resourcehouse, page-6

When tycoons tangle, just stand back and enjoy the fireworks
JAMES KIRBY
November 29, 2009

THERE is nothing like Tycoon Fighting - it's a great sport to watch. This week, the nation's newest and richest mining magnate, Andrew Forrest, with precision timing, took aim at the market's biggest wannabe tycoon, Clive Palmer, just when it would hurt most.

Both gentlemen have made their fortunes out of mining. Forrest, at Fortescue Metals was, until very recently, the nation's most audacious entrepreneur, creating a $13 billion business out of the Pilbara iron ore region of WA. Now, with Palmer aiming to float more than $3 billion worth of iron ore and coal assets in Hong Kong, the title of new boy on the block passes to an even more outspoken, overblown mining titan.

A few days ago, Palmer reportedly postponed his extraordinary plan to bypass the ASX and take his Resourcehouse group straight to Chinese investors by listing in Hong Kong. With a sudden chill running through global markets after the shock news that Dubai could default on its debts, Asian markets have now found something to worry about, and Palmer will have to cool his heels a little longer.

Forrest's main grievance against Palmer is that he's flogging off mines before they reach their potential. ''I'm not a seller, I build things,'' said Forrest … and it's true; Fortescue is now the third great local mining stock after BHP and Rio.

But in punching first, Forrest is also prompting people to take a harder look at Palmer. And it's not the private jets, National Party kingmaking, or the almost cartoon-like version of the ''big businessman'' on show here that disturbs. It's this: anyone who argues they should be higher, not lower, on a rich list is keeping very bad company indeed. As a former researcher on the list, I can tell you the characters who were arguing they should be placed higher on the rankings rarely lasted long at the top.

Palmer came in fifth last year, valued at $3.4 billion, Forrest came in eighth, valued at $2.3 billion. Palmer has complained he was undervalued - he thinks he should have been put down at $6 billion!

Moreover, anyone who wants to bypass their home market and float an Australian mining company in Hong Kong - where nobody floats mining stocks and where there is little or no understanding of commodities - is taking a very odd path. I worked as a stockmarket reporter on Hong Kong: there is everything under the sun listed on the Hang Seng but miners are a rarity. Palmer might succeed in a bull market frenzy where people stop asking questions, but that's not that atmosphere just now.

And when you see a float getting postponed - Palmer's float of his Resourcehouse group has been ''off again- on again'' for days - it often means the promoters want to float on the market more than the market wants the float.

Of course, it is worth noting that tycoons who already dominate the Pilbara might not be keen on opening this remarkably lucrative market to outsiders. (Palmer's powerbase is Queensland, though Resourcehouse has mines in both Queensland and WA.)

But for someone like Andrew Forrest, who is just getting heard by the top end of town, the vision of Clive Palmer must seem like a nightmare. Palmer is a buccaneer; Forrest is a former buccaneer trying to settle down. No wonder he does not want to be reminded of his past.

[email protected]

Source: The Age