The National Post is Canada’s second largest national paper. This column was originally published in the Financial Post on January 4, 2011.
Whoever wins the contest for control of BIM, the people of Baffin Island are
far more likely to thrive being “exploited” by filthy capitalists than being
“helped” by governments. National Post, Peter Foster (January 4, 2011)
The Baffinland Iron mine Would Bring Desperately Needed Jobs
From a financial point of view, the takeover contest for control of Baffinland Iron Mines Corp., BIM, hardly registers. The latest round of bidding for the company puts a value on it of $570-million, a piddling amount when compared with, say, the $44-billion market capitalization of Potash Corp. In other respects, however, BIM may be more genuinely “strategic” than the Saskatchewan mining giant, a proposed takeover of which was deep sixed earlier this year because of the “S” word.
In fact, the rejection of BHP Billiton’s bid for Potash was all about electoral politics. However, the location of Bafflinland’s prime asset is genuinely strategic in terms of the Conservative government’s Arctic aspirations. Also, the project would bring desperately needed jobs and revenue to the region of Nunavut, where it costs Canadian taxpayers $1-billion a year to service some 33,000 people living in an area the size of Western Europe.
U.S.-controlled Nunavut Iron Ore Acquisition Inc. made a hostile bid for BIM in September. Since then, Luxembourg-based steelmaking giant ArcelorMittal has arrived on the scene as a white knight. Last week Arcelor upped its bid to $1.40 per share for all the Baffinland shares. Nunavut Iron Ore, which was set up solely to acquire Baffinland, immediately upped its own bid to $1.45, but for only 60% of the equity.