'green' Skills Behind Sheep In Wolf's Clothing

The Age

Saturday December 22, 2007

Julia May, London

WHAT do you get when you cross a public-sector management consultant with an environmental activist? The obvious answer is not "chairman of a listed mining company", but then, the career of Peter Mullins has moved in mysterious ways.

Mullins' incarnation as the chairman of an intrepid but fledgling miner, Wolf Minerals, seems an incongruous move. He rose to prominence as chief executive of Greenpeace Australia-Pacific for five years to 2005, and headed the RSPCA in 2006.

Mullins, 56, also runs a stud of Devon cattle at his home on the NSW Southern Tablelands. Before Greenpeace, he spent 15 years in the public sector, specialising in policy and "performance management" at the Department of Foreign Affairs and Trade, and Department of Defence. Tellingly, his style at Greenpeace - in the adversarial days before climate change had captured the corporate conscience - was more measured consultation with industry and government than chaining himself to bulldozers.

Of his "roller-coaster" time at Greenpeace, Mullins says: "It allowed me to express all of my philosophical and values issues and pursue and develop them; to apply all of my managerial skills in a way that was very, very gratifying, in an organisation that is . . . a strange beast but terribly energising and engaging."

He describes - paradoxically given his present role - the daunting task of facing 400 mining delegates at a conference to discuss environmental issues in mining. He also worked hard to engage the Business Council of Australia "at a time when those conversations weren't easily acknowledged in the open. It was simply banging away saying, 'If you'd like to talk, we'd like to talk'."

Mullins talks a different language now, of tungsten, tin, drilling and pricing, after Wolf announced on December 5 that it had acquired one of the West's biggest tungsten deposits, on the west coast of England.

Wolf raised $3 million by listing on the Australian Stock Exchange in February, with its shares priced at 20?. It entered voluntary suspension in June as it negotiated a 40-year lease on the open-cast mine in Hemerdon, Devon, which has lain dormant since World War II. Wolf agreed to pay $1 million a year, rent of $160,000 and 2% royalties as it pursues production of about 3000 tonnes of tungsten a year. After the announcement, its shares leapt by 90%, to $2.55. It is now trading at about $2.

Tungsten is a minor metal - not publicly traded on the London Metal Exchange - historically used in armaments and light bulbs. With a high melting point, it is increasingly used for sheathing in industrial and military equipment. An estimated 85% is produced in China; at best, Chinese pricing is opaque; at worst, there may be widespread price manipulation. However, the benchmark price for last month, tracked by the British publication Metal Bulletin, was $US165 a tonne, up from $US38.50 in 2002. Mullins says that as a Western public company with transparent operations and pricing systems, Wolf could become a leading producer. Hemerdon's secondary resource, tin, may also help the company's revenues, with prices hitting a near 20-year high of $US17,500 a tonne in November.

However, Wolf is not the only company eyeing tungsten's prospects: on Wednesday, another Australian-listed producer, Primary Resources, announced it had bought a tungsten project in Poland, while in November a Canadian company, Adex Mining, revealed plans to redevelop a defunct BHP Billiton mine in Canada containing up to $A3.5 billion worth of tungsten, tin and other metals.

In Devon, Mullins also faces a test of how well his environmental philosophy and business strategy will gel. Although some 500 people will be employed in Hemerdon, Julian Taylor, a parish councillor, protested to the BBC that it would "engulf homes" and create more traffic. "Our lives will change forever because the beautiful top part of the village will be cut off from the main part," he said. Devon County Council declined to comment.

Mullins does not see being chairman of Wolf as mutually exclusive from his environmental position, but has told the board that if he felt conflicted, he would reassess his position, as he did after just one year leading the RSPCA - a role he describes as "a large mistake on everyone's part". The charity, which is notoriously fragmented along state lines, did not appreciate his views on national progression, he says. "Those opinions didn't strike a positive cord so we parted company."

But on Hemerdon, he is adamant. "I can repeat it until my Devon cows come home: the project will involve the community . . . There is nothing that's going to be hidden because that's not the business we're in. Our interests are to apply world's best environmental practice, not something that's dodgy."

Despite the recent conjunction between business and the environment, it is rare for leading figures to switch between the two, given the inherent discord. Greg Bourne, a former head of BP Australasia, became chief executive of WWF-Australia (formerly the World Wildlife Fund) in 2004. He angered green groups and contradicted WWF International's position last year by saying that nuclear power was inevitable in Australia and that the focus should be on safe mining and exports.

Charles Swindon, chairman of the London-based Minor Minerals Trade Association, says Mullins' background at Greenpeace is unique. "I would say generally it's a difficult tightrope to walk, to keep your mining sector happy as well as these environmental issues . . . It's very unusual actually," he says. But Swindon says Mullins' greatest challenge will be managing the risk of being a junior player in the volatile commodities market - a risk heightened by more miners entering the niche tungsten market. Swindon says Mullins must oversee a quick redevelopment and ensure that Wolf's chief executive, Humphrey Hale, maintains cash flow.

"If the (minor metals) market started to fall, which has happened with LME metals, there is nowhere for the juniors to hedge their risks, and the banks which finance them couldn't impose a long-term hedge. That is a risk - of maintaining financial flows after they've spent initial money on seismic studies and redevelopment," Swindon says.

"Minor metals including tungsten have had a very good run. But this is a price-sensitive operation. They would need, in the next 12-18 months, to be realising value in high tungsten and tin prices, and perhaps some immediate disposals of tin tailings to generate fast cash." Despite not knowing Wolf's board members personally, Swindon adds that the miner appears "reasonably well placed to do well".

Mullins is openly impatient to get things started. He says a new feasibility study will be completed by March - current estimates are based on a study done by a US miner, Amax, in 1981 - and he foresees production beginning within two years. He is confident that demand from China and India for tungsten will remain strong.

Mullins puts no time frame on his own position. "I see myself as a rather rare beast with skills in the (private), non-profit and public sectors. I would like to think that my strategic, management and communication skills, and perhaps my 'green' skills and my skills in governance might find a few more opportunities to make a difference. Time will tell."

So too, it seems, will the market for this little miner's offerings.

© 2007 The Age

Back to News Index | Back to Home