As we have seen during Week 6 of our free “Massive Open Online Course” (“MOOC”) on “Exploring Our Oceans”, Nautilus Minerals is making final preparations to begin seafloor mining of hydrothermal vents near Papua New Guinea in 2018.
Following previous blog posts discussing the possible environmental impacts of seafloor mining at hydrothermal vents, and examining the UN International Seabed Authority, this blog post will look at who is investing in the company developing the first deep-sea vent mine.
Shares in Nautilus Minerals are traded on the Canadian Stock exchange, and the investment interests of major shareholders are represented by their nominated Non-Executive Directors on the Board of the company. This post will therefore piece together information about major shareholders, tracing their subsidiary and holding company relationships using information from publicly available sources.
We’ll also have a look at where contracts for technology and services relating to the planned Papua New Guinea operations have now been placed. As a result, this post will be quite heavily peppered with links to the sources of each piece of information, in an attempt just to bring together some facts.
“Joint Venture” agreement with Papua New Guinea
On 11 December 2014, Nautilus Minerals overcame the final hurdle in preparation for mining hydrothermal vents at Solwara-1 near the coast of Papua New Guinea. A promised investment of $113 million from the Papua New Guinea government was released from escrow to Nautilus, and a Joint Venture formally created between Nautilus Minerals and a company representing the Papua New Guinea government, to administer the deep-sea mining.
Under the terms of the Joint Venture agreement, 70% of profits from the deep-sea mining will go to Nautilus Minerals, and 30% will ultimately go to the government of Papua New Guinea. So under those 30-70 terms of the Joint Venture agreement, for every $1 of profit that Nautilus receives from seafloor mining at Solwara-1, the government of Papua New Guinea will receive ~$0.42 on behalf of its 7.1 million people.
(At the moment, the deal is initially 85-15 in Nautilus’s favour; Papua New Guinea’s government has the option to increase its share to 30% if it makes further investment – but let’s assume 70-30, as the maximum that the government of Papua New Guinea will realise from the Joint Venture).
But where would that money go next, if Nautilus’s profits become dividends to its shareholder investors?
Major shareholders in Nautilus Minerals
Nautilus Minerals currently has three major shareholders (figures here are as of 5th October 2015): mining giant Anglo American Plc has a 5.99% stake; a company called Metalloinvest Holding (Cyprus) Ltd has a 20.89% stake; and another company called Manwarid Mining LLC now has a 28.14% stake.
The latter two are the start of chains that lead further afield: to Oman in the case of Manwarid Mining, and to a Russian oligarch and his billionaire associates in the case of Metalloinvest.
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To Russia with love
Metalloinvest Holdings (Cyprus) Holdings Ltd is a wholly-owned subsidiary of Metalloinvest JSC, which is in turn is a subsidiary of USM Holdings. USM Holdings is the company that manages the assets of one of Russia’s richest oligarchs, Alisher Usmanov. USM Holdings has three major shareholders: Alisher Usmanov himself owns 48% of stock, with other beneficiaries currently including Vladimir Skoch (30%) and Farhad Moshiri (10%).
Overall, these arrangements make Alisher Usmanov one of the the largest personal stakeholders in Nautilus Minerals. Indeed, his company Metalloinvest’s website lists Nautilus Minerals as an “auxilliary business”.
Alisher Usmanov lives in the UK (he owns Sutton Place in Surrey, previously a home of J. P. Getty) and made his fortune from plastic bags, cigarette imports, iron ore, telecoms and media. He currently owns a stake in Arsenal football club, and recently bought James Watson’s Nobel Prize medal at auction to return it to him.
Out of every $1 realised as dividends to Nautilus shareholders, Usmanov could personally receive up to $0.08 as gross income, before any taxes and costs are applied along the chain of companies leading to him.
The other two major shareholders in USM Holdings are Vladimir Skoch and Farhad Moshiri. Vladimir Skoch is the octogenarian father of pro-Putin politician Andrei Skoch, one of the richest members of Russia’s Duma parliament.
Being a member of the Duma prevents Andrei Skoch from holding any shares personally, but out of every $1 realised as dividends to Nautilus shareholders, his family could receive up to $0.05 gross.
Ardavan Farhad Moshiri is Chairman of the Board of Directors of USM Holdings, in which he also has a 10% shareholding for his service to Usmanov. Moshiri studied accountancy at University College London, and worked for several accountancy firms in the UK, where he came into contact with Usmanov before going to work for him.
Out of every $1 realised as dividends to Nautilus shareholders, Moshiri could receive up to $0.017 as gross income (based on information available about shareholding in the holding companies at the time of writing).
Moshiri has been a director representing Usmanov’s interests in many companies over the past ten years, including Non-Executive Director of Nautilus Minerals from 2007 to 2009. The current Non-Executive Director of Nautilus Minerals representing Metalloinvest’s interests is Mark Horn, a barrister and financial analyst who lives in the UK.
The Oman connection
Manwarid Mining LLC, which now holds a 28% stake in Nautilus Minerals, is a wholly-owned subsidiary of MB Holding Company LLC. MB Holding LLC is based in Oman, and its billionaire founder and Chairman is Mohammed Al Barwani, who also currently serves as a Non-Executive Director of Nautilus Minerals. MB Holding LLC has considerable subsidiary interests in the oil and gas sector, in addition to mining.
Coincidentally, the Omani oil sector in general has historic ties with China, having been the first Gulf state to supply the People’s Republic in the 1960s. But there is no suggestion of a link between Manwarid Mining or MB Holding and China.
Enter the dragon
So far we’ve looked at companies that are shareholders in Nautilus Minerals. But who owns the contractors that are now providing technology or services relating to vent mining operations at Solwara-1?
The contract to build the deep-sea mining ship required by Nautilus has been placed with Fujian Mawei Shipbuilding Ltd in China (and a ceremony to mark the first steel-cutting in that project took place last week), via an intermediary company in Dubai.
Nautilus has signed an agreement for ore mined at Solwara-1 to be shipped for processing in China by Tongling Nonferrous Metals Group Co. Ltd.
In early 2015 , a Chinese company also bought SMD Machines, a company based in Newcastle-Upon-Tyne, who have the contract to design and build the seafloor mining machines that will be used at Solwara-1.
Mawei Shipbuilding, Tongling Nonferrous Metals, and China Railway Rolling Stock Corporation (parent company of CSR Times Electric, which now owns SMD Machines in Newcastle) are all Chinese state-owned enterprises. So China effectively now has a major interest in deep-sea mining at Solwara-1, through the contracts providing the production ship, seafloor machinery, and ore processing.