August 25, 2013
Former Chinese commodities trader Jerry Ren, who is quietly building a mining empire in the Australian outback, scoffs at talk the resources boom is over. For him its just moved north.
As some mining firms clock up billions of dollars in losses, Ren has secured millions of acres of exploration rights in Australia’s most remote regions that could soon make him a billionaire, helped by his connections in the world’s biggest consumer of minerals China.
Ren, now an Australian resident, has already been dubbed the “$900-million-dollar-man” for his estimated net worth.
“There’s still plenty of money and opportunity in Australia if you know where to look,” says Ren, the son of a steel mill engineer who grew up in the shadow of the Great Leap Forward, Mao Zedong’s disastrous attempt to modernise China’s economy.
Ren’s privately held Australian Oil & Gas company holds a 75 percent stake in exploration rights covering 70 million acres, 25 percent of Australia’s Northern Territory, or an area larger than Afghanistan.
Under-exploited by heavy hitters like BHP Billiton and Rio Tinto as Australia’s last boom took shape further south in established iron ore and coal fields, Ren has had a near-free run to stake his claims in the Territory.
Ren’s licence holdings stretch from the oil rich seas off the tropical city of Darwin, south through the moonscaped Tanami Desert, one of the last unexplored parts of Australia, to the isolated outback town of Alice Springs.
And Ren’s established mining operations in the Territory are already reaping handsome rewards.
Using links to China’s industrial sectors, Ren has secured deals to ship freighters loaded with iron ore, ilmenite and other minerals to China, mostly via the Territory’s little used port of Darwin, the closest Australian city to Asia.
One of his companies this month will start exporting ilmenite to China for manufacturing lightweight alloy for aircraft parts and paint pigments. Two others are getting ready to mine iron ore. Another already supplies aluminium foil containers for food packaging.
“Make no mistake, China’s economy is still growing and they are still in the market for Australian minerals. This talk of the end is foolish,” says Ren, who regularly leads delegations to China to drum up new investment opportunities.
Ren was born Xiao Feng Ren in the city of Benxi in China’s northeastern rust belt province of Liaoning, where he attended university. He later worked for the China Metallurgical Import and Export Corp and learned about minerals.
The state-owned entity eventually split into two divisions: Sinosteel and the Metallurgical Construction Corp of China. Ren quit in 1989, just as China opened its economy to outsiders.
Before leaving China, Ren traded “specialty” metals like tungsten, molybdenum and ilmenite.
After several years in Europe and the United States, where he worked as a steel consultant, Ren in 2006 settled in the Northern Territory, convinced of its mining potential.
Like Australia’s 20th Century mining legend, the late Lang Hancock, Ren quickly pegged hundreds of thousand of acres of outback land for exploration.
Hancock is credited with the 1952 discovery of plentiful iron ore deposits in the state of Western Australia, which few believed existed. The Hancock family held on to the mineral rights making Lang’s only child, Gina Rinehart, one of the world’s richest individuals.
But Ren hardly fits the gruff, weathered image of an outback prospector. He is an urbane, fit-looking 50-year-old comfortable in a suit and the upper class suburbs of Sydney.
Two years ago he paid A$11.5 million for a four-storey Sydney mansion and sends his sons to a private academy in Switzerland.
Ren regularly joins business delegations to China to champion the Territory.
In June, as part of a government and business delegation, Ren negotiated a deal with Chinese heavy machinery giant XCMG Construction Machinery Co Ltd to construct a A$60 million assembly and distribution plant in the Territory.
Territory Deputy Chief Minister David Tollner said the agreement would open the door for more Chinese investment.
“This is a big win for Territory business and an enormous opportunity to position Darwin as a strategic trading and distribution hub,” said Tollner who witnessed the deal being signed.
The Canada-based Fraser Institute, which measures the attractiveness and ease of mining, ranks the Northern Territory as one of the best areas in Australia to invest.
Ren is convinced the Territory is rich in reserves but concedes a lack of infrastructure and land rights issues with Aborigines makes exploiting them tough.
There are only two main roads crossing the Territory and neither is fully paved. Ren is reported to have driven a carload of Swiss investors from the town of Mataranka to his ilmenite mine on Roper River, a five hour trip on a bone-jarring road, and asked them to count the cars they passed.
They counted only three.
Ren likes the remoteness of the place because “no one is here yet”, but adds “we could use better roads, that’s a fact.” Australia is in the throws of a national election campaign, with polls on Sept. 7, and both the government and opposition have issued policies aimed at developing the Northern Territory as Australia’s next economic growth engine.
Publicly listed companies including France’s Total , Norway’s Statoil, and Australia’s Santos are recent investors in the Territory.
Aborigines control a fifth of the Territory, through land rights enacted to preserve their 60,000-yearold culture, and regularly lock horns with miners over land access and royalties.
Ren says he has become adept at negotiating access to aboriginal lands. “There’s enough in the Northern Territory for everybody.” This month his Australian Oil & Gas reached a buy-in deal with another Australian company, Blue Energy, over a large slice of the Territory.
“The opportunity is there to find these large deposits cheaply,” says Ren. “In Australia, the Northern Territory is the place to be.”
Courtesy of Reuters.
August 25, 2013