In mid 2007 an unusual threesome met in a Harlem office block to present a somewhat ambitious plan to fight poverty in Latin America. The novelty lay in using resources coming from the mining sector. Two of the three hosts needed no introduction: ex-president Bill Clinton and Mexican billionaire Carlos Slim. The third however made the attendees curious. “Who is it?” asked some, craning their necks, trying to make out the slightly built, well dressed man with close-cropped white hair, who was easily distinguishable from the strapping American and the chubby Mexican. The gentleman in question was Frank Giustra, a Canadian mining magnate who despite (or because of) his low profi le has been instrumental in multi-million dollar mining projects in Latin America.
The Clinton Foundation offices are in Harlem, where the meeting had a specific objective: to formally present the Clinton-Giustra Sustainable Growth Initiative (CGSGI), to which Giustra and Slim each committed US$100 million. The idea is simple. As Clinton said at the meeting, the initiative “will focus on improving living conditions in Latin American countries and other nations, in partnership with the mining industry and other sectors.” Months before the June 21 launch some 20 natural resources companies had already committed resources to the project.
The first to climb aboard was the Canadian oil company Petro Rubiales Energy Corp., which in July announced a US$4.2 million contribution to CGSGI after raising US$440 million for its crude operations in Colombia’s Llanos basin, one of the Andean region’s most promising hydrocarbons reserves. When asked to comment on Petro Rubiales’ contribution to the project, Giustra made his intentions clear. “As someone who has made a living by helping to raise millions for mining projects around the world, I’m particularly proud of this trend-setting contribution and the very clear message it delivers to all of us in this sector,” he said in a statement.
From that June day to date the news surrounding the former mining magnate now has more to do with the fight against poverty, environmentally green mining projects and sustainable development in developing countries than with rigs, drills and good mineral yields. After three decades of amassing a fortune, Giustra has apparently decided to make his wealth work for more noble ends in Latin America.
But who is Frank Giustra and what is the reason behind his seemingly sudden desire to make mining a vehicle of the virtuous?
KING MIDAS
Frank Giustra declined to be interviewed for this article. He is not open to the press and prefers to keep his private life as private as possible. But a look at his business life together with interviews with former colleagues and his wife offer a good perspective of this 50 year-old businessman listed as one of Canada’s richest businessmen and, more recently, one of its more illustrious philanthropists. Although nobody has calculated to the dollar and cent the scale of his personal fortune, in a recent interview with Vancouver newspaper The Globe and Mail, he said simply that it is “considerable.”
Clinton, Giustra and Slim formally presented the Clinton-Giustra Sustainable Growth Initiative in the expresident’s Harlem office in 2007. Giustra and Slim each pledged US$100 million to the project
A certainty in the life of Frank Giustra, son of Italian immigrants, is that he was born in 1957 in Sudbury, Ontario; a city of some 200,000 inhabitants. His father worked there in a nickel mine. As a young man he lived briefly in Argentina, but not even his wife is sure of how much time he stayed there. He once wanted to be a trumpet player. But his father’s mining background and Giustra’s first job in an investment bank made him decide to put all his efforts into the business of raising capital to finance mining projects around the world.
Giustra is an energetic entrepreneur who seems to know exactly when to enter and exit a business sector. In 1978 when still very young and after having studied finance and business at university, he started his investment bank career at Merrill Lynch. He was a rising assistant stockbroker, but in 1980 left Merrill to join Yorkton Securities, a start-up investment bank. Ten years later the young Giustra would be named president of Yorkton, an outfit that specialized in offering capital to mining projects in the developing world. These included a number of significant projects in Latin America, such as Refugio, a gold deposit in the north of Chile. According to industry press, Yorkton managed to raise US$3 billion in the 10 years that Giustra was in charge.
Catherine McLeod-Seltzer, a well-known Vancouver mining businesswoman, also took her first steps at Yorkton in 1985. Of her boss Giustra, McLeod-Seltzer says she remembers his management style, quite unique at the time. Giustra gave total freedom to his executives, always giving them a very clear line to follow. “He gave us a lot of autonomy; he set the goals and then distributed the tasks to the others, trusting that we would do the job well,” recalls McLeod-Seltzer, now chairman of Pacific Rim Mining Corp., a Canadian mining company also based in Vancouver.
In those days Giustra, who probably read Jack Welch, used to reward those who gave him results. McLeod-Seltzer was one of those executives, and in 1992 Giustra gave her her first big break by sending her to live in Santiago, Chile for a year, where she headed Yorkton’s first office to finance exploration and production projects in Latin America. The learning inspired by Giustra was providential for the businesswoman, and in 1993 McLeod-Seltzer left Yorkton to become president and CEO of Arequipa Resources Ltd, a gold exploration company based in Peru that in 1996 was acquired by Barrick Gold Corp.
Although McLeod-Seltzer says that she is not a personal friend of Giustra, she says that their respective grandfathers were in their time mining colleagues, and worked together on more than one project. And even if she isn’t personally close to the magnate, she is geographically through living in West Vancouver, where Giustra has his mansion. And while Giustra is discrete with the press, he is less so as a socialite. “Last night in my house I heard music coming from Frank’s house,” she says. It was August 22, and Giustra was celebrating his 50th birthday.
The past is now bringing the paths of McLeod-Seltzer and Giustra back together. As this report goes to press she assures that although it has not contributed anything yet, Pacific Rim Mining Corp. is looking “very closely” at the projects of her ex-boss and CGSGI. “We speak the same language,” she says, referring to the responsibility that mining companies have in promoting employment and development in the communities in which they operate. In fact, Pacific Rim is developing the first large-scale gold mine in El Salvador, where 1.5 million ounces of gold worth US$825 million have already been identified. The project, which together with another 28 awaits authorities’ approval to start extraction, includes the promotion of employment and the construction of infrastructure. “Mining needs to create real wealth,” says McLeod-Seltzer, echoing the words of her raucous neighbor and ex boss and the companies associated with him.
Alison Lawton, Giustra’s wife and an activist in the fight against AIDS in Africa, urged her husband to help change the manner in which the mining business operates.
METRO GOLDWYN GIUSTRA
Frank Giustra is similar to Brazil’s Rivaldo and Argentina’s Juan Román Riquelme, complex characters who both played in the key number 10 shirt for their respective countries’ soccer team. Both stay out of the spotlight, ghost-like, until starting with accurate shooting, majestic passing and goal assists left and right before melting back into the shadows and waiting for another moment of inspiration. Giustra understands timing like few others. At end-1996 on leaving Yorkton he showed his mastery of timing, as the sector was on the point of collapsing because of the fall in metals prices on the international market. In what is considered by some as a very well thought-out move, the executive not only left investment banking and mining but took an unexpected step to the world of entertainment.
Far from an error, it was another success. In those years, everyone from investment banks and US pension funds to Saudi oil sheiks started to lend large sums to Hollywood producers to finance the increasing production and launch costs of their films. Merrill Lynch – owner of United Artists together with investment fund Hicks, Muse, Tate and Furst – JP Morgan Chase and Citigroup were among the first movers. In 2006, just under 80 investment banks still sent executives to the Cannes Film Festival to seek out projects in which they would invest US$2-2.5 billion.
Giustra put the name Lions Gate Entertainment to his venture, a production company whose name bears tribute to two bridges, one that crosses Burrard Inlet in Vancouver and the other built by Alexander the Great in 324BC at Hamadan in what was then Persia, in memory of Hephasetion, the Macedonian aristocrat who was his lover, general and bodyguard.
The director Robert Altman initially created Lions Gate, which Giustra refounded in 1997 with capital raised from debt and equity. In his few years in charge – he took the company to the stock exchange in 1998 – the Canadian miner grew the studio to such an extent that it competed shoulder to shoulder with the giants of Hollywood. The controversial American Psycho was the first hit for Lions Gate Films, the Hollywood branch of the company. Later came Dogma, with the already-acclaimed duo of Ben Affleck and Matt Damon, and later still came Michael Moore’s explosive Fahrenheit 9/11.
According to information submitted to the SEC, Giustra sold 2.5 million shares in Lions Gate Entertainment, the corporation based in British Columbia, at US$2.20 a share on May 15, 2003. The day before, he had resigned from his post as director of the company. The timing was again precise. Giustra wanted to return to the mining business, which was emerging strongly again and whose ups and downs he knew better than the film industry, where flops such as Windtalkers, The Adventures of Pluto Nash, Final Fantasy and Battlefield Earth were burning the industry’s fingers.
This time, the Canadian filmmaking miner set himself up as head of Endeavour Financial…right at the time that the sector starting rocketing upwards. In 2001 Giustra had predicted that the price of gold had bottomed out and that therefore the dollar would begin to fall. Three years later, he rubbed the crystal ball and said that uranium prices would start to appreciate as never before. The price of gold has more than doubled since then while silver has tripled and copper has practically quadrupled. And uranium? Giustra decided to create a world-class uranium producer by backing UrAsia Energy, for which he raised US$450 million from private investors. UrAsia is presently the third largest public uranium company in the world.
In Endeavour meanwhile, Giustra was in charge of the acquisitions of a number of mining companies. One of them was the capitalization and resurrection of Northern Orion at the start of this decade. Giustra also helped the company take the Agua Rica copper and gold project – one of Argentina’s most important projects – off the hands of Australia’s BHP Billiton. Estimated investment in Agua Rica totals US$2 billion.
Giustra’s most brilliant move in Endeavour was Wheaton River Minerals. Wheaton’s spectacular growth has been attributed to Giustra’s notable astuteness in predicting movements in the world price of gold. The Canadian bought the company for US$20 million and took it to a US$7 billion market capitalization and endowed it with cash reserves of US$480 million.
Wheaton has played a part in a flurry of large-scale operations. In 2002 it bought Minas Luismin, one of Mexico’s largest gold and silver producers, and the following year it paid US$180 million for BHP Billiton’s stake in Argentine copper mine La Alumbrera. Recently merged with Goldcorp, Wheaton has moved strongly in Latin America, with exploration or production activities in Argentina, Chile (La Coipa), Mexico (El Sauzal, Los Filos, El Limón, Peñasquito, San Dimas and Nukay), Guatemala (Marlin and Cerro Blanco) and Honduras (San Martín).
THE CLINTON CONNECTION
Far from the press, Giustra has been free to shape a world of contacts and money. Apart from his mining businesses, he is a board member of the International Crisis Group, a non-profi t organization that works to resolve international conflicts, where he rubs shoulders with Ernesto Zedillo, Ricardo Lagos, George Soros and an extensive group of ex presidents and prime ministers.
According to Arturo Elías, Carlos Slim’s spokesman and son-in-law, the Mexican magnate only met Giustra when they went to the offi ces of the Clinton Foundation with the former US president. But Giustra and Clinton have close ties, even though they met only a few years ago.
Giustra has become one of the people closest to Clinton. So much so that in September 2006 when the ex-president turned 60, Giustra was the co-producer of a fund-raising gala in Toronto for the Clinton Foundation. Jon Bon Jovi, James Taylor and Billy Crystal headlined a show that raised US$21 million. The gala was produced by acclaimed music businessman Sam Feldman, representative of the legendary Joni Mitchell and neo-jazz singers Norah Jones and Diana Krall.
“It was Sam (Feldman) who introduced Clinton to my husband,” says Alison Lawton, Giustra’s wife and mother of his two children, and hardened activist in the fight against AIDS in Africa. The first contact between Giustra and Clinton, Lawton remembers, happened soon after the December 2004 tsunami that devastated southeastern Asia. Lawton and her husband decided to organize a private concert at their 12,000 square foot home in Vancouver to raise funds for the victims of the catastrophe, and although Clinton did not go, he sent a video speech. “The tsunami is what set all this off,” says Lawton, who gave up her fi nancial career to concentrate on producing documentaries. Among other showbiz personalities, Robin Williams, Rod Stewart and Sarah McLachlan were at the event, from which US$2 million was coaxed from guests’ checkbooks and considerably more followed in the subsequent weeks.
But why did Giustra join the growing community of businessmen and multi-billionaires with a concern for philanthropy? Lawton remembers a conversation with her husband five years ago. At that time, Lawton was deepening her understanding of the needs of people and families living with AIDS in Africa. So she urged Giustra to use his resources and contacts to generate a change in the way the mining and natural resources businesses operated around the world. “Frank and I realized that not only were we financially privileged people, but that we were very well connected,” she says.
And of these connections, Clinton has perhaps been the most important. It’s well known in the circles in which Giustra moves that he has made his private jet available to the ex president and that he has accompanied Clinton all around the world, meeting with political and business leaders in South America, Asia and Africa in the last two years. “All of my chips, almost, are on Bill Clinton,” Giustra said recently in an interview with the New Yorker. “He’s a brand, a worldwide brand, and he can do things and ask for things that no one else can.”
For now, CGSGI is moving full steam ahead, collecting funds from private mining companies that seek to explore for – and exploit – resources in developing countries. And as for the private plans of the filmmaking Canadian miner, nobody knows. The only certainty is that, this year, Frank Giustra has committed to give half of his future earnings to CGSGI’s philanthropic projects.
