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Glencore & Volkswagen: When Carmakers Drove into the Mining Industry

The inside track on how VW tried to buy up the global cobalt market

Copper on the Block

From Freeport’s copper mines in Arizona to the $6bn Cobre Panama project, the market is awash with copper assets

20 Critical Trade Routes

Before dawn in the DRC, a mercenary is sitting in a truck parked-up on the edge of the country’s largest mine

Barrick’s jet spotted in Perth, aluminium stocks in the US (Chris Potter, Greg Wood, Alcoa)

Elliott’s New Royalty Group Open to IPO

CEO Shaun Usmar has closed $700m of royalty deals in two years

There's a large new player in the royalty and streaming market. That's the message coming from South African Shaun Usmar, who has closed more deals by dollar value than perhaps anyone else in the mining industry. It was on a trip through New York that he stopped by at the office of hedge fund Elliott (“just out of curiosity,” he says), spending four hours discussing deal flow. Before he knew it, Usmar had packed in his position at Barrick to launch a new $1bn royalty company, Triple Flag, backed by Elliott's capital. In little over two years the new business has gone through more than 250 transactions, doing detailed work on 90 deals and closing five worth $700m in gold and copper. “It's opportunistic,” Usmar says, fitting in an interview between calls with partners. “We have seen many transactions and continue to pursue deals that are well in excess of a billion dollars.” Triple Flag is currently private, but has already bought 32 royalties and streams generating $45m per annum, and may one day be listed. “Everything we buy we look at on a buy-to-hold basis, but we've built our own internal equity models and we understand if we're going to add something what it will mean to our broader portfolio, how that stacks-up to our notional peer group, and what that would mean for value accretion. We're doing things in a very deliberate, careful way, so that if the most valuable exit is through the public markets, we can do that very easily.” Every deal is customised, Usmar explains. “I come at this with a mining CFO hat, understanding that people have choices and markets evolve, so each time we put proposals together we usually are providing multiple alternatives.” He first went into mining finance having done an MBA at Kellogg in the US. It was the 1990s and all his former classmates went into banking and tech, but South African mining group Billiton was expanding overseas and invited him to go into M&A in their new head office in London. “We had a small core team so you really got a front-row seat.” Since then, he has worked on more than $100bn of deals, including Billiton's merger with BHP, creating the world’s largest mining company, but when finance director Mick Davis left to launch his own firm, Xstrata, Usmar was one of the first seven to join and was soon juggling the finances on its $19bn acquisition of nickel giant Falconbridge. “We bedded that down, worked through the financial crisis and reset the cost structure.” Still in his 40s, Usmar has also fitted in a stint as Barrick Gold's finance director, lopping $4bn off its debt and lowering its free cash flow breakeven point from $1,700 to $1,100 per ounce. “We had to get the company back on track… It was a busy but rewarding period.” Joining forces with Elliott, known as one of the world's most aggressive and relentless investors, was perhaps an inevitable move. “I wouldn't have left Barrick just to collect a salary. I think it's a great time to be building a mining business.”


Aluminium: Blessed

Former banker denies relationship with Ivan Glasenberg

Two companies are cashing-in on US import tariffs on aluminium. One in Chicago-based Century Aluminum, which is firing-up idled smelters in Kentucky and South Carolina and heading for record revenue in 2019. It was vocal in lobbying for the tariffs and is led by Michael Bless, a fast-paced (and unabashed) former investment banker who studied medieval history at Princeton. The other company is commodities giant Glencore, led by trader Ivan Glasenberg. It’s aluminium desk is thought to have taken a large position, buying-up around $1bn of stocks in a warehouse in a swampy field outside New Orleans shortly before the tariffs were announced. As soon as they hit the market, prices jumped. Glencore's insiders are staying tight-lipped. But adding to the intrigue, Glencore is Century’s largest investor and trades all its tonnage. The two companies have an arms-length relationship, Bless insists, and he never discusses the market with Glasenberg. “One hundred percent, never,” Bless told Businessweek. “I don't talk to Ivan, other than when he calls and says, 'Hey, how are you doing?'”


Brandgold’s $18bn Culture Clash

“That’s the deal.”

Ever since Barrick and Randgold announced an $18bn tie-up last month, investors have been trying to work out how Barrick's slick American chairman John Thornton and Randgold's rough-and-ready South African founder Mark Bristow will be able to share an office. Whilst Thornton is media-shy, travelling between private clubs in Barrick’s Gulfstream V jet, Bristow books his own hotel rooms and is famously off-the-cuff. He did national service, goes skydiving and has climbed the most dangerous face of Mount Kilimanjaro. “For me, sleep is the biggest waste of time,” he once told The Northern Miner, knocking back a triple espresso. So when it comes to prioritising assets or negotiating with governments, who will ultimately call the shots? The bidding has already begun: Bristow owns 0.9 per cent of Randgold (worth $70m), whilst Thornton, who only recently went into an underground mine “for the first time in my life”, has just doubled his stake in Barrick to 5m shares (worth $66m), writes MiningMX. When it comes to sharing desks and going up in the executive lift, Bristow has never had an office, and that is not something he intends to change. “That's the deal.”