 | Bio |
When Lukas Lundin was ten years old, his father – resource industry legend and X-Leaguer, Adolph Lundin – sat him and his brother down and asked, "Who's going to be the mining engineer and who's going to be the petroleum engineer?" Thus were planted the seeds of his long and storied career of developing oil, uranium, gold, copper and even iodine, in Africa, the Middle East, South America, Russia and Mongolia.
By the time he was 15 years old, Lukas was attending corporate board meetings and flying around the world looking at mines. After schooling in the United States, he was immediately off to explore for gold in Sierra Leone, running a 50-man exploration crew before he was even old enough to legally drink in a bar.
From there, he graduated to petroleum exploration, setting up shop in the Middle East and Asia as a manager of Gulfstream Resources, and then International Petroleum. With the latter, he explored for oil throughout the region, cutting some of the first exploration deals in Vietnam, Papua New Guinea and Malaysia. He describes the period as a "big adventure" – at one point, during the Iran-Iraq war, an Iranian airliner was shot down just a few hundred meters from the drill rig where he was working.
After getting that venture off and running, Lukas' attention turned to South America, where, in the course of making petroleum deals, he had heard about a promising copper-gold project that was coming up for bids. Intrigued, but lacking a background in mineral deposits, he embarked upon what would become a familiar task over the course of his career – educating himself on a new sector from the ground up by systematically seeking out and learning from those who knew the industry best.
By the time Lukas had brought himself up to speed on the Argentinean metals properties, he had developed an extensive network of contacts with some of the best geologists in the region. Tapping this, he was able to acquire and develop not one, but two major deposits – Alumbrera, which eventually sold to Rio Algom for $500 million, and Veladero, which was acquired by Barrick Gold for $300 million and is, to this day, the major's biggest porphyry deposit. (Today, the family's Tenke Mining (T.TNK) owns the largest land position in Argentina, 1.2 million hectares.)
Even while figuring out the geology of Argentina, Lukas found time to assist his father in the securing of the Tenke Fungurume mega copper project in the Democratic Republic of Congo, the name sake property of Tenke Mining. He was also exploring for oil in Africa with a new start-up, Tanganyika (V.TYK) which, over the past two years, has moved from C$.90 to C$6.77, a gain of better than 650%.
Remarkably, he also found time to lead the family's charge into a new commodity: uranium.
Noting that the fundamentals for uranium seemed to suggest a bull market in the making, Lukas once again set out building knowledge and contacts. After a long search, he acquired several properties in the U.S. from a bankrupt trader, and thus was born International Uranium Corp. (T.IUC). At first, the move looked dubious when IUC debuted at $1.25 and promptly plummeted to $0.20. But the Lundin persistence and sense for business eventually won the day – IUC currently trades at near $5, with a total worth of $400 million.
Today, Lukas manages affairs for some eight different companies, working with various resources around the world. The comment has been made that resource investors could do well simply following this stable of firms. Given the track record of the Lundin family overall, and the specific initiatives spear-headed by Lukas, we agree. We'll certainly be watching his moves closely.
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| Interview |
XL: First off, Lukas, I'm sure all of our readers would love to hear about what it was like growing up in the Lundin family, one of the resource industry's most successful family enterprises. Growing up, you must have had a lot of exposure to the resource sector.
Lukas: Normally at the dinner table we'd talk rocks and stocks. (laughs) That was the only thing my father talked about. I was definitely exposed to it.
XL: How old were you when you first started becoming involved in the family business?
Lukas: Ten years old, I think. We'd have a lot of discussions about it. It was interesting, because in those early days one day we'd be building a pool, the next day we'd be worried about having lights in the house. Depending on the ups and downs of the markets.
XL: The cyclical nature of the business seems an important thing to learn early.
Lukas: Oh yeah, it was very interesting. At the same time, as a kid, I never noticed the ups and downs that my father went through. He always came back from the office happy and optimistic. But, looking back, there must have been some tough times during his financial deals. But, as a kid, it was all good.
XL: Did you ever accompany him on any of his business trips?
Lukas: I started going to my first board meetings, annual meetings, at about fifteen.
XL: Fifteen?
Lukas: Yes – mostly it was annual meetings I attended at that age but I remember visiting several mine sites at about that same age too with my father. We used to go to, look at all sorts of different projects. Later, when I was studying in the States, I continued to go with him to visit various sites, including the Cargo Muchacho mine, which we were involved with.
XL: So, mostly in North America?
Lukas: At that time it was mostly North America.
XL: Was it a forgone conclusion that your career would involve the resource sector?
Lukas: Yes, I would say so. If I hadn't done that I would have gone into the hotel business. I think at about age nine or eleven, my father asked my brother and me, "Who's going to be the petroleum engineer and who's going to be the mining engineer?" That was the family discussion at that time in life, and it hasn't changed since. (laughs)
XL: And you chose to be the mining engineer?
Lukas: I chose mining, but then switched to petroleum.
XL: It sounds like you've done well at both. So, you came over to the U.S. for school?
Lukas: I came over to New Mexico. I went to school in Socorro.
XL: What made you choose there?
Lukas: Actually, that was complete luck. My father was looking for uranium in the Grants mineral belt and my brother had a summer job working down there. I went down to pick him up – I'd just finished working in northern Canada – and I heard about the school. I went down and visited it, signed up and two days later I was in school.
XL: Very spur-of-the-moment. What attracted you to the school?
Lukas: I just looked at the school and decided that maybe it was time to do this, so I signed up. When my father came to pick us up I said, "I'm not going to go home. I'm going to go to school in New Mexico." He said okay, so I went down, got an interview, and there weren't that many foreigners so they were quite excited to get a European going to the school.
XL: And was the industry up or down at that point?
Lukas: The oil sector was booming at that time. It was 1977.
XL: Was your program mostly in oil, or was there some mining as well?
Lukas: It was mostly oil.
XL: So, were you planning on a career in petroleum alone, or did you still have an interest in mining?
Lukas: I just studied petroleum engineering at the time. It was just something to do. An education.
XL: After you came out, what was your next foray into the business?
Lukas: When I first came out of school, I thought I was going to get a big desk and make a lot of big decisions. That's what you think when you have a degree. Then you find out that nothing has changed and all you've got is a degree. So, my first six months were in Canada line-cutting up north. It was horrible. Then I went to Sierra Leone for eight months, in West Africa, and did some gold exploration.
XL: Who was that with?
Lukas: That was with a company called Eurocan. Now it's changed to Tenke Mining. They had a big gold exploration play in a place called Bumbuna, in northern Sierra Leone. I think we got the stock to $9 on some drill holes. We lived in the villages there and I had about 50 guys working for me line-cutting and doing exploration.
XL: So, you were in charge of the program.
Lukas: I was in charge of one of the groups, yes.
XL: And how old were you?
Lukas: Twenty-one.
XL: That's great experience for someone that age.
Lukas: Yes. Then my father acquired some concessions in Egypt, in the Gulf of Suez. They had a company called Gulfstream. So, I went over there and we had hired two ex-Shell geologists and they were there running it. Within six months, I was running the show there. I was about twenty-two or twenty-three. We had seismic programs and we drilled some wells. That was a steep learning curve. Actually, lots of fun.
XL: How many projects did you have running?
Lukas: One in the southern Gulf of Suez and another in the onshore of Sinai – two projects.
XL: And what came of those?
Lukas: Unfortunately, we farmed them out – we spent two years there and got Gulf Oil involved – and I think we drilled about nine dry holes.
XL: So, it was another learning experience.
Lukas: Yes. (laughs)
XL: And then you went to International Petroleum?
Lukas: Yes. There were three companies that became International Petroleum, which then moved to Dubai. I think I moved to Dubai in late 1984.
XL: What was Dubai like at that time?
Lukas: It was great. I was a bachelor for one year and then I got married and had two young kids there. It was fantastic. Today, you wouldn't recognize anything. At the time I lived there, I think it was like 300,000 people. I think it's two million now. It was very cosmopolitan, very liberal. I had a fantastic life, right on the beach. I had a very interesting job – we went around and picked up every concession we could in the Middle East. We went to Yemen, Somalia, Ethiopia, Iran. I was about 25 years old and thought I knew everything. Negotiating those contracts with the governments and ministries, it was unbelievable.
XL: And did you end up with projects in all those countries?
Lukas: Yes, we ended up with projects in Somalia, Ethiopia, Yemen, Oman, Qatar. Projects everywhere. Dubai. We were all over the place. I was running the office there with my brother and we had another nine or ten guys. We were all young and stupid.
XL: Obviously not that stupid if you were managing to acquire that many concessions.
Lukas: We drilled a thousand dry holes!
XL: Ahh. Did you have any successes?
Lukas: We did have some successes. Our group found an offshore field in Oman, in the Gulf of Suez. And in the Strait of Hormuz. That was right during the Iran-Iraq war. We had gunboats around our oil rigs. It was exciting. They shot down that Iranian airliner and it landed a kilometer away from our rig. Lots of fireworks.
XL: Incredible. But there were a lot of dry holes on other properties?
Lukas: We had a lot of dry holes. We were able to farm out a lot to Amoco. Other partnerships, too. Looking back at it, it was a great experience but we were a bit too young and too green and aggressive. At the same time, we never would have learned all this stuff without doing it. My father gave us complete free rein. It was unbelievable.
XL: Was he involved in the decision-making at all?
Lukas: Oh, he was involved. We talked to him daily. But he let us go here, pick up things there, do this and that and he always backed us. It was amazing. Somalia was really fascinating. We were competing against Chevron and some other guys for these concessions. We had meetings in opium dens in the middle of the night. It was a big adventure.
XL: And how did you end up getting the properties over Chevron?
Lukas: We offered a higher bid than them. We found out what they were bidding, of course.
XL: It sounds like the wild west.
Lukas: Very much so. So much fun. We traveled around on converted 707 cargo planes that they wouldn't fly anywhere else in the world, so they became Somalia Airlines. Those were good times.
XL: Was International Petroleum ultimately profitable?
Lukas: It became quite a big success because from there we went into Malaysia and Libya where we had a big discovery. I negotiated the first concessions in Libya. And I was quite involved with our negotiations in Malaysia after that. Where else? Offshore Vietnam – some big structures, Papua New Guinea – shallow gas. We drilled the biggest offshore structure – one hundred square kilometers – and it was all full of CO2, but anyway, it was an unbelievable experience. The exposure to high risk/reward plays – I don't know if I will ever get exposed to projects like that again. And then we had a discovery in Malaysia that became the backbone of Lundin Petroleum, which we later sold to Talisman. So, at the end of the day it was very successful. It took us about ten or eleven years to get there though.
XL: It sounds like you worked in some pretty far-flung locations. How did you hear about these potential projects?
Lukas: At that time my father had a great guy working for him by the name of Ed Durkey, who was quite familiar with the Far East. He got us involved in Malaysia and then offshore Papua New Guinea.
XL: And there probably hadn't been a lot of work done in those places, at that time?
Lukas: Not that much. In northern Malaysia there wasn't much work. Exxon had produced everything in the middle of the country. I think we were one of the first concession-holders in Vietnam.
XL: Was there a philosophy or model that guided your exploration?
Lukas: Our model was to chase elephants. Go big or go home.
XL: And you were joint-venturing a lot of these properties?
Lukas: Yes, a lot of them. But, you know, we drilled this well offshore Papua New Guinea, in the Gulf of Papua. It was a giant reef and at the time we only had $2 million in the bank. The budget of the well was $12 million. We had to get everything organized from Singapore – the drill ship, the supply boats, the storage boat. There was nothing in Papua New Guinea. Then we shipped everything from Singapore to the Gulf of Papua, which took two weeks. So, we got involved in this and then my father called up and said, "How much will it cost to cancel?" And it was $500,000 and then rose to $1 million, and he just said, "Well, let's go." We had all these ships and no money in the bank. But we'd been talking to a lot of companies and I was able to sell 45 percent of the concessions for about $200,000 a point. So, I'd raised $10 million between the time that the ship left Singapore and arrived in the Gulf of Papua. With that money I was able to drill the hole.
XL: It sounds like you took some incredible risks, but they paid off.
Lukas: Yep. I would never do that today, but...
XL: And what ultimately became of International Petroleum?
Lukas: It became Lundin Oil. We acquired some assets in the North Sea also, and that whole thing we sold in 2000 to Talisman for about US$500 million. And we spun off Sudan to a company called Lundin Petroleum.
XL: Right. And you're operating there now. What's your impression of Sudan at the moment?
Lukas: It looks much better now. We still have a big block and we hope to be back on the ground there in the next six months. They have six years to get things done and then they have a general election. So, I think we have a six-year window and then we'll see.
XL: Interesting. Changing tack a bit – while all of this petroleum work was going on, you also were getting involved in mineral exploration in South America.
Lukas: Right. I left Dubai in 1989 and moved to Vancouver. We had a company called Eastmaque Gold Mines, and we had a lot of problems with it, so I was supposed to come here for two years to fix it. I didn't want to leave Dubai, it was so much fun, but I came here and eventually sold Eastmaque to a friend, Ross Beaty. He had a company called Equinox at the time.
XL: Another X-League honoree.
Lukas: He took over the company two years later. I was doing some oil exploration down in South America at the time and I got exposed to this copper-gold project – Alumbrera.
XL: You were doing petroleum work and happened to hear about a copper-gold project?
Lukas: Exactly. I didn't know what porphyry copper was. I didn't know anything about it.
XL: How did you come across it?
Lukas: It was a tender of some deposit that had been drilled off by the United Nations and it was owned by the province. It was all very complicated – some gold heap-leach thing. There was a lot of work that had been done there on the project and there were a lot of files on it. There was a guy called John Guilbert, whose name was on the papers all the time. I found out he was a professor at the University of Arizona, a specialist on porphyry systems. So, I called telephone information and got the number for the university, called them up and asked for John Guilbert. Lo and behold, some fellow answers and says, "This is John Guilbert." So, I asked him about this Alumbrera thing and he was completely euphoric about the deposit. I went and saw him and he told me this was the greatest thing since sliced bread. After spending half a day with him I thought, "I have to get this," and I rushed down to Argentina. For two years that was all we did. We went after this thing and finally got it.
XL: And were you concerned at all about making the jump from petroleum to mining?
Lukas: No, I wasn't too worried. I didn't really understand what I was doing. (laughs) It was the same concept as our oil and gas business – go for big stuff. Actually, if I had known more about it I probably wouldn't have done the deal. But lucky enough what happened was they had a high-grade core at surface that made the mine very profitable. When you looked at the overall numbers, it didn't look that good. Today, with my knowledge, I probably would have turned it down, which wouldn't have been good.
XL: Right. It ended up doing quite well.
Lukas: Unbelievably well.
XL: How much work did you do on it?
Lukas: We spent about $10 million on it and then we did a farm-out to Mount Isa Mines – I think it's Xstrata now. They took 50 percent and carried me to production. I had a lot of problems with them because the capital costs went from $600 million to $700 million, and there was debate about how much they should carry me for and eventually I decided to sell my interest because it was going to end up in court. I went out and I got Placer Dome to offer me $12.50 a share and then I got topped by Rio Algom and North Limited, who offered me $15. And a year later I was able to sell half the interest for $500 million.
XL: During your time working on Alumbrera, were there any lessons that you could carry over from your experiences in the oil sector?
Lukas: No. The only thing I learned was patience in negotiating with the different provinces. I had a pretty good guy helping me run it.
XL: Did you learn a lot about porphyries?
Lukas: Yeah, I learned a lot about porphyries. I knew nothing about them and I had to go raise money. It wasn't that easy. I tried to raise $5 million, but it took forever. No one would listen to me.
XL: So, Alumbrera went to Rio Algom and then...
Lukas: In the meantime we had staked some more land in Argentina, properties we didn't know what to do with. We had a company called Napoleon, and we changed the name to Argentina Gold. And then, it must have been about 1995 that our geologist, Patricio Jones, found an enormous gold discovery called Veladero. We drilled it off... the gold market was very bad at that time. But we raised money and the drilling looked really good, and then we got Homestake to come in and buy us out at about $8 a share. And then, of course, Barrick took over Homestake and now Veladero is the biggest deposit that Barrick has on their books.
XL: How far did you bring the project? Was it a totally greenfields play when you started working on it?
Lukas: Completely green. It was a pure discovery.
XL: So, Patricio came to you and said, "Listen, I've found this thing..."
Lukas: Actually, there was a tender going on in San Juan province. Lac Minerals at that time was tendering. There was a concession called Del Carmen and then there was Veladero. And Lac really wanted Del Carmen. We really wanted it too, because we thought that was the big one. So, it was a big fight and there were a lot of underhanded things happening. My god, we had the biggest legal battle of our lives there for a year. I decided to make peace with Lac, so they got 60 percent of Del Carmen and we got 40, and then we got 60 percent of Veladero and they got 40. We thought Del Carmen was the good one, so we got the "bad" one. But then the big deposit was found on Veladero. And then Barrick took over Lac and they became our partners on that. They tried to lowball us for our interest but we were able to get Homestake to come in and buy it.
XL: How was it, doing business in Argentina at that time?
Lukas: It was very good. We work with a great guy there – Patricio Jones. He knows everything. Everybody complains about things there, but we had no problems.
XL: Patricio has also been inducted into the Explorers' League, so we are very familiar with his impressive body of work. On the topic of Argentina, Doug Casey, among others, feels that it still has a lot of mineral potential.
Lukas: Yes, we have a very big program. We're spending $6 million this year and we're going to spend $8 million next year. It's like the third wave of exploration there.
XL: And how much work did you end up doing on Veladero after you got the concessions?
Lukas: I think we spent about $20 million before we sold it. We sold it to Homestake, but it was a very tough market at the time. In today's environment I would have raised the money and drilled the whole thing out myself.
XL: Now, one of your other big projects currently is Tenke Mining. When did it start?
Lukas: In 1996, we started working on the Fungurume deposit in the Democratic Republic of Congo. It took us 13 years to get the deposit.
XL: Thirteen years?
Lukas: Yes. We got one concession, we signed it, and then we got in force majeure. It's been on and off but we first started looking at it 13 years ago. I think now we're getting there, finally, maybe just a few weeks or months away.
XL: It must have been quite the task trying to do business in that part of Africa back in those days.
Lukas: I wasn't that involved with it actually. It was mostly my father's project.
XL: It sounds like you had enough other things going on. While you were doing the work in Argentina, were you still involved with the Lundin petroleum companies on a day-to-day basis?
Lukas: Lundin Petroleum was taken on by my brother. I had a little company called Tanganyika Oil. We were trying to find a new basin in Tanzania, but we drilled three dry holes there. At the same time, we also had some other disasters. A company called International Curator. We were looking for a copper deposit in the Baja Peninsula. We drilled the whole thing out and spent $50 or $60 million but in the end it didn't work out technically and then the stock went from $16 to 20 cents. Kind of a painful experience. Then, I was very interested in the uranium business, so I raised $50 million for that – International Uranium. It came out at $1.25 and immediately went to 20 cents.
XL: What year was that?
Lukas: That was 1998, I think. Now the company's doing great, but it was five years of hard work. At the same time I had the Curator and a couple of other train crashes.
XL: What made you decide to get into uranium way back then?
Lukas: I looked at the supply/demand balance. Consumption was twice the amount of supply. I thought, "This has to end someday," but I didn't think about how much had been produced and how much was out there from nuclear weapons programs that was still coming out of Russia.
XL: It took a little bit longer than you thought for the market to pick up.
Lukas: Yes. It took longer than I expected.
XL: Did you know much about uranium then?
Lukas: Nothing. I just went around and looked... it was very hard to find uranium assets, even when the market was depressed. Finally, I found Oren Benton in the U.S. He was a uranium trader who was in bankruptcy. So, I bought all his uranium assets. He had a mill in Utah, some properties in the U.S. and a property in Mongolia. I bought them from him for $25 million out of bankruptcy. It was a very complicated deal, but I got it done.
XL: How did you come across Benton and his properties?
Lukas: I just went around and looked and looked and looked. I encountered a guy named Earl Holland who's another uranium trader and he worked for Oren Benton – who was making a lot of money shorting uranium at the time. So, I hooked up with him just by asking people in town, "Who knows about uranium?"
XL: Is that generally your approach when you make a move into a new sector, talk to as many people as possible to find a good deal?
Lukas: It's like walking around in the dark – you just touch and feel.
XL: Now that International Uranium is doing extremely well, what do you see going forward for the uranium market?
Lukas: I'm very bullish. I'm very bullish on energy in general.
XL: And International Uranium will actually have some production soon from the Henry Mountains deposits.
Lukas: We're running the mill right now, producing 600,000 or 700,000 pounds of uranium this year and then the mine's coming into production in the next six to nine months.
XL: Right. You're milling uranium-bearing material owned by other companies. That's a great strategy – you've got income even before you start mining.
Lukas: Yeah, and then the question is: what do you do with that 600,000 or 700,000 pounds of uranium. Stock it or sell it. We'll see what we do.
XL: Because you may get a better price down the road.
Lukas: It looks like it. The spot price went up $3 last night.
XL: And it sounds like the U.S. government will be supportive of nuclear power, and presumably uranium mining.
Lukas: Yes, I think Bush understands. I think there's going to be a very big push. I mean, there's a lot of uranium in the world, it's just a question of ramping it up. It's going to take five to seven years. So, I think there's going to be a major squeeze over the next two to five years because we won't be able to ramp up fast enough. Once uranium gets to $50 there'll be a lot of mines coming into production. But it will take time.
XL: How's the work coming on your uranium assets in Mongolia?
Lukas: It looks good. We're doing a 35,000-meter drill program this summer.
XL: Excellent. And aside from International Uranium, what other companies are you most involved with these days?
Lukas: Lundin Mining. We developed a copper/zinc mine in Sweden and then we bought another zinc mine in Sweden, and now we just bought a mine in Ireland.
XL: Yet another commodity – base metals. You're positive about that sector as well?
Lukas: Yes, it's been underinvested in for a long time. I think we're in a supercycle.
XL: So, you've acquired the Galmoy lead-zinc mine in Ireland to take advantage.
Lukas: Right. We just got hold of it within the last two weeks. The company who owned it – Arcon – we closed the first acquisition last June, and by this June I think we'll be making $7 or $8 million of operating cash flow a month.
XL: Okay. And you have Tanganyika Oil going on at the same time as well.
Lukas: Yes, large oil concessions in Syria.
XL: And Egypt too, right?
Lukas: Right.
XL: Is that still in a fairly early stage?
Lukas: No. They've got three or four billion barrels of heavy oil. The question is, how to get it out of the ground? We're working on it. Basically, we're going to work up the prospects and then probably sell the whole company.
XL: And you've also got oil in Russia with Valkyries Petroleum.
Lukas: Correct. We've bought half of the interest in a field in the Republic of Komi, in northern Siberia. It's a field with 20 million barrels of reserves, producing about 6,000 barrels, and I think we'll try to bring the production up to 10,000 barrels by year-end. And then also we've acquired a new project in Kalmykia, which is the only Buddhist province in Russia. It's right on the Caspian. We've acquired a field there that has about 20 million barrels of oil. We're putting it into production. And we're trying to acquire more acres there in the offshore Caspian Sea. It looks very intriguing, actually. It's a big play.
XL: You seem to be almost a "resource agnostic", in that you are working on oil, gas, uranium, precious metals, base metals – all over the world. Do you have any sectors that are particular favorites?
Lukas: I like uranium a lot. But uranium is always political, so you have to be careful with it. I'm a big bull on oil in general because I think we're at peak oil now. I don't think the world can produce much more oil. I don't know if it's today or in five years, but I'm very bullish on energy in general. And I'm very bullish on base metals. The only thing that could stop this cycle is if the oil price goes too high. As long as the oil price doesn't go crazy on us, I think the metals prices will be high for a long time. There hasn't been any big investment in base metals over the last 20 years. There's not a lot of new production coming out – some mine expansions, but no big mines. Last copper cycle, we had Grasberg and Escondida and some super giants. We don't have any of those right now on the drawing board. Yes, we have Oyu Tolgoi and Tenke Fungurume, but it's about five or six years away before those things are in full production. And zinc has been even worse hit because it was so overproduced during the last 10 years that there's been no investment there. And I think the zinc market has changed a bit because of galvanization. Everything is galvanized now. And that's new in the last five or six years. Over the next two or three years, it looks very good.
XL: Are there any areas that you're steering clear of?
Lukas: I'm a bit leery of the ex-Soviet Union. Kazakhstan and places like that. There seems to be so much going on there – there's always something.
XL: What about Russia itself?
Lukas: We have no problems there. We don't mind it. We've been there for a long time. As long as you go by the book, you can deal with it. I'm avoiding China. I don't understand it.
XL: How about places that you particularly like?
Lukas: Africa.
XL: Yes, we were interested to read recently that Anglogold is going to spend $5 million in the Democratic Republic of Congo this year. Do you think interest in the region is picking up?
Lukas: It's complicated, but the DRC is definitely picking up.
XL: At the same time, given the size of Tenke's deposit there, the market seems to be discounting the company because of a perceived political risk.
Lukas: It's the largest unexploited copper deposit in the world. These big projects are very political, that's why it takes a long time. But I think the market will come around. The important thing is that we get a piece of paper signed with the government. It's priority number one for these countries to get these big projects going. The only way to help the economies of these countries is to get these projects started and generate money. No one believes in aid anymore because it just gets stolen.
XL: And the current government seems fairly stable?
Lukas: It's the Congo, so it's as stable as it can be. But once we go into production, I don't think anything will stop us.
XL: We'll certainly be watching that. Have we covered all the companies you're currently involved in?
Lukas: The only other one is Atacama, which is in the industrial minerals business. We just bought out our partner there, so we own 100 percent now.
XL: What are they producing?
Lukas: Iodine, which you put in salt and fertilizer and x-ray machines. And then sodium sulphate is going to come onstream, which is filler for laundry detergent.
XL: Are the markets good for those?
Lukas: For sodium sulphate, you have to be close to a big market to make it work, and Brazil will be an interesting market for us. This mine's going to produce about 15 percent of world production.
XL: On a more personal note, the number of companies you work with is phenomenal. How do you balance that many commitments?
Lukas: Sophia takes care of me. [Ed. note: Sophia Shane is the Corporate Development Manager for many of the Lundin companies, and was sitting in on this interview] We have good people. Tenke is run by Paul Conibear. IUC is Ron Hochstein. For Tanganyika, we just hired Gary Guidry to run things. I try to get involved in the major decisions and I'm very involved in the fundraising for the companies.
XL: Are you traveling constantly to these different countries?
Lukas: No. I have to frank with you – we just acquired the Galmoy mine in Ireland for US$120 million, and I haven't been there yet. It's run by a guy called Karl-Axel Waplan – these are all good guys running the companies. I just try to keep on top of things and make sure we're moving in the right direction.
XL: Good people are the key.
Lukas: Yeah, and it's very hard to find good people. I think it's like an 80 percent fail ratio. Most people I have in the group have been working for me for between five and fifteen years.
XL: Still, it must be a lot of work for you just keeping up with the day-to-day workings of all these companies.
Lukas: Yes. And babysitting the stocks, etc.
XL: But you're used to hard work – you've mountain-climbed Mont Blanc and the Matterhorn and finished the Dakar motorcycle race across the Sahara Desert. Are you still active in those things, in between making mines?
Lukas: I just hike the mountains now. I think I'm done with the Dakar, too. I almost killed myself in the last one.
XL: Any lessons that you can cross over from those experience to your business work?
Lukas: I guess the lesson is "stay focused". Everyone asks me what it was like doing the Dakar, and I tell them it's kind of like going to the monastery. That sounds strange, but you're so focused and so concentrated on that road so as not to crash that it must be like living in a monastery. Business is the same way – stay focused on what you do, and don't do anything you don't understand. If someone explains something and you don't understand, don't do it. People have tried to explain gold hedging to me and I don't understand it. So, I won't do it.
XL: Sounds wise. What about accomplishments that you're most proud of in your career?
Lukas: The great thing is, when the smaller shareholders make money. It's almost more fun to see those people make money than yourself. And the other thing that's fun is, when you create these big projects and you create a lot of job opportunities. Like Alumbrera, the area around the mine was very poor, but by the time you create the mine you have about 500 workers and that probably expands by about 10 times to equal 4,000 or 5,000 jobs in the surrounding area. Tenke Fungurume is going to change the Congo. Those things are quite exciting. You can make a difference – they make money, you make money, everyone does. The worst thing is when stocks go up and down. I hate that.
XL: Well, yours seem to go up more often than down.
Lukas: Well, you take a lot of risks in life and you have some failures. You try to manage the risks.
XL: What other companies or people do you particularly respect in the resource sector?
Lukas: I think Ross Beaty does a great job. I think Robert Friedland has done a very good job. He's very good, very persistent. People may say they are lucky, but you make luck. They work hard. The Hunter Dickinson Group are also good guys.
XL: Agreed. Thanks for your time, Lukas. Great chat.
Lukas: Okay. Thank you.
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