Copper-eyed Canucks Pair With Burma's Top Thugs
By Derek Moscato
source :AsiaWise
6 Aug 2001
While Canadian junior mining companies traditionally have a reputation for over-the-top promotion, volatile stock market issues, and the most speculative of digging ventures, they seem to have mellowed in recent years. The truth is, investors globally now take a more skeptical approach to the Canuck juniors, especially in the wake of the infamous Bre-X scandal and a slew of Vancouver Stock Exchange scams.
But just because more companies are doing lower-risk business in more stable countries, that doesn't mean it's the industry rule. A quick glance at the Canadian juniors operating in Asia reveals a throwback to mining's former glory days, when higher risk was almost always associated with higher returns.
And in 2001, Ivanhoe Mines seems to be the poster child for the industry's wild side. Established in 1994 under the name Indochina Goldfields, the company changed its moniker in 1999 to reflect its growing international stature, and interest in minerals beyond gold. The Vancouver-based company, with international headquarters in Singapore, has interests across Asia: iron ore products in Australia; gold in Kazakhstan and Fiji; and ongoing mineral exploration in Mongolia, South Korea and Vietnam.
However, it's the company's interests in Myanmar, or Burma -- producing LME Grade A copper from its Monywa joint venture -- that has garnered most of the interest in the company recently. The new S&K Mine, the first phase of the large Monywa Copper Project in central Burma, is now producing copper at a rate of 28,500 tonnes per year. It's one of Asia's largest copper mining operations, and one of the lowest-cost copper mines in the world.
The investment community may like the numbers, but the company's Burma agenda is a real turn-off with North America-based political activists. An article appearing in the Shareholderpower.com web site earlier this summer argued that the Monywa Project "is in fact not only vital for the existence of Burmese military rulers, but also indispensable for the Ivanhoe company since the major projects, its derived profit, and future prospect mainly locate in Burma." (sic)
In June, Ivanhoe shareholders were greeted by demonstrators at the company's annual general meeting in downtown Vancouver, denouncing the company for its JV with the government of Myanmar, and its alleged indirect benefiting from involuntary labor operations in the country. The protesters -- who included student and labor leaders, environmentalists and human rights activists -- staged a mock 'die-in',complete with chalk-marked silhouettes of human bodies on the sidewalk entrance to the meeting.
To its credit, Ivanhoe was quick to respond to its naysayers. "We think appropriate engagement is better than isolation," said Ivanhoe president Daniel Kunz in an issued statement released that same day. "We are proud of the 600 men and women in Myanmar who, with the help of only nine expatriates, are successfully operating this state-of-the-art mine... I can categorically state that no forced labor has been used in the construction and operation of the S&K Mine at Monywa."
That Ivanhoe came out fighting against its detractors shouldn't have come as a surprise, mind you. The company's chairman, Robert Friedland, is something of a legend on Vancouver's Howe Street (the city's financial district) for his penny-stock wheeling and dealing over the years. The Chicago native, a graduate of the flower power generation, has a colorful past. He did the requisite time in Buddhist meditation in India and stayed a spell on a communal farm, where he is said to have hung out with Apple Computer founder Steve Jobs. And in 1970, obviously having parted company with Steve, he was arrested on charges of selling 8,000 hits of LSD to a U.S. federal agent.But he's made a great deal of money for some of his investors since those wild days.
A big money spinner was his Voisey Nickel Mine in Labrador, in Canada's northeast. Friedland himself is said to have pocketed over $500 million from that alone. He's also well-regarded for his myriad connections in Asia -- and a willingness to operate in political no-go zones ruled by ruthless military dictators.His critics have dubbed him "Toxic Bob" because of his association with a mining company blamed for one of the worst environmental disasters in Colorado history.
But Friedland is probably more concerned coming out of Ivanhoe shareholder ranks. The stock, which trades on the Toronto and Australia stock exchanges, is mired in the C$1.30 to $1.50 range -- well off its 52-week high of $2.25, and light years away from its $10 to $20 range back in 1997.
Investors would certainly like to see more bang for their buck, especially since the company is considered one of Canada's more successful junior mining operations in Asia -- political and social controversies notwithstanding. Friedland's profitable past is also viewed as a huge plus from small-cap investors. But according to one Toronto-based analyst, the slow going for the stock might be attributed to the big decline in the price of copper, which is down over 10% in the past couple of months.
Mining industry publication Minews recently reported that Friedland is looking to garner interest for Ivanhoe outside of North American and Asia-Pacific circles by listing in London. He was in the City earlier this month looking to put some brolly-and-bowler heft on his board. Even the naysayers won't accuse Robert Friedland and his Ivanhoe crowd of being a complacent bunch.