Golden touch
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If there is a great time to be in metals – any metal in fact – it is now. Gold and tin prices have soared to record highs while a weak US dollar has led to a surge in demand, with prices of both base and precious metals rising significantly. Meet Joseph King Jun-chih, an accounting graduate from the State University of New York, who entered the world of minerals five years ago when he invested in a mine in the mainland. King, 43, and a friend founded North Asia Resources, which was acquired by Green Global Resources (0061) in July last year.Green Global, which used to be an agricultural and information technology firm, appointed King as chairman in March. A month later it reverted to the name North Asia Resources, focusing on mining.
Since Green Global’s acquisition, North Asia has been busy in Mongolia which has large reserves of minerals.
North Asia owns and operates an iron ore and copper mine and two gold mines in Mongolia.
The Oyut Ovoo iron and copper mine in south-central Mongolia has already produced 20,000 tonnes of iron ore for trial production, King said, while 1,200 grams have been dug out from the gold mines.
North Asia has big ambitions.It is aiming to position itself as the BHP Billiton of Mongolia, and be the gateway for the transfer of resources from Mongolia to China.
“No pain, no gain” is King’s motto as he tries to steer the firm into a leadership role.
To achieve this the management team has to be on its toes.
So two of the thre
e executive directors – deputy chairman Chan Kwan-hung and executive director Michael Tse Nam – are based in Mongolia to keep a firm grip on supervision and management.
“We have to be there to learn about the local environment, law, local conditions and customs,” King said. “We want to send a strong signal to our partners that our management team is not there for sightseeing. We are committed.”
The firm has an advisory board, packed with world-class mining experts.
They include Sean Hinton, Mongolia’s honorary consul general in Australia. Hinton’s experience in Mongolia spans 22 years during which he established a good relationship with the government.
Also on board is David Owens, who has been in the industry for 32 years. Owens founded Asia Gold, which was acquired by a company later known as SouthGobi Resources (1878).
Although Mongolia is a developing country, it will be a mega resources producer in 20 to 30 years, the World Bank predicts.
“It is a golden opportunity for us,” King noted, “considering that Mongolia is next to China.”
North Asia has an office in Ulan Bator, Mongolia’s capital, and King said he is satisfied with the mines’ operations.
“Oyut Ovoo is an open-pit mine, easy for exploitation and the cost is low too.”
North Asia is looking to expand production starting next spring.
“It took us only six months, from the acquisition to the initial blasting. We have legal and government approval to proceed,” King said, noting that in Australia, the same process could take years.
King said projects can get off the ground quickly in Mongolia because of the government’s keen interest in foreign investment.
“Mongolia is a mining-friendly country with laws that allow co- production and joint ventures for mining projects,” he said.
King said Mongolia also has geographical advantages.
“The Gobi desert, which covers 33 percent of the country, is three times larger than France, which is good for the mining industry.”
But not all is rosy.
The biggest problem for doing mining business in Mongolia is transportation, King said.
“Most of the country is uninhabited and there used to be only one railway built by the Russians decades ago.”
The gauge of the track in Mongolia is wider than in China, “so the iron ore couldn’t go anywhere if we did not solve the transportation problem.”
North Asia then decided to team up with China Railway Mongolia, a subsidiary of China Railway (0390).
Under their agreement, China Railway Mongolia will purchase 1.5 million tonnes of iron ore from North Asia at the prevailing market price each year and transport at least 2.5 million tonnes for North Asia to Erenh on the Mongolian-China border every year.
King is glad that North Asia had the foresight to list on the Hong Kong stock exchange.
Many Mongolian resource firms are now trying to follow suit because of the growing interest in the country’s bountiful resources.
King said North Asia will focus on developing its business in Mongolia by acquiring several more iron mines in the future.
China needs large quantities of iron to feed its growing industries.
“That’s why I am so bullish about our future,” King said.
The North Asia chairman is also full of praise for his staff, but admits that when it comes to salaries, his firm cannot compete with mining giants such as BHP Billiton or Brazil’s Companhia Vale do Rio Doce. But North Asia makes up for this through its corporate culture and care for employees.
“Besides a bonus, our employees can travel overseas.” Whenever an employee has to go on a long business trip, his wife gets a fruit basket as a token of appreciation for his dedication.
King was born in Taiwan but came to Hong Kong when he was three or four years old with his father, King Yeo- chi, a former vice chancellor at the Chinese University.
The younger King picked up Cantonese from watching television as his father made him speak Putonghua at home.
King and his three brothers lived with their parents at Chinese University quarters until he moved to the United States at the age of 17.
He started his career in New York at Ernst & Young, and later became an investment banker at Blackstone Group and Nikko Securities in Tokyo.
“I was raised in a traditional family,” King said. “My father was strict, he went straight to his study room to smoke his pipe and read books after work. The family had dinner together no more than once or twice a month, but my father had a big influence on me.”
King said he learned to be hard working and aimed high. But the “most important thing is to be honest.”
For North Asia the streets of Mongolia now appear to be paved with gold, and iron and copper, as metal prices rise amid global economic uncertainty.
