re: national interest wild card! Can Johniie be trusted, I recon he's allready done a deal with Yanks and or Glencore.My own view
Refer article from the Australian
Apologies if it has allready been posted.
The half-life and times of Australia's uranium dilemma
27jan05
WHEN John Howard arrives at the World Economic Forum tomorrow he'll be confronted with the theme of the world's biggest business and political gathering: "Taking responsibility for tough choices".
And the toughest choice our Prime Minister, and Treasurer Peter Costello, will face this year is whether to hand dominance of the global uranium market to a bunch of Swiss commodity traders. The stakes are high: there's a high likelihood of a price cartel and a considerable reduction in control over where our uranium goes.
Although there are difficult environmental issues, such as waste management, nuclear energy is emerging as the key fuel source for maintaining global growth rates while cutting emissions.
Australia has well over a third of the world's uranium and whoever controls it will have enormous global power over the next 20 years.
Historically, the Swiss are best known for their watches, cheese, chocolates and secretive bankers. But just over 20 years ago Switzerland became a big global force in commodity trading when Marc Rich fled to the country, pending US criminal charges.
To pay his US taxes in 1984 Rich sold his stake in Twentieth Century Fox to his partner, oil billionaire Marvin Davis, who in 1985 onsold it to News Corporation, publisher of The Australian – a deal that led to the transformation of the then Australian-based company.
Rich developed one of the world's biggest commodity empires to take advantage of Swiss neutrality and laws.
These days Rich is ageing, but his legacy remains.
He enticed many top global traders to Switzerland using various lures: freedom from US laws, low taxes in the canton of Zug, and the advantages of Swiss education.
The traders would use Swiss law to legally break trade embargoes imposed by the US and other governments and take advantage of the turmoil in the former USSR to buy metals and other commodities at attractive prices. In the process Rich and his traders would become fabulously rich.
These days Rich is less active but his techniques are embedded in the generation of traders he trained. Almost every trade embargo – including Cuba, Iran, Libya, South Africa and more recently Iraq – has given the Swiss the chance to make big profits.
The Swiss developed techniques to use derivatives so that governments could never trace what was happening to physical material.
The Zug canton – I passed through the place on the way to the World Economic Forum – has set up a training school for traders.
It is clear that their biggest coup may come if Xstrata can gain control of WMC Resources, owner of a third of the world's uranium through its Olympic Dam mine in outback South Australia.
On the surface, Zug-based Xstrata looks remote from the Swiss traders but most of its products are marketed by Glencore, a company owned by the Swiss traders.
Glencore officially owns only 16 per cent of Xstrata, but that stake is more than doubled via the traders' influence over Xstrata shares held by Credit Suisse.
Australia's Foreign Investment Review Board has an old file on Glencore. When the Swiss traders tried to make a bid for a significant stake in the Portland aluminium smelter in the early 1990s they were told quietly a rejection was possible, so they sold their small stake.
Whereas the hedge fund traders in London and New York simply borrow money to punt in the market, Rich and his people are much smarter and constantly look for an edge.
In the early 1950s, when Rich dropped out of New York University, no one could have believed what would happen to him in the next 50 years.
His first opportunity to star arose out of the Korean War, when governments stockpiled mercury. Rich acquired the rights to the production of the world's two biggest mercury producers, and the squeeze he imposed delivered a fortune to his employer, Philipp Bros.
The firm then sent Rich to Cuba and later he devised ways to get around the US embargoes. But he split with Philipp and, while still residing in the US, set up Marc Rich AG in Switzerland to take advantage of Swiss law.
Two enormous opportunities arose. Marc Rich AG made a fortune breaking the Cuban embargoes and marketing Iranian oil in defiance of US bans. After the OPEC crisis the US began to classify its oil into various categories, including "old oil" selling at $US6 a barrel.
For Rich that was a ticket to a bonanza, as he purchased oil at around $US6 and found a way to sell it for between $US25 and $US45 a barrel. But the US reckoned that as a US citizen he could not hide behind a Swiss company. With charges pending it was time to move to Switzerland, and in the next 11 years he obeyed Swiss law, unfettered by US restrictions.
In 1994, Rich sold his Swiss trading company to the traders who had come to Switzerland to learn from him. They dropped the name Rich for Glencore International and widened its activities.
I'm sure Rich is right in saying he has no ownership of Glencore (he now has his own Swiss trading company) but the culture is the same – it is owned by his traders and headed by one of his lieutenants.
In a derivative-based trading world, if the Swiss gain control of the marketing of Australia's one-third of the world's uranium, the three biggest suppliers of nuclear fuel will be Switzerland, Canada and Russia.
The Swiss have very close ties to Russian marketers, and with the Australian third in their pocket they will be in the position that Rich achieved back in the 1950s with mercury.
The combination of uranium embargoes and a small tight cartel has the potential to deliver profits that will dwarf anything the Swiss traders previously achieved. The Swiss will argue they will obey any Australian restrictions (sensitive markets can be supplied from Russia) because Zug's potential cartel rewards are so great.
But the Swiss leopards will have to convince Australia that they have managed a complete change of spots.
Xstrata chief executive Mick Davis might be the world's greatest mineral strategist but he is saddled with the past activities of his biggest shareholder and the marketer of his minerals.
If Costello and Howard allow the Swiss traders to control a significant chunk of global uranium they will have to accept global responsibility for the consequences.
(20min delay)