SA’s Mick the Miner has returned and is eyeing Guinea
The former Xstrata CEO, on the receiving end of many a shareholder revolt, may yet develop the iron ore mine of Zogota with Beny Steinmetz
London — Almost every major player in mining has tried to build an iron ore mine in Guinea. Now it’s the turn of Mick Davis.
Davis, aka Mick the Miner, had been one of mining’s most successful operators and deal makers, but in recent years has struggled to re-establish himself in the industry. Now, a remarkable make-up deal between billionaire mining tycoon Beny Steinmetz and the Guinean government has given him the chance to develop one of Africa’s richest iron ore deposits.
Should Guinea and Steinmetz settle their disputes, Davis, through his new Niron Metals vehicle, will be able to develop the Zogota iron ore mine in south-eastern Guinea. The project, where mining giant Vale has already spent hundreds of millions of dollars, could be developed quickly and relatively cheaply using existing rail infrastructure that runs from the nearby Liberia border to a deep water port.
“Niron believes the Zogota deposit can be brought into production on an accelerated timetable, thereby helping unlock the potential of Guinea’s rich resources,” Niron said.
For Davis, it offers an opportunity to relaunch his mining career that started in his native SA.
Glasenberg (and Rio Tinto) vs Davis
As Xstrata’s CEO, he took a debt-laden coal miner and built it into a $50bn giant before a friendly takeover by Glencore. Yet what should have been Davis’s crowning achievement soon soured. He was earmarked to be the CEO of the new combined company, but a shareholder revolt over payments he was set to receive led to his ousting and billionaire Ivan Glasenberg taking the top job instead.
Since then it has been a roller-coaster ride for Davis, who’s also the UK Conservative Party treasurer. His private-equity vehicle, X2 Resources, folded after failing to make any deals amid volatile commodity prices and as investors couldn’t agree on what assets to buy. In 2017, he was on the cusp of being appointed Rio Tinto Group’s chair, before, once again, falling victim to an angry shareholder revolt that labeled him an unacceptable choice.
Still, while X2 failed to make any deals, it showed Davis’s ability to attract financial backers. He raised about $5bn from investors including Noble Group, TPG Capital and other sovereign wealth and pension funds for the vehicle, and it’s unlikely he’ll struggle to raise a much more modest amount required to develop Zogota.
The mine is also unlikely to be the only target of Niron, Davis’s vehicle with Switzerland-based FOS Asset Management founder Marcos Camhis and Varda Shine, formerly of diamond giant De Beers.
Should Davis succeed in shipping iron ore from Guinea, it would mark a great achievement. While the West African country is bestowed by some of the richest deposits in the world — including the fabled Simandou — companies from Rio Tinto to Vale have so far failed to mine in the country.