Earth Movers and deal makers

A look at the energy industry and conglomerates

The rich 100: 2005 | 2004 | 2003 | 2002 | 2001

Intro | Earth movers & deal makers | Lords of land & drug czars | The informers & high flyers | The foodies & shop men | Deal kings & the producers | “My favourite thing”

Earth Movers
These Rich 100 shakers and movers make their money extracting riches from the depths of the earth, whether it's mining in Asia, or drilling for oil in Alberta

Though born on opposite ends of the planet and centuries apart, Genghis Khan and Robert Friedland share some common traits. Raised in poverty among the warring nomadic tribes of the Mongolian steppes, Khan forged clever alliances, crushed enemies and united the Mongol nation. He then raided and plundered his way across Asia all the way to the shores of the Adriatic Sea, toppling even China's mighty Chin dynasty. Friedland's beginnings — he was an antiwar hippie who operated a communal farm in Oregon in the early 1970s — also gave few hints of the mogul he would become. Similarly shrewd and ambitious, he carved out a massive commercial empire by deftly negotiating the Byzantine worlds of mining and finance, most notably in 1996 by selling the Voisey Bay nickel deposit in Labrador to Inco for a staggering $4.3 billion, personally reaping about $500 million. The tentacles of this empire now reach as far as Australia and South Africa, as well as emerging markets such as China, Burma and Kazakhstan.

This year, Friedland, who has one home base in Hong Kong, again seized the mining industry's imagination with Ivanhoe Mines' Oyu Tolgoi copper and gold project in Mongolia's Gobi Desert. Thanks in large part to encouraging early-stage geological data from Oyu Tolgoi, shares in Ivanhoe Mines (TSX: IVN) surged from the $3 to $4 range in July to a high of more than $15 in early November. The result is that Friedland's estimated personal wealth exploded in 2003, jumping 250%, to $1.43 billion from $408 million last year. That's the biggest increase in net worth on the Rich 100.

Other resource and energy magnates on this year's list include: Calgary oilmen Murray Edwards and Clay Riddell; Barbados-based Les Shaw; and mining barons Seymour Schulich of Toronto, and Stewart Blusson of Vancouver. Schulich's net worth was boosted by his share holdings in Newmont Mining (TSX: NMC); Edwards also increased substantially thanks to the strong performance of Canadian Natural Resources (TSX: CNQ) and Ensign Resource Service Group (TSX: ESI), in which he has large holdings. Riddell, meanwhile, will likely pay closer attention to this year's NHL playoffs: in August, he used a portion of his wealth to buy an undisclosed stake in the Calgary Flames, joining fellow team owner Edwards.

For all their success in 2003, however, Friedland was the clear winner. Most of his new wealth came from his 44% ownership stake in Ivanhoe, now worth more than $1.1 billion. The strong performance of shares in Ivanhoe Energy (TSX: IE) — Friedland owns 32% — also contributed to his good fortune. As for his latest play, Friedland began drilling on the Oyu Tolgoi site several years ago on advice from a Mongolian geologist named Garamjav who, by the way, lays claim to being a descendant of Genghis Khan. The property's value, Friedland says, is enhanced by its proximity to China, which he predicts will have a voracious demand for metals. Critics note the site is relatively remote, however, and will require expensive new infrastructure to ship the ore.

Friedland shrugs off such naysayers. He was particularly irate at Forbes magazine, which described Mongolia as “indigent” in a November article. “Only an idiot who's never been to Mongolia would use that phrase,” he fumed. “These are an exceptionally proud people descended from Genghis Khan.” Ivanhoe executives invoke the Mongol warlord's name frequently; last year, one even said he and his colleagues consider themselves “emissaries of the great Khan.” Bold words, indeed, from a company that sets its sights on the Chinese marketplace. By Matthew McClearn

Deal makers
Buying up competitors and bargain-hunting for businesses, they build empires

The newcomer who made the biggest splash onto the Rich 100 this year is undoubtedly Victor Li. His firm, Trinity Time Investments, was chosen in November to buy a $650-million stake in Air Canada, which would make him the struggling airline's largest shareholder, with a 31% position. Li's desire for Air Canada helped confirm the Hong Kong-based businessman is indeed a Canadian citizen, a necessary part of meeting the federal government's ownership requirements for airlines. And our own Rich 100 list.

However, 39-year-old Li, who is worth an estimated $700 million, would long ago have qualified as one of the wealthiest Canadians. As the eldest son of renowned Hong Kong billionaire Li Ka-Shing, Li is tied to the family empire, an enormous collection of companies that include property development, strategic investment, shipping, telecom, energy, infrastructure, even biotech, all under the banner of the Cheung Kong Group. The outcome of Li's Air Canada play may still be uncertain, as competitor Cerberus Capital Management has recently submitted a second, unsolicited offer, sweetening the pot for creditors. But one thing is pretty much a given — we're very likely to keep seeing Li (and his brother Richard, who we've put in the communications sector) on future Rich lists.

Li may be one of the neophytes in our survey, but the undisputed Canadian conglomerate king remains the Irving family of New Brunswick, whose privately held fortune lies predominantly in oil, forestry, trucking and newspapers. The Irvings collectively have a net worth of $3.88 billion, up 5.4% over last year. On the country's other coast, Jimmy Pattison's pockets run deeper than English Bay. The 75-year-old CEO of the Jim Pattison Group, Canada's third-largest private conglomerate, with interests in food, auto sales, media, trade and real estate, sits at No. 6 overall with a net worth of $3.19 billion, up 6.3%. With Canfor's recent acquisition of Slocan Forest Products, Pattison — having held a significant stake in both companies and rumoured to be the catalyst behind the merger — turned a tidy $36.6 million in the transaction. He will hold 20% in the new entity, which is expected to be a major global player in lumber production, assuming the acquisition is made final in the new year.

Last but not least, there's Toronto's well-known power couple, Gerry Schwartz and Heather Reisman, whose estimated net worth fell to $629 million this year, from $677 million in 2002. Lately, business for the pair has been bittersweet. Schwartz — who is the CEO of Onex Corp., a conglomerate that counts Celestica and Loews Cineplex among its subsidiaries — presided over a third-quarter net loss of $484 million, compared to profits of $105 million in the same quarter last year. But Onex's forecast isn't bleak, since investors have so far committed US$1 billion to the Onex Partners fund to help finance future acquisitions.

As for Reisman's Indigo Books & Music, the company she founded claims it has turned the corner since acquiring money-losing Chapters in 2001. But even for the country's largest book retailer, shilling books is a tough job, thanks in part to non-bookstore retailers like Wal-Mart and Costco taking a bigger piece of the market. Which, of course, means the final chapters of the Indigo business story are still being written. By Will Seccombe