Lai See

PUBLISHED : Thursday, 24 March, 2011, 12:00am
UPDATED : Thursday, 24 March, 2011, 12:00am

Ivanhoe's copper bull takes a chance to talk up Mongolian mine

Invited to speak on 'The state of mining: outlook for mining and the mining investor', Robert Friedland, executive chairman of Ivanhoe Mines, responded by spending 40 minutes talking about his huge Mongolian mining operation Oyu Tolgoi. He is not alone in adopting this approach at conferences to promote his company but nobody at the Mines and Money conference seemed to mind. Friedland's numbers are mind-boggling. He said work was ongoing round the clock to prepare the mine for production next year. The project is apparently burning cash at a US$75 per second and averaging around US$7.5 million a day. This year, he expects to spend US$2.5 billion in what will be the project's key construction year.

The ore body established so far measures 30 kilometres long, one kilometre wide and extends 1,000 metres underground. At its present size, independent experts say the mine would support production for at least 60 years and probably more than 100 years. The current ore body, according to Friedland, has a value of US$400 billion and is expected to yield 47 million ounces of gold and 87 billion pounds of copper. Put another way, the mine is conservatively expected to produce 1.2 billion pounds of copper and 650,000 ounces of gold and three million ounces of silver every year for the first 10 years. Silver is a by-product but, at current prices, is worth over US$100 million a year, which will cover the cost of production at the mine. Ivanhoe's share price is not going to be hurt by this presentation.

On a lighter note, Friedland also discussed the size of the mine shafts - among the biggest in the world - being built. The No 2 shaft stands 31 storeys above the Gobi Desert. He suggested putting a revolving restaurant atop it but said harsh words were exchanged with partner Rio Tinto, which objected, saying it couldn't see the sense in it. Then he came up with the bright idea of going to shareholders and offering them naming rights. 'Fidelity gives you the shaft,' he quipped, adding they didn't pursue it as Fidelity was not amused.

Friedland noted during his presentation that he was a 'copper bull not a gold bull', and was later asked why. 'Gold is simply a long-term barometer of currency destruction,' he declared. Whereas copper is economically driven by worldwide economic growth. 'I would rather bet on worldwide growth rather than currency destruction,' he told his audience. But this seems a somewhat casual view, given that, as he admitted, 'I am long 50 million ounces of gold personally, derivatively.' Not too shabby for someone who's not a bull on gold.

HSBC makes its presence felt

People have been complaining that it has been harder to get hold of tickets for the Rugby Sevens this year. Everyone knows there are informal ways of getting hold of tickets as they trickle through from the corporate clubs and the mini-rugby and so on onto the informal market.

People tell us this is because there has been a reduction in the number of tickets made available to the clubs this year. Those participating in the mini-rugby have had the usual allocation made to them cut back.

And the reason for this? Although HSBC is not taking over the sponsorship of the event until next year, it is already making its presence felt as title sponsor of the IRB Sevens World Series by getting a bigger allocation of tickets this year.

A 6.5m yuan wedding feast

It is not exactly news that mainlanders can be big spenders but it sometimes takes curious forms. We hear of a family from a town in Shanxi who were planning a wedding party for 1,000 guests. Since they were looking for something rather better than was available locally, the family decided to use the banqueting services of the Grand Hyatt Beijing.

This turned out to be a daunting logistical feat, according to Kam Hing-lam (pictured), chairman of Beijing Oriental Plaza. The Grand Hyatt Beijing is part of the Oriental Plaza development, which is owned by Cheung Kong (Holdings).

To cater for such a large party, the hotel sent 200 staff, some of them borrowed from other hotels along with food and utensils. They then proceeded in a convoy of six coaches and six trucks on the 12-hour journey to Shanxi. For their pains, the hotel charged 6,500 yuan (HK$7,716) per head with the final bill totalling 6.5 million yuan.


In an item on March 4 on bankers' pay in Asia, the material used in that item came from Reuters Breaking Views but inadvertently was not attributed to Reuters.