Mark Leftly: Rio Tinto grabs a slice of Canada's uranium riches

Now it just needs to make sure it keeps hold of it
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The Independent Online

The battle won, now it's time to prepare for the war.

This weekend, mining giant Rio Tinto finally closed its C$654m (£412m) takeover of Hathor Exploration, which is based just south of Lake Athabasca in Canada's Western Provinces.

In times gone by, Native Americans and traders trawled this area for fur-bearing animals, game and water fowl. Hathor is in search of something a little less cute: uranium.

The Athabasca Basin is believed to hold a fifth of the world's uranium supplies, hence the bidding battle that emerged for little Hathor at the end of last year. Canada's Cameco, one of the world's biggest uranium producers, made the first move with a C$3.75-a-share bid in August, before Rio countered in October.

Hathor investors watched gleefully as the bigger miners pushed up the price, until Rio finally landed a knockout blow of C$4.70 – a 75 per cent premium to the share price at the time of Cameco's first bid.

The deadline for acceptances was 5pm Toronto time on Friday, but the size of the eventual bid meant there was no danger of shareholders not snapping up the deal.

Unfortunately, Rio boss Tom Albanese cannot afford the time to congratulate himself on addinguranium to his growing Canadian empire, which also includes aluminium, iron ore and diamonds.

He must now plot a way toensure Rio retains control of Hathor. The disturbingly named Roughrider mine is thought to be not far off entering production.

Under current legislation, no foreign group is allowed to own more than 49 per cent of an operational uranium mine. As things stand, Cameco would be highly favoured to snap up the remaining 51 per cent as they have assets just down the road. Not a bad result for a company that just got trounced by Rio for the same asset.

If this smacks of protectionism, then we shouldn't be surprised. Canadian politicians and citizens are desperate to ensure that they retain control of their vast natural resources.

Also, the Athabasca Basin is largely in Saskatchewan. Sound familiar? Two summers ago, Rio's great rival, BHP Billiton, had a $39bn crack at Potash Corporation of Saskatchewan. It was scuppered, partly over price, but mainly by politics.

The government blocked the deal using the Investment Canada Act, only the second time in the law's 25-year history that it has been used to stop a foreign takeover. Similar accusations of protectionism were made when a merger of the Toronto and London Stock Exchanges collapsed last year, while other foreign miners have faced criticisms from a Canadian public who tend to regard them as little better than thieves.

Yet that same public elected a centre-right majority in 2011 for the first time in more than two decades. This is a government that wants to promote foreign direct investment and could relax certain ownership restrictions.

The uranium law could soon be overturned, not least because the fuel is now as associated with clean energy as it is with nuclear weapons. What Rio and its peers will then face is an extremely nasty political war over the future of Canada's resources.

Rebel small investors bring the big boys to book over executive pay

A ragtag battalion of individual investors has seriously embarrassed big institutions who repeatedly fail to challenge the remuneration policies of quoted companies.

On Thursday, around 45 people crammed into an eighth floor meeting room at the London offices of legal firm Wragge & Co for the AGM of Conygar, an AIM quoted investment company that deals in property development. At least half of them were very angry indeed over a confusing bonus scheme that saw a 6 per cent increase in Net Asset Value (NAV) of the company trigger a £2.65m payment to directors.

So confusing, in fact, that chairman Nigel Hamway struggled with the details of whether the increase was for overall NAV or NAV per share.

So confusing, in fact, that finance director Peter Batchelor acknowledged that the wording of one annual report had been, unintentionally, a touch misleading over whether the bonus was triggered by an increase over one or two years.

The scheme is hardly the most outrageous you'll ever see, but deserved a thorough interrogation. These troublemakers certainly achieved that with their months-long bombardment of calls and emails to the board.

Even though the resolution approving the bonus had been voted through by the proxy votes of big institutional investors, these mainly middle-aged men managed to force a full debate at the AGM. More importantly, Hamway has vowed to review the scheme and in future looks likely to incentivise the board with rewards for share price performance, rather than property value hikes that simply move with the cycle.

Although there is an unusual degree of organisation among these retail investors through a growing but loose coalition called ShareSoc, it is almost inconceivable that they should have achieved such a result when the vote cast them in such a minority.

Think, then, what institutions with all those voting rights could do if they stopped acting so impassively over pay and actually had the wherewithal to examine, debate and oppose far more egregious examples of unwarranted executive pay than this one.

Vote catcher: To beat Obama, Romney has to steal rival's policies

When Mitt Romney – or, heaven help the US, Rick Santorum – claims the Republican presidential nomination in the coming months, they should nab their lowest-polling rival's business and economic policies.

Having polled just 1 per cent in the first presidential primary last week, the ideas of Jon Huntsman, former US ambassador to China, probably aren't the first that the arch flip-flopper and ultra creationist pro-lifer would choose to lift.

But Huntsman's problems are his low profile and charisma deficit not his policies. Maximising derivatives transparency, arguing "the mismatch in maturities was at the core of much of the panic of 2008", and – electoral poison to the Christian right, this – opening borders to free trade, aren't vote winners.

Neither Romney nor Santorum would defeat President Obama with such technical arguments and dull language. But they will need intellectual credibility to compete with the incumbent's extraordinary electoral machine, so steal these ideas they must.