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Broadcast: 12/8/2002
The Mine Field

A Perth entrepreneur, a billion dollar gamble and two of the world's most powerful shareholders flexing their muscles: it's an explosive mixture. This is the battle for Anaconda. As Four Corners goes to air, Anaconda is in default on hundreds of millions of dollars in debts, there are eleventh hour negotiations with some of the most powerful on Wall Street, a billion dollar lawsuit and big rows about what the company is really worth: Is it a white elephant, or perhaps as some of its powerful shareholders might see it, a cash cow which will one day be the largest nickel producer in the world, with a growing stainless steel market to feed.

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Reporter: Ticky Fullerton
Producer: Lin Buckfield
Research: Peter Cronau



TICKY FULLERTON: This is Murrin Murrin -- 3,400 tonnes of structural steel assembled miles from anywhere on the fringe of the Gibson Desert.

It could be a set from a 'Mad Max' movie.

In practice, Murrin Murrin is a gigantic chemical factory -- Australia's most ambitious mining experiment, costing $1.5 billion so far.

JOHN HOWARD, PRIME MINISTER: I'm delighted to be associated with such a tremendously successful Australian venture.

TICKY FULLERTON: Over eight years, this man and his company, Anaconda Nickel, have wooed the most influential in the mining game.

Depending on who you believe, Murrin Murrin could soon be the world's largest nickel producer -- and, right now, the object of a power play by a secretive coterie of Swiss millionaires -- or even sooner, it may end up a grand folly of rust.

What do you think is a fair price for Anaconda stock today?

WARWICK GRIGOR, FAR EAST CAPITAL: Uh, one cent.

TICKY FULLERTON: What -- a penny dreadful?

WARWICK GRIGOR: Absolutely.

It's a basket case.

ANDREW FORREST, CEO ANACONDA 1995-2001: $1.5 billion of investment into a plant which is among the finest in the world is not spin.

You do not get the world's smartest, hardest and largest companies on the register with spin.

TICKY FULLERTON: Tonight on Four Corners -- Anaconda's big gamble.

An explosive alchemy of egos.

It's last Tuesday, the Tarts and Miners bash, at Kalgoorlie's now famous annual Diggers and Dealers Conference.

Here, the man they call Twiggy is a living legend.

MAN 1: He could sell, I reckon, ice-cream to Eskimos.

MAN 2: Twiggy Forrest -- what a great man.

What a great man for trying.

And what a great man for getting the company to where it was.

MAN 3: He seems a bit of a schemer.

TICKY FULLERTON: Twiggy, or rather Andrew Forrest, was nowhere to be seen.

For now at least, he's departed the mining industry.

MAN 3: Twiggy's not here at Diggers and Dealers this year, and I think that's a fair indication of how the industry views him.

MAN 4: Well, the word is he's on holidays.

Don't quote me on it.

TICKY FULLERTON: Word on the street had him in Perth, with the media anxious to track him down.

Another old foe was chasing him through the courts.

JOSEPH GUTNICK: Well, we're trying to find him at the moment.

So, uh -- if Andrew's out there, he can give me a call, so we can deliver some papers to him.

TICKY FULLERTON: We found Andrew Forrest where he said he'd be -- in London on a six-month break, where he agreed to speak to Four Corners.

ANDREW FORREST: Catching up with family is so tremendously important, because they've had eight years of effectively not seeing much of Dad.

Nic not seeing much of her husband at all.

TICKY FULLERTON: Eight years ago, life changed dramatically for Forrest when he realised that nickel had a big future.

ANDREW FORREST, CEO ANACONDA 1995-2001: I think, really, anyone around that time, Ticky, would have twigged to the same thing.

There was a new pipeline coming through, transporting energy right through the middle of the ore and goldfields of Western Australia, and that meant that a series of projects which -- which may have been ignored by majors should be looked at responsibly again.

TICKY FULLERTON: Until 1993, this vast desert, rich with nickel laterite, was valueless dirt.

Extraction was just too hard.

Forrest found proven technology from Cuba, and it was cheap.

Suddenly, dirt around Murrin Murrin became 100 million tonnes of ore.

With the nickel demand growing at 4 per cent a year to feed the hungry stainless-steel markets, Forrest had a story to sell -- a story that would attract funds for his new company, Anaconda Nickel.

He was already thinking big.

PETER MATHESON, FORMER TECHNICAL CONSULTANT, ANACONDA: Well, the old story -- uh, if you need to have a nickel plant, it's going to cost you, whether it's a small one or a medium-sized one or a big one.

So, uh, the bigger your output and the bigger it is, the -- the less capital per unit of production that you need.

TICKY FULLERTON: Andrew Forrest began with an old mate -- Rodney Adler at FAI.

RODNEY ADLER: We're witnessing the growth of a great entrepreneur.

WARWICK GRIGOR, FAR EAST CAPITAL: He would have painted it to Rodney that, "Look, this isn't just going to be a double-your-money exercise.

We're going to make a 10 bagger if we do this right."

TICKY FULLERTON: Rodney Adler committed $1 million to Anaconda's $6-million float -- seed money to kick off the project.

Former business buddy Albert Wong remembers just how hot the 1995 Anaconda float became.

ALBERT WONG, BARTON CAPITAL: And Andrew said, sort of, "How much would you like?"

And I said, "Well, I'll take $20,000."

And, uh, his response, uh, has not been forgotten, because he basically said to me, "That being the case, Albert, don't bother about writing out a cheque.

I might as well write out a cheque for $20,000 and give it to you."

Um -- that was how --

TICKY FULLERTON: Because the shares were going to go so high?

ALBERT WONG: The shares were going to be $1 a share before you knew it.

TICKY FULLERTON: Andrew Forrest needed much more than $6 million.

Hundreds of millions were needed to build the plant.

He found it from a company called Glencore -- the world's largest private firm.

His new partner would prove to be as cunning as it was powerful.

ANDREW FORREST: They've been described to me, indeed, most recently by their chief executive, as probably the toughest, smartest resource and trading house in the world.

I think that's a fair description.

TICKY FULLERTON: Not much is known about Glencore.

Based in Switzerland, with a cool US$45-billion turnover, it's reportedly owned by a number of its 2,000 employees -- each worth an average $1 million.

This is the extent of its website.

Glencore's founder is Marc Rich -- a fact it would rather forget.

Marc Rich is the US tax fugitive who was controversially pardoned by Bill Clinton in January last year.

GEORGE MacDONALD, EXECUTIVE DIRECTOR ANACONDA 1994-1996: The reason why Glencore wanted to become involved is they are so big that they have to control their own source of supply, in many cases, and, uh, they saw the opportunity to essentially corner the market in nickel.

TICKY FULLERTON: For its investment of $280 million, Glencore took shares in Anaconda and a direct stake of 40 per cent in the Murrin Murrin plant.

Anaconda also trusted Glencore with a multimillion-dollar contract to sell all its nickel.

At first, Glencore committed to fund plant construction.

But the Swiss trader wanted more than a 40 per cent stake.

It was soon threatening to cut off funding unless it controlled 80 per cent of Murrin Murrin.

ANDREW FORREST: That was one of the toughest times of all of our lives involved in the company.

Um, there was a group of executives who, uh -- suddenly looked at all their funding being withdrawn for a project which we'd literally banked on building at that point in time.

And we were being told that our interest would go from 60 per cent to 20 per cent, um, or else.

TICKY FULLERTON: Warwick Grigor, an analyst and Andrew Forrest's business partner in the early days, remembers Forrest's reaction to the Glencore grab.

WARWICK GRIGOR: From that point on, he realised that Glencore may be the biggest wolf of all, and he had to look out for himself and his shareholders.

And I think, from that point on, he was looking for a chance to get even.

TICKY FULLERTON: With his back against the wall, Forrest went to London.

Glencore sportingly lent him the corporate jet, but it would have been less happy to learn Forrest had cold-called the company's controversial founder -- Marc Rich.

Once again, his powers of persuasion paid off -- Rich taking over 7 per cent of Anaconda.

Presumably the last person Glencore wanted to see on the register was Marc Rich.

ANDREW FORREST: You'd really have to ask Glencore or Marc Rich about that, Ticky.

TICKY FULLERTON: But Forrest still needed more funding.

Against all odds, he took his problems to the big bankers on Wall Street.

He returned with US$400 million, lent by bond holders.

TREVOR JONES, FORMER DIRECTOR COUNTY NATWEST SECURITIES: Now, to do that, to raise that amount of money at any time is difficult, but to raise US$400 million in the US high-yield market at that particular time for a greenfields project -- that is, something that's off the drawing board -- is quite unique.

ANDREW FORREST: If someone is going to join you, then they need to understand where it is you intend to get.

So, the first thing I do is to say, "This is what we are going to create," and believe that too, because we will create it, then take them back through the steps that it will take to get there and the role that they play.

TICKY FULLERTON: Forrest also had a background to give the story a sense of destiny.

A century before, his great-uncle, John Forrest, was a pioneer and premier of Western Australia.

He backed the legendary C.Y.

O'Connor to build the water pipeline to Kalgoorlie -- vital for hopeful prospectors during the gold rush.

As Lord Forrest had pioneered the interior, his grand-nephew saw himself developing it.

He had over 10 per cent of Anaconda, and now he set about wooing the indigenous owners.

SADIE CANNING MBE, ABORIGINAL ELDER: In our area, we -- we hadn't had anybody come and approach, um, the Aboriginal people in the way that Andrew Forrest did.

He did go to each claimant group and ask and tell -- told them, and sort of made a sort of deal with them regarding the land.

TICKY FULLERTON: Forrest even had the Aboriginal community rallying for him and Anaconda, offering training, jobs and a new business to supply Murrin Murrin.

With about $1 billion in the bag, the Anaconda chemical dream started to take shape.

In 1998, four giant titanium-lined autoclaves were wheeled across the desert.

PETER MATHESON: You've got heat and lots of it, and you've got high pressure.

Uh, the pressure vessels look remarkably like submarines.

Uh, and you've got hot concentrated sulfuric acid.

And you put them all in a big pot and stir them up, and it is an extremely aggressive environment.

TICKY FULLERTON: Murrin Murrin was built to munch three million tonnes of rock a year, spitting out just over 1 per cent pure nickel.

Critically, to be financially viable, it was designed to run at full capacity within two years.

And no cutting corners in building the thing?

PETER MATHESON: No cutting corners whatsoever, uh, otherwise it'll come back and bite you.

And, uh, I think Anaconda's learnt that lesson -- that it does come back and bite you.

TICKY FULLERTON: When Murrin Murrin launched, Forrest was in control and the plant had endorsement from the top.

Two days after Murrin Murrin's launch, Andrew Forrest had another coup to announce.

Anglo American, the giant London-based South African miner was on board.

It paid $243 million for a 23 per cent stake in Anaconda.

JOHN MacDONALD, INDEPENENT MINING RESEARCH: Anglo American, at the time, was the second-largest mining company in the world, and, uh, that lent the project huge amounts of credibility, because, up until then, it was the preserve of Glencore, which was, um, mining -- a metals trader, um, the bond holders, who really had no mining expertise at all, and, uh, Anaconda itself, which was coming from nowhere.

TICKY FULLERTON: So, for you, that changed the story completely?

JOHN MacDONALD: It changed the story completely, because it just added so much credibility.

TICKY FULLERTON: It also gave Forrest new power.

ALBERT WONG: For him to achieve bringing in two giants, er, the ilk of Glencore and Anglo American and standing in between the two, er, reminds me of our days together when um, uh, uh, we read this book ah, 'The Art of War' by Sun Tzu, an old Chinese General, that, er -- the old saying is divide and conquer.

TICKY FULLERTON: By mid 1999, Anglo's head of base metals, James Campbell, had bought the Forrest dream, which by this time was far bigger than Murrin Murrin.

Forrest and Campbell talked the big talk together.

NORM FUSSELL, DIRECTOR ANACONDA 1995-2001: Those two guys stood up side by side in world meetings and talked about where they were going to go on the nickel projects of the future.

TICKY FULLERTON: But within two years the big talk would bring both men down and leave them bitter rivals.

Joe Gutnick, another laterite nickel miner, witnessed the fallout.

What sort of a fellow is Campbell?

JOSEPH GUTNICK, CENTAUR MINING: Well, he's been very, very successful in the coal division of, er -- Anglo American.

He was a CEO designate of, er -- for Anglo American.

TICKY FULLERTON: Worldwide?

JOSEPH GUTNICK: Worldwide.

TICKY FULLERTON: So what went wrong?

JOSEPH GUTNICK: Murrin Murrin.

TICKY FULLERTON: The biggest risk on Murrin Murrin was its frightening complexity.

Over 5,000 instruments, high-pressure acid-leaching vessels, acid vats and flash tanks.

WARWICK GRIGOR: Basically a laboratory pilot plant worked and so they said, um, well, let's just go for the big one now.

TICKY FULLERTON: 10,000 times the size of the pilot --

WARWICK GRIGOR: 10,000 times the size.

And -- the dynamics, the complications, it's just, it's just mind blowing just how much bigger that plant is.

TICKY FULLERTON: Anaconda's problem was that key investors demanded a fixed price contract with the plant's builder, Fluor Daniel, with heavy penalties for delays.

Under pressure, cracks literally began to appear in Fluor Daniel's work.

ANDREW FORREST: You take the ore from the ground, you mix it with water and with acid and you dissolve the nickel from it.

Under high pressure, Ticky.

That pressure's got to be released for then -- for the nickel to be refined.

Fluor came up with an innovative design -- by the way, saved a lot of money for them -- with an innovative design that they wouldn't build such a big chamber, they wouldn't have to pump the liquid right up to the top, but they could just inject it in from the bottom, into what was called a blast plate.

That blast plate Fluor told us would last six months at a time.

TICKY FULLERTON: How long did it last when it was turned on?

ANDREW FORREST: Some would have lasted six seconds, some would have lasted a week.

None made anywhere near its design.

TICKY FULLERTON: Forrest admits he lost his grip on the project.

But he wasn't about to cede control.

TREVOR JONES: Andrew was dynamic and I think quite quite brilliant in getting the project from where it was, from infancy, to reality.

But the next phase of -- of -- once the engineering problems started to occur, the next phase brought a different set of issues that the major shareholders felt Andrew wasn't the appropriate person, in fact, to manage.

TICKY FULLERTON: Anaconda was partly insured by Lloyds but is still claiming up to a billion dollars from Fluor for design faults.

In 1999 though, cash was needed badly.

Production was way off schedule.

GEORGE MacDONALD: There is two years of missing production, um, and that means $200 million to $300 million at least of cash flow which has been moved back 12 to 18 months.

And you've got debt and debt covenants which remain the same, um --

TICKY FULLERTON: So -- so interest is mounting?

GEORGE MacDONALD: Interest is mounting.

TICKY FULLERTON: Anaconda was on dangerous ground.

Everything hung on a steady ramp up to full production which could pay back the huge debts to US bondholders.

But the ramp up was two years behind, with the plant running at below 40 per cent capacity.

It was up to Andrew Forrest to keep the dream alive.

JOHN MacDONALD: When they'd had to report to the stock exchange that the production wasn't quite going as they'd hoped, um --

They'd say, "Well, yeah, but we think that we can do better than we thought we can at certain areas, um --

We've got these other projects coming on now that are just as exciting or more exciting than Murrin itself.

We're talking about expansion."

Just raising the bar.

WARWICK GRIGOR: I have never known a company about which there have been more rumours.

Rumours of takeover, rumours of parties coming in.

I mean, every day, people would ring up and say, "Have you heard about this?

Have you heard about that?"

Um, and you know it was -- it was rather time-consuming just telling people, "Look, I don't know anything.

Um, ask Andrew.

He's the one who's probably starting the rumours."

TICKY FULLERTON: Your detractors say, you know, it was spin that kept Anaconda going.

It was really never going to deliver what it said it was going to deliver.

ANDREW FORREST: Ticky, that's completely false.

$1.5 billion of investment into a plant which is among the finest in the world is not spin.

You do not get the world's smartest, hardest and largest companies on the register with spin.

There are hard assets there, which everyone knows who is impartial and is expert, will be a very great industry.

TICKY FULLERTON: Was there ever any question of ramping the stock by you or other shareholders?

ANDREW FORREST: No.

TICKY FULLERTON: By now, the 20 cent shares were $2.50 and rising.

And Forrest was thinking far beyond Murrin Murrin.

Now he was talking 'The Three Nickel Provinces' -- the world's largest nickel infrastructure project over thousands of kilometres of desert and four billion tonnes of nickel.

ANDREW FORREST: Everything which the state and the company would need -- road, rail, gas, water, energy -- could all be accommodated into one steady layout plan.

TICKY FULLERTON: There was another rumour fuelling the share price -- that Anglo wanted to take over Anaconda.

ANDREW FORREST: There was takeover speculation because James Campbell had already gone public.

Whether or not he intended to, I don't know.

But he went public at a media conference that he intended to take Anaconda over within two years as Anglo American, then the world's largest mining company.

TICKY FULLERTON: At one point, Forrest could have sold out to Anglo for a hefty premium, as he later revealed.

ANDREW FORREST: I know full well what they think of the assets because during the Olympics, we were talking $7.50.

TICKY FULLERTON: At $7.50 a share, Forrest could have walked away with well over $250 million.

ANDREW FORREST: I would only, uh -- walk away from the -- from the company, so to speak, if the same offer was made to all shareholders.

And I haven't been motivated by wealth.

I've found in my experience from my friends who are very wealthy that it is a very isolating force.

TICKY FULLERTON: Why don't you think he grabbed it?

JOSEPH GUTNICK: Well, maybe it wasn't a real bid or he really believed his own, er -- his own dreams were going to be enacted.

TICKY FULLERTON: By the Sydney Olympics, Forrest's 'can do' spirit won him the job of turning round Athletics Australia as chairman to what it is today.

He was on a high, and so were the Anaconda shares, now over $4.00.

The $6 million company in 1994 was now worth $1.5 billion.

It was at this point Rodney Adler cashed in his fun fund.

His total $4 million investment was now $60 million.

Little wonder he was supportive.

RODNEY ADLER: Is he maybe a little bit at fault every so often because he's pushing, you know, the boundaries?

For sure, but a great entrepreneur has to push the boundaries and what I think we're seeing created now is a new Australian mining house.

TICKY FULLERTON: Others felt Andrew Forrest had pushed the boundaries too far.

JOSEPH GUTNICK: I've done a number of, er -- transactions with numerous major players in the mining industry, and I've never had a fall-out as I've had with, er -- Andrew and I'm not the only one.

TICKY FULLERTON: Joe Gutnick blames Forrest for the downfall of his company Centaur.

He claims Forrest reneged on a $20 million investment in his nickel project.

Gutnick won his case in court, the judge calling Forrest an 'untruthful' witness.

Anaconda is appealing, but it's not the only time judges have singled out Forrest.

In a litigious career, a judge said, he would achieve commercial ends even if it involved threats and falsehoods.

And just two weeks ago, another judge called him 'quite untruthful'.

ANDREW FORREST: People who know me very well, um -- would completely deny that.

But the hurt comes from, um -- the fact that those same commentators have ignored other judgments where I've been found to be very truthful and a very reliable witness.

TICKY FULLERTON: So as far as you're concerned -- I mean, the courts have -- have been wrong, have got -- have somehow seen a side of you which does not exist?

ANDREW FORREST: Well, the courts have been persuaded by a very clever Queen's Counsel acting for, say, Gutnick and, um, and have -- have reached a totally false conclusion.

TICKY FULLERTON: Forrest has also had fall-outs with some of his early business partners.

WARWICK GRIGOR: To put it simply, if you're his partner, you're running with the wolves and you don't know where the wolves are going to take you.

Andrew has a cavalier attitude that if he keeps running hard enough, nothing will catch up with him, so why worry?

ALBERT WONG: We did settle on the steps of the Supreme Court and, um -- and -- er -- as you well know, Andrew is not adverse to um -- um -- uh -- going to court.

TICKY FULLERTON: Yet Forrest's biggest fight was in Perth with both his giant shareholders.

At the end of 2000, he confronted Glencore and he had reason.

Confidential documents leaked to Four Corners show him accusing the Swiss trader of retaining 'secret profits' while selling Anaconda's nickel.

The documents confirm Glencore did keep funds from Anaconda over several months.

Glencore later paid US$788,000 to Anaconda for what it called 'discrepancies'.

In a letter to Four Corners, Glencore denies it was skimming off money.

It instead blames Anaconda's continually missed targets for nickel, which it says, created a mismatch of deliveries.

Glencore's lucrative marketing agreement was terminated.

But all this was kept quiet.

In public, it was Anglo that grew angry.

NORM FUSSELL: I think Anglo got disenchanted with the investment when share prices fell.

I guess that always leaves a sour taste in an investor's mouth.

Anglo's James Campbell, once Forrest's supporter, was now exasperated by the financial black hole of Murrin Murrin and Forrest's eternal optimism.

JOSEPH GUTNICK: James Campbell's whole career was on the line.

Anglo wrote off half their investment.

TICKY FULLERTON: The last quarter of 2000 saw the share price halve and spending continue.

On 27 March last year, in a night of the long knives, Anglo lobbied directors to oust Forrest.

ANDREW FORREST: A number of the board were contacted, rung up at very early hours in the morning, 2 o'clock, 3 o'clock, and told that they had to give answers immediately in order to, I think, to quote a, um -- a person from Anglo, "In order to deliver Mr Forrest an ultimatum or an ambush when he, um -- came in from work -- came into work after breakfast."

TICKY FULLERTON: That time, Anglo's coup was unsuccessful, but it continued to publicly attack Forrest.

MAN 5: Anglo American has, um, over a period of time become increasingly concerned with the management of the company, the leadership of the company of Anaconda.

NEWS REPORTER: Today after failed talks between the two parties, Anglo announced it would call a meeting of Anaconda shareholders to remove the company's chief executive, Andrew Forrest, and four other directors from the board.

TICKY FULLERTON: It was clear that Forrest could no longer play off Anglo against Glencore.

Norm Fussell, Anaconda chairman last year, saw both companies positioning for control.

NORM FUSSELL: We at Anaconda were concerned that either of those companies were seeking a situation where they could control without paying a control premium.

TICKY FULLERTON: The lead-up to the meeting called by Anglo was tense.

94 per cent of small shareholders polled wanted Forrest to stay on.

On the day, a final vote was never taken.

It was an extraordinary extraordinary general meeting, really, wasn't it?

NORM FUSSELL: Yes, it was, and it wasn't a very fun, uh, day being a chairman of it when, I don't know, I think he adjourned the meeting seven times while all these side meetings were going on.

TICKY FULLERTON: Behind the scenes, under pressure from Anglo and Glencore, Andrew Forrest finally agreed to step down as chief executive and leave altogether a few months later.

For James Campbell, it was a bloody victory.

Within mining circles, Anaconda is said to have battered the reputation of the man once set to run Anglo worldwide.

ALBERT WONG: Andrew may have lost the battle but he didn't lose the war.

I think Campbell lost the war.

TICKY FULLERTON: Forrest's departure from Anaconda has been messy, however.

He mixed business with philanthropy.

Last year, he negotiated a $3.5-million payout by Anaconda, not for him, but for his new charity for underprivileged children, Leaping Joey.

And he got Glencore to throw in a further $3.5 million.

Then in February, Leaping Joey spent exactly $3.5 million buying Anaconda shares owned by Forrest at 10c above market price.

Forrest also donated further shares to Leaping Joey, but he faced a scathing media attack that his benevolence was really minimising income tax.

ANDREW FORREST: The -- the issue for me personally is I would have been much better off to have taken that money as a pension and redundancy payout.

It would have been probably more tax-effective and I would have received the funds personally.

To be asked if you were getting a tax benefit for money you've never received is remarkable to me.

And to ha -- to have -- have, um, the media given a spin that that's what it was, to me, is really, really hurtful.

And it -- it missed entirely, um, what the set-up of the charity was all about.

WARWICK GRIGOR: The donation that Andrew sought to have put into Leaping Joey is how he'd like to be seen as a philanthropist doing good for kids, but the fact that it bought shares off him is just more evidence that Andrew's always got a hidden agenda and he doesn't do anything totally for -- out of the goodness of his heart.

TICKY FULLERTON: Does he get any points for being a philanthropist?

WARWICK GRIGOR: Um -- I'd say he gets points for being a hypocrite.

TICKY FULLERTON: Sadie Canning found herself in the thick of a scandal -- having agreed to go on the board of Leaping Joey.

SADIE CANNING MBE: Don't we all do something for our personal tax gains?

You know, in some way or other, you know?

But I think Andrew's got that big heart as I said before.

I think he's genuinely interested in people, in trying to help people.

TICKY FULLERTON: So where does this leave the desert chemical factory?

Anaconda's shares, once $4.00, are now almost back to the 20-cent issue price, leaving small shareholders, who own almost 30 per cent of Anaconda, wondering what to make of their stock.

GEORGE MacDONALD: Rode it up, rode it down, rode it up again, you know, rode it down again, and I figure they'll probably stick it on the wall as -- as wallpaper.

TICKY FULLERTON: The new Anaconda chief, former Western Mining's Peter Johnston, says he inherited a company that can't pay its debts.

PETER JOHNSTON, CEO ANACONDA: The company was in, uh, a parlous financial state.

Uh, cleaning up the balance sheet was long overdue.

And that was just what you had to do to, uh, get a reality check on this company.

TICKY FULLERTON: Johnston's first move was to "clear the decks", as he put it, writing down Anaconda's assets by $230 million.

ANDREW FORREST: Losses you think of when people lose money.

Not a bean of that was a loss -- that was a re-evaluation of assets, which you can do with the stroke of a pen.

TICKY FULLERTON: So it wasn't a reality check, then?

ANDREW FORREST: It wasn't -- Murrin Murrin, which was apparently devalued, is exactly the same operation, only much more advanced and now making good money, as it was when the company was capitalised at $1.5 billion.

TICKY FULLERTON: George MacDonald, Forrest's finance man in the early days of Anaconda, is cynical about the write-down.

GEORGE MacDONALD: You know, the glass-half-empty view is a technique which is used successfully by, uh -- by management who are, er -- both wish to resuscitate companies and who wish to -- be rewarded for --

TICKY FULLERTON: Turning them around?

GEORGE MacDONALD: Turning them around.

PETER JOHNSTON: Sure, but we've never made a profit, so there was no question --

(Laughs) of a turnaround.

TICKY FULLERTON: In March this year, Anaconda went into default on its $400-million US bonds, placing its future in the hands of its debtors.

PETER JOHNSTON: The reality of the situation since I joined the company -- there was nothing left in the cupboard in December.

TICKY FULLERTON: Forrest is adamant that he could have persuaded US bondholders to be patient.

ANDREW FORREST: That agreement, um, can certainly be reached in a way that bondholders understand -- they had a responsibility for a two- or three-year delay and that they could give the company that two- or three-year breathing space.

TICKY FULLERTON: Without paying any interest?

ANDREW FORREST: I think an interest holiday, um, would have been a very smart move, and extending the bonds by two or three years as well.

TICKY FULLERTON: Do you think he could have done it with his magic?

PETER JOHNSTON: You'll have to ask Andrew.

I should also add, of course, debt is what got this company into problem, into the current situation.

TICKY FULLERTON: Ironically, despite Anaconda's near-bankrupt state, it's now finally in operating profit.

What's more, there are claims that Glencore and Anglo want to push out other shareholders just when the business comes good.

Murrin Murrin is now cash-flow positive, and in 12 months, it should be running at 90 per cent capacity.

And the huge interest payments killing the company are no longer.

The US$400 million of bonds are being renegotiated.

As we go to air, word is that bondholders are being asked to accept around 25 cents in the dollar, wiping out three-quarters of Anaconda's bond debt.

Now, there's a conspiracy theory running here that Glencore will take control of Anaconda on the cheap.

It works like this.

In order to pay back the 25 cents in the dollar owed to US bondholders, Anaconda needs US$100 million.

It plans to raise that money through a rights issue to existing shareholders.

But if you're an existing shareholder, having seen your shares plummet, you may not want to take up rights to buy yet more shares.

If that happens, whoever the underwriter is will pick up those unwanted shares.

And what's more, the underwriter may well get $1 million or so in underwriting fees to help them get those shares.

That's the theory.

And guess who the underwriter is.

Is anybody other than Glencore going to be interested in underwriting this rights issue?

PETER JOHNSTON: Um, we, of course, would like, er, a lot of parties to be interested.

However, we think the field is fairly narrow.

TICKY FULLERTON: Glencore has confirmed to Four Corners that it has indeed put an underwriting proposal to the Anaconda board.

GEORGE MacDONALD: You would see, er, Glencore obtaining a control position without paying premium for that control position.

ANDREW FORREST: It would be one of the toughest, sharpest moves made in the Australian resources sector ever, and I have always stood for, um, the small investor and the Australian investor.

And if that occurs, then I can -- I can only say what I will do, and I will put every cent I can into investing in those rights as well.

TICKY FULLERTON: Last month, the Anaconda Shareholders Action Group -- ASAG -- warned management over talking down the share price and playing into the hands of a major shareholder like Glencore.

Some see Andrew Forrest behind the push.

You say you're not behind the ASAG letter --

ANDREW FORREST: No.

PETER JOHNSTON: We have never been negative about the company.

There has been absolutely no evidence or no favouring of minorities or majorities.

We -- we --

As a company, it's our duty to look after all shareholders.

And that's what we've done, as has the board.

TICKY FULLERTON: It is true that Glencore has already sunk over $500 million of its own money into the Anaconda dream.

It now holds 34 per cent of the company.

But it's true, too, that it's used other people's money.

To fund its 40 per cent share of Murrin Murrin Glencore borrowed US$300 million from -- guess who -- US bondholders.

And it seems Glencore wants the same 25 cents in the dollar.

WARWICK GRIGOR: It's exactly the sort of environment that Glencore see as an opportunity to negotiate and improve their position.

TICKY FULLERTON: Glencore warns that bondholders could still opt for receivership, but there's no doubt the Swiss trader has improved its position.

It is once again selling Anaconda's nickel.

Remember, earlier Anaconda and Glencore fell out over discrepancies, a fact of which Peter Johnston surprisingly says he is unaware.

If I could show you a letter from the past which actually has accusations by previous Anaconda management saying that Glencore were retaining secret profits on those sales, would you be a bit worried about your current agreement?

PETER JOHNSTON: Um, well, I can only say we negotiated the current agreement.

They are sound commercial terms.

It was approved by the board, and open and above -- and completely transparent.

One of the problems we have in this company in the past -- there are a lot of legacies.

We're about trying to move forward.

TICKY FULLERTON: So you trust Glencore?

PETER JOHNSTON: Oh, absolutely.

They've been a great supporter of the company.

TICKY FULLERTON: Neither Glencore nor Anglo would be interviewed by Four Corners.

In a short statement, Anglo said it was "only a minority shareholder".

As for Anaconda's most famous minority shareholder, Andrew Forrest can only muse on what might have been.

TREVOR JONES: Andrew, in my opinion, has left a bit of his heart on his sleeve, but also, I think, quite a bit of personal family fortune in the desert.

If that plant had have ramped up, if that plant had have operated at something like its capacity, uh, today, Andrew would be seen in a completely different light.

But it didn't, and it's a failure.

And, as such, Andrew has withdrawn.

Although one thing I'd say about Andrew is you write him off at your peril.

SADIE CANNING MBE: It's like a little city on its own in the middle of nowhere, and when you come from Laverton, there's a hill there, and you look across and you see these beautiful lights.

You know, just an achievement there, in the middle of nowhere.

It's something --

TICKY FULLERTON: Murrin Murrin's fate now lies with the banks and two big shareholders.

For most in the financial community, it's burnt too many pockets and reputations.

At the moment, the prospects are it will either be a white elephant or a money machine for Swiss millionaire's.