Saturday, April 26, 2008
Searching for the next cartel
My investment in the potash fertilizer cartel organized by Mr Doyle, CEO of POT, is causing me joy. Did I tell you how I discovered POT? Years ago, when I was invested only mutual funds, I was wondering in front of the Bank's computer why my fund was making less than the underlying shares. A very old man told me: Dont you know? The funds keep the best yielding shares, the dividends and the cream for themselves. I said: Cannot be. According to their constitution, they are transparent etc etc. He laughed and showed me how he was making on the Israeli POT. Cautiosly I sold my funds and bought POT. The rest is happiness. There was a long period of depression in its price, while Mr Doyle was setting up the cartel. I almost lost my faith. But Doyle delivered. He is a real modern industrial hero.
Now I am searching for another POT and another Mr Doyle. Metallurgical coal is my leading candidate. It is used in the steel-making and includes hard coking coal, semi-soft coking coal and PCI coal. Like Potash, metallurgical coal is produced in a limited number of countries. The market is characterised by large volume, longer term, annually priced contracts. Price negotiations between Australian suppliers and Japanese steel producers set the trend that influences settlements throughout the market. Anglo Coal is a significant supplier to virtually all the major steel producing groups in the world. The pic is Mr Boyd Payne, President of Fording Canadian Coal Trust, one of the players in this market. Mr. Payne was appointed President of the Trust and Fording ULC in January 2007 and President and Chief Executive Officer of Elk Valley Coal in August 2006. From 2001 to 2006, Mr. Payne was Vice President, Marketing for BHP Billiton in Singapore. From 1996 to 2001 he was Vice President of Marketing for Fording Coal Limited, whose metallurgical coal operations were acquired by Elk Valley Coal in 2003. He also held several senior positions with Line Creek Resources Ltd. from 1991 to 1996, Manalta Coal Ltd. from 1989 to 1991, and was General Manager of Gregg River Resources Ltd. prior to 1989.
Mr Payne: I for one have high expectations from you!