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Blog : BOARD TALK

"God give me #governance - but not yet" #mining

Posted on March 24, 2013 at 4:40 PM

It was  something of an eye opener  to attend the second meeting of the Natural Resources Forum (NRF) last week at the Royal Institute in London's Mayfair.


Talk about boardrooms that have their work cut out - and oh so much risk management to worry about. And then there's whatever China is up to- no one really seems to know - but China's behaviour around natural resources in Africa is causing an awful lot of insomnia.


The NRF was launched late last year and sadly I missed that occasion. It  describes itself as "a private independent organisation dedicated to introducing institutional investors and professional advisors in the Mining & Metals and Oil & Gas sectors to high quality companies that are developing noteworthy investment opportunities." 


It was certainly all very classy - live chamber music with refreshments and light lunch in the library, and a tight itinerary of speakers pitching for investment. Among them : Charles Blackmore, MD New Kush Mining one of the first investors in South Sudan, the world's newest country, David Reading CEO Aureus Mining developing Liberia's first commercial gold mine, John Gerstenlauer COO Gulf Keystone Petroleum on 'lotsa oil' in Shaikhan and fields around in Kurdistan.


Michael Rawlinson, head of the mining research team at Liberum Capital with a very impressive track record and clearly a large brain, looked worried throughout.


Also of note milling about and very accessible were delegates  down on the list as 'independent' - they included Tom Albanese, ex CEO Rio Tinto and Jeremy Asher chairman Tower Resources and Agile Energy. And there were bankers, and lawyers and brokers and dealmakers - and Ernst & Young, well represented and claiming 35% of the audit market share in oil and gas companies in the Fortune 250 as of September 2012 (according to their own literature).


Buchanan, the financial communications consultancy, were out in force as sponsors. I was being very discreet, under the mistaken assumption that I could not report on it.


So what can I now usefully say ? That, even as an observer with very limited knowledge of the sector it is apparent that it faces a widening gulf - between those who see the opportunity (ie the money to be made) and those who counsel for caution - and acually understand something about the geopolitics of it. In other words, the need for governance is acute.


The first chairman I spoke to rather set the tone. "How important is governance to mining companies" I asked. "A bit like St Augustine on chastity" he replied ie "God give me chastiy....but not yet - at least not until I've made some money."


I tried again, at the end - talking to someone with 30+ years in the industry, assorted NED roles, and bags of experience. "I don't understand how UK plcs operate in so many of these countries without paying bribes" I started.... "Oh it isn't called bribery anymore, didn't you know ? It's called CSR. You don't hand over wads of cash, you build something instead - a school, a hospital, something like that" he said.


It's a curious sector - it has a reputation for being a world, perhaps even a law unto itself - same names in the boardrooms - mainly pale and male with multiple roles and lots of 'fat cat' syndrome. But the challenges within it are also growing- from regulatory compliance to counterparty risk to IT security. And there have been some spectacular embarassments  - ENRC anyone ? 


It can only benefit from more transparency - the organisers of the NRF are to be congratulated, and I look forward to the next session.

Categories: Transparency, Behaviour, Governance