By Andy Hoffmann
The Globe and Mail
For anyone planning on weighing in on the debate over whether Canada has made a grave mistake by allowing its most precious resource assets to be sold to the highest foreign bidder – don't bother.
According to the chairman of the world's largest mining company, the discussion is over. Canada has already been reduced to an industry “branch office,” largely irrelevant on the global mining stage, as far as BHP Billiton Ltd.'s Don Argus is concerned.
Calling on his fellow Australians to continue investing in domestic mining assets, Mr. Argus pointed to Canada as a “worst-case scenario” when it comes to being competitive in mining.
“Australia's position in global resources is not guaranteed,” the BHP chairman told a business gathering in Brisbane late last week.
“If we fail to remain competitive, Australia will incur a substantial opportunity cost and in the worst-case scenario, our resources will fall into overseas hands and we will also become a branch office – just like Canada,” Mr. Argus said.
The stinging use of Canada as an example of how not to create dominant corporate mining firms represents the bluntest assessment yet of the consequences of a wave of foreign takeovers that has seen some of the most storied names in Canadian mining fall to foreign hands.
“As a Canadian, it hurts,” Don Lindsay, president and chief executive officer of Teck Cominco Ltd., Canada's largest base metals miner, said in an interview.
While Australia and other resource-rich nations, including Brazil and Russia, have instituted policies and rules that have fostered corporate mining interests and protected assets from unwanted buyout offers, Canada's government has done little to prevent a wave of mining takeovers by foreign firms.
“I believe that as a country, we should be taking a different direction,” Mr. Lindsay said, stressing that he was speaking from a personal perspective and not as the head of Teck.
In 2006, Teck tried to take over Canada's Inco Ltd., whose key nickel assets included operations in Sudbury, Ont., Thompson, Man., and Voisey's Bay, Nfld.
Teck's stock and cash offer was bested by an all-cash bid by Brazil's Companhia Vale do Rio Doce (Vale), an aggressive global mining consolidator, which is itself protected from unwanted takeovers by the Brazilian government's “golden shares.”
Ottawa gave the deal the green light even though many, including Goldcorp Inc. chairman Ian Telfer, have criticized the unfair advantage that Vale's golden shares give it over Canadian competitors.
At a time when the mining industry is booming due to soaring demand from red-hot Asian economies, Canada has lost more mining head offices than any other country.
In 2003, Canada was a leader among mining nations, home to 12 of the industry's top 40 companies, according to data compiled by PricewaterhouseCoopers LLP. Since then, seven of those firms have been taken over. BHP itself owns mining assets in Canada. It controls the Ekati diamond mine in the Northwest Territories and recently paid $284-million for control of Anglo Potash Ltd. and its exploration assets in Saskatchewan.
— July 21, 2008
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