The man who juggles life in three places
George Jay Hambro, a former investment banker and the son of a stockbroker turned mining magnate, shuttles between his home in London, iron ore mines in Russia, corporate offices in Hong Kong and steel mills on the mainland.
It is little wonder he said he had a blocked nose and 'felt like an invalid' coming from minus-20 degrees Celsius weather in Moscow to humid and warm Hong Kong.
The 37-year-old Englishman is chairman of IRC, which has an operating iron ore mine in the Russian far east, another mine, with ore processing facilities being built and several projects under development or exploration. He said heading up a young mining firm was more satisfying than being a banker because it involved creating something for the long term, which entailed more risk, but also provided greater rewards.
IRC was listed in Hong Kong in October 2010, when it raised US$240 million. Still loss-making at the operating level last year, the firm could raise output five-fold in the next few years by bringing bigger and lower-cost new mines on stream.
Despite its operating mine being just 150 kilometres from the Sino-Russian border, a lack of transport routes means processed ore has to be hauled 2,600 kilometres by rail to the mainland. A bridge, due to be completed in 2016, would cut the rail distances to China by about a third, substantially reducing freight costs.
His father, Peter Hambro, is the chairman and a 4.6 per cent stake owner in the London-listed Petropavlovsk Group, a gold miner in the Russian far east. Petropavlovsk owns 65.6 per cent of IRC.
Previously a stockbroker, Peter Hambro teamed up with Russian Pavel Maslovskiy to set up Petropavlovsk in 1994.
IRC is the iron ore subsidiary of London-listed gold miner Petropavlovsk chaired by your father. How does it feel to be reporting to your father?
I speak to him at least every other day and we share a lot of experiences. One of the things that both my father and I have been able to bring to the table is experience in the capital markets. I was an investment banker and he was a stockbroker. At IRC, I report to all of our shareholders, not just my father, who is just one of Petropavlovsk's shareholders.
How did IRC's mining projects come about?
We acquired previously state-owned mining licences through auctions.
Given the Russian far east's iron ore is on the same belt as that in northeast China where big steel mills are found, why were the Russian mines not developed earlier? Are Chinese steel companies interested in investing in Russian iron ore development projects?
For many years, Russia and China didn't have much conversation. A lot of Chinese firms have invested in hotels and trading businesses in the Russian far east, but not in mining. It's human nature not to take the risk to be the first in doing something. We spoke to a few Chinese steel firms interested in our projects, and we continue to speak to a few of them.
IRC has received an 11-year, US$340 million loan facility from state-backed Industrial and Commercial Bank of China. Does this come with conditions?
Yes, there is a quid pro quo for that loan facility. We get financing and customers from China, and in return we must use 60 per cent of the loan proceeds on Chinese contractors and equipment in building our mine.
Why did IRC choose Hong Kong for its listing? Why not in the London market?
Hong Kong is a gateway to China, which allows us to be close to our customers, partners, financial supporters and shareholders. Some people have asked if we would have been better with a London listing. I don't know, It's like saying whether I would have done better had I stayed in banking.
You have a Russian chief executive and a Chinese chief financial officer, and work with people from both nations closely. Have you come across cross-cultural management issues?
There is a quota on the number of Chinese people allowed to come across the border to work on our project in Russia, and managing that quota is a day-to-day activity. We also had issues with construction design. In Russia, we have to conform to the Russian way of building things, but the Chinese said they had never done it that way. None of these things are easy, and when you look back you ask yourself, why did we spend two weeks discussing the issue? In the end, practicality and focusing on the big picture are important.
Some analysts predict the global iron ore industry will be oversupplied in two years, which will see prices fall substantially. Does that worry you?
It would worry me if we were a high-cost producer, but we are at the bottom end of the cost curve. I don't think the supply concerns will be as big a problem as feared. As someone building a project, I know how hard it is. I don't think projects in the pipeline will all come on stream.
What are the potential reasons for project delays?
The shortage of capital, equipment and people. We are lucky because Russia's long history of mining means it has a good pool of labour and specialists. If you go to Africa, you need to build railways. You will need to either hire people from overseas or train up locals. Either way it is very expensive.
You were named after your grandfather's grandfather George Jay Gould, who was a successful businessman in his time. What is your personal goal in life?
I don't think money is everything. You also need a family life, otherwise you burn out. I am fortunate to have a lovely wife and two children. My goal is to balance what I do in business and what I do with my family, who are based in England and come to Hong Kong regularly.
You had worked in a mine briefly during your student years. What prompted you to take this path?
I worked as a pit technician at a gold mine in Western Australia when I was 18. It is a tradition for many British students to take a year off to work and travel abroad before starting university. I worked with the geologist and the drilling team to execute drilling programmes and collect samples.
Was it your father's wish that you give mining a try back then?
I'm sure he was delighted about my mining job, but it was my choice. I met a man in London who worked in the mine. He told me that if I ever went to Australia I could apply for a job at his company. I've always had a fascination for the mining world.
Was the job easy and did you enjoy it?
It was pretty tough and it took a lot of getting used to in terms of the hard work and long hours. The people worked from 7am to 7pm, but then they all went to the pub after work, every day of the week. At our mines in IRC, no alcohol is allowed.
You have followed your father's footsteps into the mining industry. Would you want your two daughters to be in the business, too?
I don't know. Sadly this is a male-dominated industry, but there are some very inspiring ladies, such as Cynthia Carroll, chief executive of Anglo-American. So there is scope for ladies.
What do you like to do in your leisure time?
We have a small farm in Wiltshire, England, where we keep some sheep and cows and a dog. I enjoy spending time with my family there.
The amount, in US dollars, IRC raised when it listed in Hong Kong in October 2010
- In 2011, revenue totalled Euro122.2 million