PREMIUM: Sir Mick Davis: The SA mining magnate rejuvenating UK’s Conservative Party

Warren Buffett urges us to highlight our disappointments and talk modestly of our successes. Sir Mick Davis is clearly a convert to this approach as you'll hear in this fascinating interview with a Port Elizabeth-born wunderkind who kicked on to become one of the global mining industry's dominant personalities. After the earning stage of his life, the now 58 year old Davis has closed up his business shop and is moved into the serving period. Reason: he believes the British economy is faced with an "existential" challenge. Davis regards the rise of a hard-left Labour Party as deeply threatening to the UK and much that has contributed to its economic success over the past few decades. During the wide-ranging discussion he also repeats direct advice given to South Africa's mining minister when Davis outlined why he would recommend against investing in the country – but proposing four changes which turn him back into a supporter. This in-depth interview unpacks lessons from Davis's career and looks ahead to his next challenge as CEO of the UK's governing political party, a post which carries huge responsibility and takes him back into the public spotlight. – Alec Hogg.I'm with Mick Davis in his offices in London. It's a fascinating time in politics, we've got changing leadership models around the world, and you're now at the heart of it. South Africans know as a boy from Port Elizabeth who got to the top of the corporate ladder. So what attracted you to the political game and in particular, the Conservative Party, where you're now the CEO? .___STEADY_PAYWALL___.I've always been a political animal. I've been engaged and interested in politics from a very young age, and when you come from a complexed society, like SA, which has been complexed for a long time, you can't help but be interested in political outcomes and directions. The nature of the job that I had in the mining sector, right from general mining through to Xstrata, you were involved with politics because the mining industry is a direct interface with society and therefore, with the political process. So, it's an area I've been engaged with in all my life, I guess..I think that we have an existential issue here that the road that the Labour Party under leashed and the general corporate is going is diametrically opposite to the road that I think we should be travelling down. I believe in free markets. I believe that they add value and bring prosperity to all people. Whereas I think that Socialism has denied prosperity to many, and even though many people might have good intentions, those good intentions are never fulfilled. I've been a donor for a while, to the Conservative Party, I became it's Treasurer, and after the election I sensed they had an opportunity of making a contribution to re-capacitating the party to fight the next election..There were a few changes, you were one of three, but of course the most important one, being the CEO now of the Conservative Party. Did you grab it in a heartbeat or did you hesitate? .There wasn't a position of CEO, and I took the view during the course of the election and obviously, immediately after the election that there was a rebuilding that had to be done for the party. I thought that it required somebody who could focus and who was not a politician, per say, which I'm not and they could devote their time and energy to looking at the things around building up field campaigning and building up digital campaigning, improving research capabilities, etc. It's sort of like managing a big system, and that's the one thing that I have got. I have the capability of managing a big system and that's why I offered my services..Is there lots to be done?.Yes, undoubtedly, there is a lot to be done. I think what happens in the lifecycle of a party it ebbs and flows in terms of resource and capabilities. I think that the broad message of the election is that we need to actually reequip ourselves to fight the general election campaigns in a more, effective way..Let's just go back a little though, to your beginnings in Port Elizabeth. Your parents, were they from many generation of South Africans? .My parents have both passed away. They were first generation of South Africans. On my mother's side my grandparents came from Lithuania, and on my father's side came from the UK, but were previously of German-Jewish origin. Both my parents were first generation South Africans so, we are a typical, Asper Jewish family. The Asper Jews travelled around the world trying to find a home..Why did they select Port Elizabeth?.I just think that's where they ended up. In those days, when my grandparents arrived in SA, and they were young children when they arrived, (on my mother's side), and PE was where they ended up. In fact, they lived in New Brighton. And on my father's side they came out during the First World War and I assume it was just simply because of the availability of jobs at the time..Then you went to Johannesburg, you became an accountant, and had a spectacular career at Eskom, which at that time, was one of the biggest utilities in the world..Yes, I joined Eskom at a fantastic time because it had gone through great trauma of losing touch with the consumer so, it had seen itself mainly as a technological company running power facilities and not understanding what they were doing, which was delivering a service to consumers. The result was that we ended up in a period of significant excess capacity, rising prices, and poor service delivery. There was a Commission of Enquiry. It resulted in a restructuring of Eskom and the late John Morris came on as chairman of the new Eskom board. Ian McRae was appointed as CE and they were looking around for talented people to have in the management team. John decided at the time that he wanted somebody to really focus in on internal audit because he believed that having that capacity with the company, which would build resilience..I was a young guy at the time. I wanted to become a partner at the then Peat Mike, they were not ready to make me a partner and so, this opportunity came along and I grabbed it. Again, I was fortunate. The then, CFO, Larry Harper, who was an outstanding CFO, had decided to move to pastures anew and I was offered the job as CFO. So, at a very young age I managed to get this incredible opportunity of running the finances of an incredibly large organisation, which was involved in massive complexity. It was borrowing money from overseas. It was at the time of the debt standstill. We were the biggest corporate borrower in SA, and outside the government, the biggest player on the Bond Market, and had very significant challenges and risks on the treasury side to manage, as well as try to downscale Eskom itself, and make it more effective and efficient. So, it was a fantastic time for a young person to learn and I learnt a huge amount of things and I have a great debt to John Morris and Ian McRae for showing the confidence in a 29-year-old, wet behind the ears, young accountant..In your 20's an executive director in a country, which was not known for promoting people at a youthful age. Did you learn a lot about managing people?.Yes, through all the mistakes I made along the way but the one thing I learnt very early on is that you're only as good as the people who work for you, and I try to get the best possible people, people who I thought were smarter than myself, in my team and then give them huge amounts of independence, and authority to act and make decisions. So, provided I understood what they were doing and had all the information, I didn't attempt to micromanage anybody but it was a fantastic time and made it such an amazing learning experience because it taught me about big systems. It taught me about how you can get the best out of people and it taught me about risk..Eskom today? .Eskom today is a tragic place, I think. I think all the good work that was done and all the trauma that Eskom then went through and the country went through in trying to right-size the organisation and get it fit for purpose and produce a product, which was reliable and which was at a price that people could afford. At that stage, we had started the whole electrification of black townships as well. It was a huge enterprise, a huge endeavour, and it was a huge amount of work and to see where they've allowed Eskom to travel down today, where it is unreliable, where the product is not fit for purpose, and the company itself, again, is in a financial state, which is perilous. It's just really tragic and it does not have to be this way. There is no inevitability about where Eskom is or where the rest of the infrastructure providers are in SA. It's just really poor management and interference in a political sense and other senses, which are just deflecting Eskom away from the purpose that it should actually be there for..It sounds like they could use a 29-year-old, Mick Davis, to go and do their internal audit for them as well. .Well, they certainly can do with talented people in the organisation and I'm sure the organisation actually, has a lot of talented people in it but they need an organisation, which is given the authority to run and do the job that they should be doing for the good of the country and for the good of the people..So, in 1994, we had the election in SA and a new democracy, and you moved into mining? .Yes, coincidentally. What happened was that the story of my career is an unrequited ambition, I think because I left KPMG, as they thought I was too young to be made a partner, and I ultimately, left Eskom because they chose Allen Morgan to be CE instead of me. Now, Allen was, I think a very good CE. He was an outstanding runner of the distribution group but I had ambitions that I thought I could bring something to Eskom, and they made another choice. So, it made sense for me to move on and at the time Gencor was going through restructuring. It was a huge conglomerate of unrelated industries, and Brian Gilbertson had made the decision that they were going to essentially unbundle their non-mining interests and basically, focus in on the core mining company, and build that up. He was looking at his team and he decided that he wanted a new CFO and he approached me..I had got to know Brian through the Alusaf Project, where Eskom clearly played a pivotal role in getting that going. So, he offered me the job and it was actually a very interesting negotiation because I said to him, 'well, I've sort of been a CFO of a big company, and I'm not sure I want to come in and be a CFO so, can you add a bit of spice to the position?' He said, 'well, why don't you also become executive chairman of Ingwe,' which was their coal, it was then Transit-Tel – it became Ingwe, the coal company, and I jumped at it because again, it was going to put me into an environment where I was going to learn something totally new. That I hadn't really been engaged, directly, in running something. I've always sort of been an enabler and now, I was going to be able to be the CFO but also directly, involved in the running of an operation. So, again, it was a fantastic opportunity..Ingwe was a big success story..Ingwe was great, and again, we had a great team. It had reasonable assets and what we did was first of all, identify where we could actually bulk up and grow critical mass in SA? With the demises of the Rand Mines, as an entity, Rand Coal became, potentially, available and seeing that it was potentially available and it wasn't on the market. But seeing that it was potentially available I just pursued it and put in place a structure, which allowed us to acquire it. Initially still sharing it with the market place and afterwards we took out the minorities and that was a very important step, in terms of moving Transit-Tel from a moderately sized coal company with reasonable assets but not great assets, into a domestic coal company in SA, which was of very significant size, with a very good mix of long life, high quality work class assets so, that was a great move..Then I started looking at how we could build an international coal business and went to Australia with the team and identified coal operations in Australia, as an entry point. We did that and we then successfully bidded for a coal concession called Mt Arthur, which is still today one of the best coal operations in Australia, owned by BHP Billiton. So, that was a great opportunity again of building a business from small beginnings into something, which was very significant in the international market..You mention BHP Billiton. That was the next but one big step because you had the Billiton offshore listing in London, and clearly not even 40 years, but at this stage you were already seeing the world as a place that could may be fulfil your ambitions more. .Well, what led to the Billiton transaction was that as we sat down at Gencor we recognised that we were operating in a good but mature mining region in SA, and that the only way that we could grow and add continued value to our shareholders was to find prospects outside of SA where you could actually refresh. You have to constantly refresh your asset base in a mining company because by definition, you have a wasting asset. So, what is a world classed operation, it becomes middle aged, old, and tired, and it eventually closes. We felt that operating in SA, we ultimately, if we stayed within the confines of SA the company would slowly diminish, as you weren't able to replace world class assets with new ones..But the challenge, of course, in operating internationally was what money could you use because with the exchange control you couldn't use the SA balance sheet. So, we spent a lot of time thinking about what were the steps needed to be put in place to internationalise the company, to allow us to play on a world stage? We developed a strategy paper called, 'The Road to Ir Wijaya' The reason was because we had some, at the time we thought it was high prospective areas in Ir Wijaya, where Freeport-McMoRan have their big copper-gold operation, and if we wanted to pursue those we didn't have the capital to do that so, we called the road to Ir Wijaya – how do you actually put in place capital to do that?.We had seven-steps to get there and they were involved, some stuff domestically, we were taking out the minorities so, we controlled all of the cashflows. That we weren't sharing the cashflows with the market and therefore could divert cashflows from some operations to others. It involved taken out the minorities of Alusaf and various others measures so, we had seven-steps. The last step was actually, internationalising the balance sheet of the company and we looked at whether we could actually merge with international entities and we tried a couple of those and that didn't work. There were two companies that we tried to merge with at the time, one was Lonmin and the other one was a company, which is now no longer in existence but actually owned utilities in the UK and internationally..Then we struck on the idea of, 'well why don' we just simply merge with ourselves?' We already owned the Billiton assets and all that shell, which we had acquired during the time. In fact, that was the transaction that I came in as my first job to finance, when I came in as CFO. So, we essentially, setup a shell company, which bought the Billiton assets and then issued equity to the shareholders of Gencor would acquire everything other than the platinum and the gold assets out of SA. That was a fundamentally, important step because it allowed us to use the listing here to raise capital going forward, and it gave us a different rating. That the minute we were listed on the London Stock Exchange our cashflows were rated at a higher level than they were rated in SA, which of course gave us again, an immense leverage to look at growth. So, that was an important stepping stone and it allowed us to have a currency, which we could finance acquisitions..We bought a copper-zinc company in Canada and then when we had sufficient size we started looking at, 'so what is the next step?' The next step, ultimately, was try to go very big and we identified that BHP were a very significant company, which had good assets and we thought that we were a natural fit with them, both in terms of our asset base but also in terms of our management team..That was a huge deal. It was the biggest resources company on the planet, and still is, and the initial objective of BHP was clearly to consolidate. But from a management point of view, things seem to go a little bit wonky there. .Well, they had trials and tribulations in their management. In fact, the first time we tried to engage with them, Mike Salamon and myself, we travelled over to meet with the management of BHP. We had been given a mandate by our board to do that, and by Brian to go and talk to them, and we were arriving and our first meeting was the CE of BHP and he was fired that day so, it wasn't much of a productive session that we had there. So, things laid dormant for a while and then their new CE came onboard. We engaged with him and he rightly said to us, 'I need to think about what BHP is, as a company first. Let me do that and I'll come back to you if I think there's an interest in looking at a merger with yourselves.'.So, it took a while. We maintained a very good and constructive relationships. After a couple of years, the discussions picked up again and I think, at the end of the day it actually was, not only obviously, a significant transaction in the industry. It was one of the most successful mergers that we have seen because the teams worked well together. I think there was a good mix of assets, even though they've now syphoned off much of the old Billiton assets, that at the time, they worked well, and it created a very significant entity and created a lot of value for shareholders. I think from that point of view, it was a great transaction..I was at the heart of that transaction but it was clear to me that the critical mass of BHP Billiton was going to be run out of Australia, and that one of the conditions of approval from the Australian government was that the CE and the CFO needed to have their principle office, and I think principle homes in Australia. I sort of thought, 'this was a good time for me to move on,' and try and see if I could create something as a CE on myself. Brian Gilbertson, who I think was one of the most talented people I've ever worked for, was going to be the succeeding CE of the entity, once the incumbent from BHP retired so, I just thought it was a great opportunity to move on and then the Xstrata opportunity came up..Mick, this brings you to 40, and I want to throw something at you from Katherine Graham, who was the great publisher of The Washington Post, showing much more testicular fortitude than the men in the industry by taking on Richard Nixon. Her father was Eugene Meyer, who was the Federal Reserve chairman and the original purchaser of The Washington Post. His view, which many still follow today, is that from 20 to 40 you learn, from 40 to 60 you earn, and 60 upwards you serve. Now, your life appears to have been quite a lot in that regard, just a little bit accelerated. You are now 40 years old. Was this the time that you felt you could then take all those learnings and apply them for yourself? .Yes, I think that's actually right because when I looked at Xstrata, it was a very small company. It was listed in Switzerland. It had too much debt onboard. It was in breach of governance in that year but it was sort of an empty shell for me to actually work with and because I took the view that the industry, which had been moribund for a while, and the real pricing commodities had been in decline for about a 20 to 25-year period. I thought that we were moving into a different arena. I had been to China. I had seen how China was starting to urbanise and to build capacity and build new cities. It seemed to me that they were going to demand a lot of commodities and we were coming out of an era where there had been very limited expenditure on exploration and on new development. So, I thought that we were going to have a squeeze in prices, and I'm not going to tell you that I imagined that it was going to be as dramatic as it was in the first decade of the 21st Century, but it was dramatic..I saw that trend and I thought that if I could find a way to position Xstrata in London, in other words, get access to the London capital market, then we could actually do some really important stuff because I'd be able to buy operations when the rest of the mining industry was perhaps, still thinking about consolidation and not spending. So, the Xstrata opportunity was just a blank canvas and I was excited that it was something that I could, with my team, work on. I had views on about how mining companies should be managed. That we should have a very small head office. That the engineering and the mining capability should be where the mines are and not be sitting at head office, and we shouldn't have people who could second guess how people would run operations..When you start off with something, which is very small, and the opportunity of enforcing that philosophy. Whereas, if you go into a big system it's very difficult to turn it around so, just, as I said, it just represented a fantastic opportunity for me to take a theory forward, in terms of where the world was going, in terms of commodity prices. Also, a view on how you could best manage mining companies and put that in place and see if it worked..And from those early days, because clearly, you've got a good track record going into this point, but raising capital is never easy. Have you got some who supported you then, who've continued to support you in your later iteration with Xstrata? .Yes, I had a lot of very loyal support from shareholders. When I started with Xstrata, I went to see 3 or 4 of the big fund managers in the UK and I asked them if they would support a new, diversified mining vehicle and they all said, 'if you come with a proposition, we'll support you.' I continued having fantastic support right up until the end from shareholders. It was only with the last big corporate transaction, I think it was with Glencore that that support dissipated for a number of complex reasons but I've always had the support of the capital markets and I was never pushed back..So, whenever we bought a proposition that needed to raise capital they were always there to back me and that was the reason why we were able to do the big things that we were able to do because the providers of capital trusted us and we delivered. We delivered returns to them, and even when the going got tough we responded very quickly to change in circumstances. To make sure we didn't impoverish our investment and we maintained a base for growth and value addition..How did you communicate with them because it was interesting looking through your Wikipedia page, which when you're famous you have that and it says that you raised $40bn from capital markets and you were involved in corporate transitions of $120bn? First of all, is that accurate, and if it's accurate, how do you keep people in the loop?.Yes, I think it is accurate. I'd have to add up the $120bn but the $40bn is accurate. It's probably there because we did the, I mean, that would include my career before Xstrata so, it will include the BHP transaction, and certainly include the $17bn or $18bn we spent on buying Falconbridge etc, so it's not too far off. What we always did was to make sure that we tried not to over promise and under deliver so, essentially, we set out a strategy of what we wanted to achieve and the road map that we were travelling down, and we were consistent in that so we never changed our story. I think that is probably the most important thing in communication with investors is consistency. They understood what metrics we were using, in terms of identifying what the value addition was. They understood the business proposition and the investment case behind it. What we fundamentally believed in terms of commodities, in terms of growth, and issues like that. They could have taken a different view to us but they understood where we were going and they understood also that I was entirely opportunistic. I wasn't just a strategic investor, in the sense that 'we have to be this,' or 'we have to be that.'.I had a view that we had to be clear on what created value and that when an opportunity presented itself we took it, and if it appeared that the opportunity we wanted wasn't going to add up then we didn't chase it. For instance, Western Mining in Australia – we initially, did a hostile bid on them because they didn't want to engage with us, but it became clear to us when BHP came in as a competitor that we would never be able to compete with BHP and we withdrew very decisively. That gave us as much credit in the investor community as pursuing transactions, which we stayed the course with because they saw that we were quite disciplined..I think the big thing was consistency and there was an openness in communication. I had the philosophy that we tell people everything, unless there was a really good reason not to tell them. Whereas, I came from an environment where you only told people the bare minimum so, I completely reversed that and we almost revolutionised the way that mining companies, in particular, engage with shareholders. So, we established the investor days, where we actually brought investors in and we actually gave them a deep dive into the business, into the different segments of the business so, they understood what the value drivers were, what we were trying to achieve, where we had done well, and where we had done badly..Other companies followed our example. We initiated that so, twice a year that we had very deep, in depth discussions with companies, other than the usual road show where you go and have a 30 minute or an hour chat with them and tell them, 'everything is great, don't worry.' We tried to, as much as we could, pre-introduce ideas. So, we tried not to surprise the market. Now, we didn't always get everything right and clearly, right at the end, I got something horribly wrong with the investor community when it came to the Glencore transaction and the packages that I wanted to put in place to retain employees. I still think I was right in terms of what I tried to do but I was wrong in terms of the way that I communicated that, and did not get buy-in from from the investors. But I think, by enlarge, over the course of Xstrata's life we did a really good job of making sure that they weren't surprised and what we delivered they could say, 'that cords with your strategy, that makes sense.'.That transaction with Ivan Glasenberg also from Johannesburg, presumably someone you knew quite well from that part of your life. It seemed to be a match made in heaven but it didn't work out that way. .Yes, I have known Ivan for many years. In fact, Ivan was the person who approached me to go into Xstrata as CE, and we had had a long and productive relationship, and a good relationship for many years. The history to that transaction goes back to the structural issues of Glencore. Glencore was a partnership, a very successful trading business, which over time, had made the judgement that to preserve their business case they also needed to have equity production as well and not just third-party production to trade. They had their own investments in operations but their single, biggest investment was their stake in Xstrata..We had worked well together because they had marketed some of our product and if they didn't market they would advise us on other products, and it was a good relationship. There are tensions between the various players within the companies but that was just par for the course but the strategic relationship between the two groups were good. Now, Glencore was a partnership and because of the nature of the partnership it didn't have really permanent capital because when a partner retired they had to get paid out over a period of time. As they were making investments in long term assets, the rating agencies became concerned that their balance sheet on the other side wasn't matching long term capital with long term assets. They made some adjustments, in terms of structure adjustments. They could never crack this so, it became clear to Ivan that he had to address the permanent relationship of his capital base..Now, it also became clear to me that if they did that by listing Glencore that the future of Glencore, as a listed entity, having a significant stake in Xstrata where they had negative control, it would not be able to last indefinitely. It became the classic pyramid position and, also, we were going to become competitors because they would have had a currency in shares, which they could have used for acquisitions and we would compete against each other so, quite rightly, Ivan looked at how he could address his capital. He decided that they were going to Glencore, which they did. Now, at the time, half the value of Glencore, at the time of the listing, was their shareholding Xstrata. We had done very well for the Glencore partners and Xstrata did $500m market cap when I took over as CE. So, their stake in it was about $200m. By the time they listed their stake in Xstrata must have been $25bn – $30bn so, it was a very significant part of the asset base..It came from timing the commodity boom and doing their investments at the right time. .Correct so, they enjoy obviously, the massive growth and the value of Xstrata. They also enjoyed the fact that they got a significant amount of commodities from Xstrata to market, and that they were able to borrow money using their Xstrata shares as collateral. So, it allowed them to increase their capital base and buy assets because of their holding in Xstrata. There were a whole lot of numerous benefits they got from it. Xstrata was, I think, a very good story for Glencore..But then, as I said, it was really untenable to have a listed entity on top of another listed entity so, I always viewed that these two companies now needed to merge and we had quite a complex negotiation because it was an issue of what price the merger should take place and eventually we hit on a ratio and we agreed, amongst all of us, that the Glencore partners and team had made an enormous amount of money out of the listing and my team had been normal employees of a listed company. Although they had earned well and I had tried to compensate them well they didn't have the same level of wealth and we were going into a very complexed merger, which was going to be difficult because it was a merging of two different types of cultures. I took the view that I needed to ensure that my team were retained and incentivised to retain, and therefore we wanted to put in retention packages..The market responded badly to them and I think that perhaps Glencore and their bankers sensed that, as a result, the transaction might be imperil and that changed the whole dynamic between the two of us during the course of the negotiation so, what should have been a very productive, friendly merger, became more complexed and more difficult and it was quite unfriendly by the time it finished. It was the right transaction in the end, I have no regrets. I wish it could have ended in a more productive way, from a relationship point of view but I've no doubt that it was good for the shareholders, in the long term, that the two companies came together..When one of the shareholders who'd amassed a very significant shareholding in Xstrata for over a short period of time, the Qataris decided to flex their muscles and tried to tweak to get a higher ratio and they got about an 8%, I think, improvement in the ratio. Ivan and his colleagues took the view that if that was going to happen then they wanted to have unfettered control over the company and he put it to me that I should step down. So, I said, 'if that is going to get the transaction done then that is what I'm happy to do.' You should never get in the way of a good transaction so, that's the story. It didn't have to end the way it ended but you can't always control all the variables in complex negotiations..Are you still friends? Are you still friendly?.We still have a perfectly civil relationship but I'd be lying to you if I said, 'we spoke to each other very often,' but no, we don't..But you left there, with your team and went into phase two of your entrepreneurial pursuits with X2. Raising money very quickly in, what must have been, very difficult circumstances..Well, we did raise the money very quickly but X2 and a transaction in Xstrata before that, are my two big regrets in life. The transaction, which is not reportable, because it didn't happen was when Valet wanted to buy Xstrata at the end of 2007, beginning of 2008. We were in negotiations with them and I believe we would have sold Xstrata to them at a very significant price, valuing the company at almost $90bn. The transaction basically, failed because Glencore and Valet could not reach an agreement in the marketing arrangements for some of the commodities of the new, combined entity. That is a great regret of mine because I think that that was an enormous potential value loss for all shareholders of Xstrata as a result of that transaction not happening..So, that was a great regret of mine and then of course we had the Global Financial Crisis, which led to new and interesting challenges for Xstrata, which we came through very well and then, of course we had the combination with Glencore in 2013. So, that led into X2 and I sort of recognised a time in the economic cycle, which was not too dissimilar to where we were at the backend of the 1990's, early 2000's, where people had lost faith in the sector. Asset valuations were coming down pretty dramatically and that I believed that you could actually buy good assets at relatively good prices. So, people were not valuing the cashflows in the way that they should be..Now, that was a thesis which was really quite well accepted by the people who put money into X2, which was a combination of long term pension funds and several wealth funds, and one private equity organisation. But I made one, fundamental error, which shows you that, I was then in my late 50's, that even when you're that old and you've been in business for a long time there are always things to learn. My fundamental error was that I agreed to the core investors, who had each put in $500m, could have decision rights over our investments. In other words, they had a right to veto, and it was an individual veto. The reason why I agreed to it was because the private equity company said they needed it to demonstrate to their LPs that they were playing a more strategic role and once I gave it to them, I had to give it to all the others..The reason why I agreed to it was because I had never had a situation where, if I had set out an investment case and a business plan and bought transactions, which were within the construct of the business plan that the people turn around and say, 'we're not going to support you.' I had board and shareholders that continuously supported me because I delivered stuff to them in the universal in which I said I was going to deliver in and we set out a very detailed investment plan, which incorporated 6 core commodities we were looking at. The type of transactions we were looking at. The concentrations and how we'd fund them, and everything like that. So, I thought it's their money. They can have decision rights but if I did what I said I'm going to do, why wouldn't they want to back me because why come in the first place?.We didn't invest for the first 18 months because I felt that my team would be catching a falling knife, as it were, because the market was still going down but we looked at a lot of stuff and eventually we engaged in very detailed discussions with Rio on their coal assets, and some of their aluminium assets in Australia and New Zealand. We were looking at buying this package and we got very far down in those negotiations and very close to concluding those negotiation, which involved 9 months of due diligence, which was funded for by the X2 partners. We managed this all along the road and when we at the time where we had to put an unconditional offer on the table some of those partners decided that they couldn't back the investment for different reasons. Some because they felt they couldn't be exposed to coal, given the way the world has taken a view of thermal coal and others for other reasons. But a transaction, which I thought at the time, would be a fantastic transaction. Therefore, we weren't able to conclude..We had other opportunities we were looking at as well and again, when we tried to put an unconditional offer on the table and again, we couldn't get unanimity amongst the group. Both transactions, I think, would have yielded incredible returns. Our IORs which were well north of 40% in both cases, and it would have made a considerable amount of money for the investors but I just then took the view, with my partners, that it seemed unlikely that we would be able to get, at any one point in time, all the investors to collate around a deal because they all have pressures on them, which might force them into a position where they couldn't back a particular deal. That we should therefore, return the or give back the commitments back to our investors and say, 'we've tried but it would be highly wrong for us to continue taking fees when we don't actually think we'd be able to conclude a transaction.' It was simply because structurally, we had created a situation where a deal wasn't really possible..But that's a disappointment, after going through a lengthy career where people, as you say, 'listened to you.' Then you get juicy transactions at the right time in the cycle, and they weren't able to be affected. Would you now write that off? Is that your earning part of your career finished now, into serving, because that does seem to be where you are you focussing, at the moment? .That's a very good question. Let me say, 'yes, it was immensely disappointment.' It is disappointing because we were right, in terms of the timing, but again, we're using other peoples' money and I respect their right to decide where they're going to put their money. I regret the structure that I put in place because I should have asked people to back my judgement entirely and it was my fault that I put in place a structure, where decision rights were there. But giving people decision rights, you have to accept their rights to actually, exercise those decisions. But immensely disappointing because I think it was the right time. We came up with the right transactions and it would have produced an incredibly good return for those investors, had we been allowed to do them..So, moving on. I don't consciously think that the time for me to earn has past, but I wasn't doing X2 because I wanted to make a huge amount of money. I've made enough money to satisfy myself and whatever money I was going to make and whatever money I may make in the future, if I am able to do that. I've taken the view a long time ago that I've got a lot out of life and I can put a lot back in. Both Barbara and I, my wife and I, have spent a lot of time thinking about how we can impact society for good, and spend a lot of the capital we've accumulated and we're trying to do that. We both feel very strongly that investing in education and investing in young people at risk, and in investing in generally building up societies where societies are challenged is an important thing to do when you have the capacity you should do it. That really is our motivation and if I can find an enterprise at some stage in the future, which will deliver value. It's delivering value because that's the sort of stuff that we want to do. Not because I need more personal assets, I don't..But the work that you've been doing, and we can start first of all, with the Jewish community. You were knighted in 2015. Does everyone around you call you 'Sir Mick' now? .No, generally people call me Mick..But that was to do with the Holocaust, how's the fascination?.So, that was separate to the Jewish community. I was asked by David Cameron to head up the Holocaust Commission into looking at whether the UK had a proper memorial to the Holocaust, to both the people who died and the survivors and to whether the education of the Holocaust in the UK was effective and whether anything should be done on that? So, I ran the Commission for a year of some very talented people and we came up with some very powerful recommendations, which I'm pleased to say, 'every political party supported.' The government, again, with the support of all the political parties set aside a very significant sum of money to construct a memorial and an education centre, which is going to sit right next door to Parliament, at the very heart of one of the greatest cities of this world and, also supported a number of recommendations of how we could improve Holocaust education amongst school kids and amongst the adult community? It was a great body of work, which I was privileged to be part of. That really was a very special time for me..But was it something that you had a connection with?.Well, to be frank with you, the person who understands the Holocaust better in my family than I did, at the time, is my wife, Barbara because she's made a great personal study of the Holocaust and is incredibly well-read. She and I have had an interest in it because it is the event in modern times, which I won't say, 'has defined the Jewish people,' but has impacted the Jewish people when 6 million out of a world population of 13 or 14 million at the time, were killed. That is dramatic and that not only impacts, and it's not only just an ectooecial issue. It's an issue about how you think about yourself, going forward. So, you can't help, as a Jew, but be immersed in the consequence of the Holocaust. Barbara is much more well-read than I was, and much more attuned to it but yes, it was something I was connected to..It's interesting with that because it does play to the best parts of the British culture, of the tolerance that one finds in Britain. Right in the beginning when we started talking, you were saying, 'the reason you're playing a role now, in politics,' is this ectooecial kind of issues that… Well, the whole world is facing but seem to be gaining momentum in Britain as well, with the politics of divisiveness and hate, rather than bringing things together..Yes, I think that's true and I think the important lessons of the Holocaust and remembering the Holocaust is only worthwhile if you make its lessons and its messages relevant to the current generation and emerging generations, which means that they almost have to develop the same memory that the first survivors of the Holocaust actually had because it's through memory. That's the unique thing about the human being in relation to the animal world – that we have relevant memory and from memory we become creative, and we advance, and we move forward..So, my view of the Holocaust is that it has to be constructive for current generations and we have to understand. The Holocaust happened because society, in Europe, enabled it to happen. It came from two thousand years of anti-Semitism, of hate for a People. It came from the fact that good people stood by and watched that the doctors, the dentists, the lawyers, the policemen actively participated in the execution of the Holocaust. Had society, within Europe, not be participants or not be bystanders – the Holocaust would never have been about to be done. It wasn't just the product of a few evil people coming out of Nazi Germany. It was a product of a failure of a whole the society. It starts off by an embedded sense of hatred. The sense of the other not being quite what you are. The it goes onto a dehumanisation of a person, stripping that person of their essential humanity. Once you strip somebody of their essential humanity, well then, we can stand by while others murder them..How do you fight that because it does seem to be something which is being resuscitated aground the world today? .Well, I think that the only way you fight that is (1) by demonstrating that every human being has a value and a value to play and is an important part of society, as a whole, and that human life is worth protecting and nurturing. I think the second thing is that hate and divisiveness destroys value and destroys value propositions and you cannot grow from that, as a society. I think provided you demonstrate that, and therefore the role that every person in society has to play to counter that negativity – if you can demonstrate that and you can get people to buy into that you have got success..The thing that concerns me about what's happening in the UK is that first of all, the arguments that were made in the latter part of the 70's, early part of the 80's, that free enterprise, free markets, and nurturing individual capability, giving people the ability to realise their talents. Those arguments, which were won there and seem now, have to be fought all over again. That the response of Corbyn and the Labour Party is that we go back to a time where individual talent is not valued. Where you try and diminish those who have been successful and who have worked hard and who have added value to society. And you try and demonise them for the tremendous role that they've played in building up welfare and living standards..That you try and demonstrate that you can benefit those who are less well-off by taking from those who have done well, and the reality is, is that's not sustainable. There's no time in history where it has been shown that by diminishing what others have you actually add to anybody else. If you diminish from people, you diminish from everybody. That it is only through a system where you encourage individual enterprise and you encourage people to be free and free to make choices that you're able to add value. I recognise that there are a lot of people in this country who feel that the system, currently, is not serving them and that they have lost out. I think that those people are entitled to a response on that and they are entitled to a government, which recognises what their values are, what their requirements are, and produces a set of policy options, which creates an environment where if they put in the effort – they are able to succeed..So, I think that is absolutely, incredibly important. If we don't do that then we will have failed. Bu this idea that you take a Socialist Trotsky approach to this and you try, from a central government, to command the heights of the economy and think you can do that. That is absolutely impossible. That has never been done before and what we need to do is we need to promote an environment where if government create the arrangements where free enterprise can flourish and address the areas where markets are not functioning, and I think that's where government should step in. So, where markets don't function they should step in to help them function better but if we can create those arrangements where freedom of enterprise, where individual liberty, where creativity can flourish – we will grow a country where people have a stake in it..That is the answer, I think, so a growing economy will address the complexities that people find in buying houses and affordable housing. It will address the issues of providing a health service, which meets the requirements of all. It will create jobs for people of talent and I think that's the road that we have to travel on and I think that we, once again, have a very clear choice to make. Do we go down the road of free enterprise and a market orientated economy, where we create opportunities for everybody or do we go down a road of draconian and socialist agenda, with the government trying to control the hearts and minds of people, and trying to command the heights of economy? That's the choice that we have to make and I think that free enterprise has worked and has added value. I recognise that the Global Financial Crisis has created a set of complexities for people in this country, which have to be addressed but we also know for sure that the socialist route has never succeeded and, has ultimately always ended in tears, for society as a whole..So, it's part of that memory as well, just resuscitating the memories of what doesn't work and applying it to what is being proposed?.Correct, but at the end of the day, the role of government is to create the conditions for where people who are prepared to put in hard work are able to succeed. And where people who are currently impoverished have their circumstances improved dramatically, and where there are discontinuities to try and address those. That's the role of government and government is able to play that role much more effectively when you have a growing economy and you have a flourishing economic environment. Than in a country where the economy is contracting, and socialism always leads to contraction and never leads to growth..Of course, just to end off with, go back to your old country, to SA, where the politics there do seem to be on a contracting of economy road. .Well, I think the tragedy of SA is that it has very talented people in it. It has, still today, an infrastructure, which although has degraded, is capable of delivering solutions for commerce and industry. But it has immense challenges in the education backlog, in housing, in the availability of basic services to rural communities, etc. Over the last 25 years, we just haven't done enough in that country to address those. To create a sufficient, well-being society that people feel that they are being looked after and they have the opportunity to prosper. There are many reasons for that and I think some of it is mismanagement and some of it is because of the fact that corruption has taken grip of the economy..Every country, I guess, has a certain level of corruption because it's inevitable. But when corruption reaches a certain level and it becomes endemic and systemic, essentially countries and economies, and societies start sliding to the abys and it's very difficult to get out of there and you enter into a dark space. The frustration for me is that I understand the education is a generational issue but we can start and address that generational issue and maybe have to count your successes in ones and twos. You start off by looking at, how you train the best management of schools? How do you then train the best teachers? How do you then get the best equipment? How do you get the best textbooks? That's the order that you have to do it in. If you have poor management, you can do nothing, but if you have a great management, even if you have slightly weaker teachers, and you're able to run a better system – then you have great management. Good management allows you time to actually build your capacity of your teachers..So, I think we need to focus in on that and almost go from school to school, to build up that capacity. I've seen it around the world it's been done and I've seen opportunities where you can excite young people, and young graduates to go into teaching for a period of time and give back to society, even at a younger age, before they start thinking about their long-term careers and earning lots of money. I just think that the infrastructure – we had a great electricity infrastructure, we're allowing that to degrade. We have a road infrastructure – we're allowing that to degrade. Society can't function, it can't be productive, if you don't have good infrastructure to support it. The lack of productivity in SA is I think, which negates all the endeavour. Poor productivity leads to high cost economy. A high cost economy means you're not competitive. You're not competitive if you can't employ people because you can't sell your goods and services..So, it's quite an easy way to join the dots..Yes, I think joining the dots is easy. It's complex, in terms of amassing the resources to address some of the backlogs. I don't want to shy away from that. You can't suddenly wave a wand and have all the funds that you need to do, but the strategic plan you need you need to put in place and to execute is not a difficult strategic plan to put in place. But it is only that plan that will take SA out of the quagmire – and to be done by people who are not actually thinking about how they enrich themselves but rather how they enrich society, that will do that..Your former colleagues, or the next generation of miners are having a terrible time at the moment with the Mining Minister. If you were back in your old job would you even consider SA as a mining investment? .I said to the current Mining Minister, when he visited the UK a year and a bit back, that SA is not a country that I would ever be able to justify to any investor to put money in, internationally, at the moment and he asked why. I gave him four reasons. The first was that I said, 'you have a moving feast, with respect to empowerment, and it's very difficult to price your investment because you don't know what you own and it changes all the time. Not only is the level of ownership changing but also the amount of money that you're asking companies to contribute to step in place of what government should be paying for keeping society on track so, it's becoming disproportionate.' So, the cost of doing business is rising, and that you can't invest in something unless you have certainty about what your 10 years is, and what your returns are, and with the changing of the goal posts. I said, 'one of the biggest things is the whole question of the once empowerment, all empowerment type debate,' and that is something that they just had to address..The second thing was that, 'we had a very unproductive environment with labour and that's not to say that people in SA are lazy, it's just unproductive in terms of the number of work days that are spent on work stoppages.' 'That the political environment is not conducive to coherency in terms of relationships between employer and employees.' And that was a challenge that people had to overcome..The third one was the issue of infrastructure – that the degrading infrastructure was reducing productivity. There was a rise in costs and if you can't get your product to the market at a reasonable cost, you can't sell it. And the final was 'corruption.' I said, 'if people believe the system is fundamentally corrupt, they will not invest.' So, I was quite open with him, about what the position was and I said in a lecture I gave to my old colleagues in the mining industry in SA some time back. I said, 'you have a duty to not only speak out but do something and that business and industry must be heard continuously. You should not allow yourself to be shut down and labelled and put in a position where you're delegitimised as a proper voice, within the SA setup.' Business has a proper voice and a role to play for the good and they need to be vocal..Just to close off with, on a happier note. We saw each other the other evening at the Cape Town Opera, here in London where wonderful talent was on display. You're a patron of friends of the Cape Town Opera. How did you get involved with that and is that the kind of thing that you're putting back into the country?.Essentially, I've supported the CT Symphony Orchestra for quite a long time, in sponsoring their New Year's Concert. I was approached by Bonhams (the top end auctioneers) as you can see around the walls of my office, I'm a great collector of SA art. I guess, I must be one of Bonhams' biggest customers on the auctions. They approached me and said, 'that CT Opera were doing tour around Europe and they would like to have a function in London,' and I thought that was a fantastic opportunity to show people the tremendous we have in SA. We had this soiree at Bonhams and they were simply wonderful and, as you say, such a talented bunch of people and they sung beautifully. It was just a delight and it made me feel good to feel that I'm still a South African, and born there and revel in the excellence that comes from the people of the country.

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