of diversified mid-tier mining houses in Australia.
Those companies, Mr Gauci says, were crucial incubators of new talent and investors in mining education. “A lot of those mid-sized Australian companies … did much to develop the mining industry in Australia and in addition strongly supported the education industry built up around the industry,” he said.
“A lot of that support has now been lost with the result that we have very few mining schools left in the country.”
Today, the Brisbane-based Mr Gauci sits on the board of gold miner Newcrest Mining and devotes much of his time to chairing the Broken Hill Community Foundation, which works to improve life in the mining town in which he was born.
http://www.glencore.com/investors/
Gauci has no regrets over deal that ‘made’ Glencore
THE AUSTRALIAN OCTOBER 25, 2014 12:00AM
Paul Garvey
Resources Reporter
Perth
Vince Gauci
Vince Gauci, the former managing director of MIM Holdings, in his office in Brisbane. Picture: Lyndon Mechielsen Source: News Corp Australia
IT was a deal that set Glencore on the way to becoming one of the world’s biggest and most powerful mining houses, and which forged the legendary deal-making reputations of the men behind it.
But if Vince Gauci had had his way, it never would have happened. Now, 11 years later, as Glencore eyes an ambitious takeover of Rio Tinto, which would see it overtake BHP Billiton as the biggest miner in the world, Mr Gauci has opened up on the events that played out during the controversial takeover of MIM Holdings.
First and foremost, he wants it to be known that he has not spent the past decade stewing about the outcome. “People may think I’m bitter and twisted,” Mr Gauci told The Weekend Australian. “I do not understand why people would think that way, but it was a very long time ago now and I am comfortable with the role that all individuals played in the outcome.”
Back in 2003, Xstrata — the mining arm of Glencore, which was absorbed into the parent last year — was an upstart big on ambition but light on assets.
It saw its offer for MIM as a means of growing bigger fast. The $5 billion price tag it put on MIM sounds small in the context of the world’s mining majors, but at the time it was more than Xstrata’s own market capitalisation — just as Glencore today has not let its smaller market capitalisation get in the way of an approach to the larger Rio Tinto.
Mr Gauci, who had helped navigate MIM through a range of significant operational challenges, was convinced that Xstrata’s offer did not represent fair value for the company and its upside. But his fellow board members did not agree, and he was a lonely voice of opposition as shareholders followed the board’s recommendation to approve the takeover.
The deal went through just in time for Xstrata to enjoy the spoils of MIM’s coal, copper and zinc assets as prices for those commodities began to rocket.
Not only was it a turning point for Xstrata, paving the way for a wave of acquisitions that would propel it into the ranks of the world’s major miners, it also helped enhance the reputation of Xstrata and Glencore as some of the shrewdest deal-makers.
Those deal-makers, led by Glencore chief Ivan Glasenberg, are now weighing up their next move after initial merger talks with Rio were rebuffed.
Mr Gauci, however, did not see anything magical in the approach on MIM — except for plenty of ambition. “There was nothing unusual or special about Xstrata’s negotiating strategies at the time of the MIM takeover apart from the fact that it was a very significant transaction for them,” he said.
“The MIM management team had a view about the quality of the company and the assets, and we felt that the price that Xstrata offered was too low. And that’s been proven by time.”
The only reason for his objecting to the bid was the price Xstrata was prepared to offer.
“If I felt they were paying a fair price I would have supported it,” he says. “In the end, history has shown the price was on the very low side, put it that way.”
The takeover meant Mr Gauci and MIM did not get to enjoy the spoils of the commodity boom that dominated the subsequent years, or see the rewards of the company’s efforts from the years spent overhauling its more challenging operations.
He says he holds no animosity towards anyone over the deal — either from Glencore and Xstrata, or from his own board.
“I have a great deal of respect for both Ivan Glasenberg and (then-Xstrata chief) Mick Davis and admired the courage they showed at the time,” he said.
“I always thought that Ivan played an important role in Xstrata’s development and in many ways I am not surprised to see him managing the merged Glencore-Xstrata business.”
If there is one regret from the MIM takeover, it is that it contributed to a continued void of mid-tier miners in Australia.
With North Ltd swallowed by Rio Tinto in 2000 and WMC Resources being bought out by BHP Billiton in 2005, there has been an absence of diversified mid-tier mining houses in Australia.
Those companies, Mr Gauci says, were crucial incubators of new talent and investors in mining education. “A lot of those mid-sized Australian companies … did much to develop the mining industry in Australia and in addition strongly supported the education industry built up around the industry,” he said.
“A lot of that support has now been lost with the result that we have very few mining schools left in the country.”
Today, the Brisbane-based Mr Gauci sits on the board of gold miner Newcrest Mining and devotes much of his time to chairing the Broken Hill Community Foundation, which works to improve life in the mining town in which he was born.