At 77, Ian Burston is pursuing ambitious iron ore projects in Nigeria that might make others nervous. Andrew Burrell reports
IAN Burston was almost killed when his parachute failed to open during national service in 1956. He walked away unharmed when taken hostage by gunmen in Istanbul in 2001. And he emerged from a prostate cancer scare two years ago with renewed verve.
Now the great survivor of the Australian mining industry is pioneering a bold push into iron ore mining in Nigeria at a time when many are jittery about the volatile price of the commodity and the hazards of doing business in Africa.
While many of his peers are content to stroll around the golf course, 77-year-old Burston is embarking on one final corporate play that will easily see him through to his 80th birthday.
“I’m having a bloody marvellous time — I might stick around doing this until I’m 85,” he laughs over lunch at his favourite Perth restaurant next to the glistening Swan River.
Burston isn’t overly concerned about the dramatic fall in the iron ore price — to below $US90 at one particularly nervy moment last month — that has forced some big miners in Australia to scale back their expansion plans.
He predicts the price will stabilise at around $US120 a tonne, though he admits this could take some time. And even if it drops to $US80 a tonne, as some predict, he insists he won’t be worried because his planned Agbaja iron ore mine in Nigeria will still make a very handy profit at that price.
Last week, Burston’s new listed vehicle, Energio, announced a maiden Joint Ore Reserves Committee (JORC) resource of 448 million tonnes at Agbaja after drilling about 15 per cent of its tenements over the past year.
It was the first JORC iron ore resource ever reported in Nigeria, which has long been dominated by the oil industry.
In a career spanning several decades, Burston has run Rio Tinto’s Hamersley Iron division and held senior executive roles at Portman Mining, Aurora Gold, Aztec Mining and Kalgoorlie Consolidated Gold Mines. He also served as a non-executive director of Fortescue Metals Group and Cape Lambert.
His most recent company, African Iron, which was focused on iron ore in the West African nation of Congo, was this year taken over by South Africa’s Exxaro Resources for $338 million, just 12 months after it listed in Australia.
Burston says he feels more comfortable these days doing business in West Africa, despite the risks of bribery and corruption there, than in the high-cost environment of Australia.
“It’s getting bloody hard to compete in Western Australia now for two reasons — your infrastructure is so tight, you haven’t got enough ports to get it out, and we are doing some queer things about what we expect operators to cough up to establish their business,” he says.
“I think we’re being very clumsy. And I think by the time we find out how clumsy we’ve been, these other places will be up and going.”
Foster Stockbroking analyst Mark Hinsley wrote in a research note this week that Energio’s Agbaja project was shaping up as a “multibillion-tonne iron ore play” given its higher than expected maiden resource estimate.
He cites the project’s proximity to rail and port infrastructure and Nigeria’s stable government and Western-friendly mining laws as reasons for confidence.
Burston says China has actively encouraged the development of a West African iron ore industry as it seeks to bring more balance to the market after years of paying what Beijing considers to be exorbitant prices for the steelmaking ingredient.
But he is not worried that China’s bid to import 400 million tonnes of iron ore a year from West Africa will drive down prices so much that it will damage the viabilty of Energio’s project, which is aiming to start producing 20 million tonnes a year by 2014.
“I’ve done my figures on (the cost of) getting it onto the ship and it’s less than $US50 a tonne,” he says. “If the iron ore price goes down to $US80 a tonne, that’s not going to worry me.
“Twenty million tonnes a year at $US30 a tonne is a profit of $US600m a year.
“The biggest problem we’ve got is every bastard who doesn’t know how to spell iron ore is telling us how to do it.
“Once we are successful, then the floodgates (in Nigeria) will open, because there’s so much iron there you can’t ignore it.”
Burston says that unlike in Australia, miners are being welcomed into West Africa through lower taxes and stable royalty rates.
“The Nigerian government is backing us to the hilt,” he says. “We sit within 70km of an established heavy-haul railway line which has never been used and which goes straight down to the port — what a break that is.
“And the local community can see jobs — everybody wants to work. We advertised for a couple of field hands and at 4am we had a couple of hundred guys out the front, all with their own shovels and all trying to be first interviewed. We nearly had to get the police in to send them home.”
Burston entered the mining industry after what he terms his Sliding Doors moment while training as a paratrooper in 1956.
Source: The Australian
