Mining giant ‘will emerge from Russia’

By John Fraser –
JOHANNESBURG (Business Day) — Former BHP Billiton chief Brian Gilbertson yesterday predicted that a new mining giant would emerge from Russia and the Commonwealth of Independent States member countries to rival BHP Billiton, Anglo and Rio Tinto.
Gilbertson, CE of SUAL, was speaking in London at the eighth Annual Russian Economic Forum.
Although he fell short of predicting that SUAL would become the new monster miner, as it would have too far to grow, he said he planned to expand SUAL, possibly through operations or acquisitions in SA.

Gilbertson said he could foresee developments in Russia � similar to those elsewhere in the past that had accompanied �radical change� � which could produce big new Russian companies �competing globally with the current resource majors�.
�There has not been a major Russian company to compete with global majors such as BHP Billiton, Rio Tinto and Anglo American,� Gilbertson said. �I think that is going to change.�
A handful of factors in the region were likely to produce a mining giant. These factors included the �renewal� of existing players, such as SUAL�s investment in new smelter capacity.
Industry consolidation and the development of partnerships were also important factors, as was the diversification of existing players, both geographically and into new commodities. Gilbertson gave examples of how SUAL was pursuing such diversification.
He said growth could come by achieving �western valuations for underlying assets�. An example was the �massive rerating� of the underlying assets of Indian firm Vedanta Resources on its listing in London at the end of 2003, for which he was responsible.
Gilbertson reiterated his interest in the aluminium smelter project at Coega in Eastern Cape, and said this interest had been communicated to Trade and Industry Minister Mandisi Mpahlwa. He was awaiting a response, he said.
French company Pechiney had been expected to proceed with the smelter project, but subsequently Alcan of Canada took over Pechiney, and Alcan had yet to commit.
Gilbertson said SA had offered three tranches of cheap power � the first two to the BHP Billiton smelter projects at Richards Bay and the Mozal smelters in Mozambique, with the third being available for Coega.
He said that SUAL was planning to build �a mega smelter, or possibly two smaller ones�. Three sites had been identified in Russia, but �we have not excluded other geographies�, and hence his approach to the South African government.
Gilbertson said that cheap power would be a key factor that would attract him to Coega. �You put a smelter where power is cheapest.�
Source: Resource Investor