A leading private merchant bank that mainly manages junior resource companies to create shareholder value, Forbes & Manhattan has founded and managed many public and private enterprises. It employs geologists and mining engineers as well as financial professionals and lawyers so it can focus on the global resources sector.
The Company is focused on four key areas, namely Precious Metals, Energy ( oil and gas, coal and uranium ), Agricultural Fertilizers ( Potash and Phosphate ) and Iron Ore and related specialty metals ( Rare Earths, Vanadium,, tungsten, Moly, etc )
Chairman and CEO Stan Bharti of Forbes Manhattan
Chairman and CEO Stan Bharti updated us with some of the latest developments. These include the launch of a Forbes Coal company coupled with the purchase of an operating South African mine, with a second mine due into operation soon, The apparently separate transactions do have some connection, as Stan points out: “We believe that energy’s going to go places and coal is the place to be. I want to use Forbes Coal as an opportunity to consolidate other coal assets from around the world. So, we’re looking at other potential deals in Mongolia, in South America, the US and China to put something together.”
Forbes & Manhattan also has interest in potash, including ownership of the Brazil Potash Corporation that has one of the largest potential potash assets in the world, a 400 kilometer long belt in the Amazon. “We’ve just had our first intersection,” comments Stan. “It’s close to two meters of 31% potash. So that was very exciting and it confirmed what we had known, that there’s a big deposit there.”
The third significant recent development is a new gold company, Belo Sun, previously known as Verena Minerals and with a large resource in Brazil. Stan says: “We’re drilling there now and we expect to update the resource before the end of the year.”
Controlling a large number of companies and projects can put a strain on management. However, Stan believes that management styles in the mining industry have become antiquated and Forbes & Manhattan has an altogether different philosophy. He explains: “First, you learn to delegate. Management is about getting things done through other people, not doing it yourself. The fact that you control a company is a myth. You create an environment where people function effectively. And the best way to do that is to remove the middle layer and empower the people that do the job.
“Secondly, you remember when you empower them that they will not do the job the way you do it. It’s not the way they do the job; it’s how they get results. The third key thing to remember about management is that there’ll be some chaos when you empower people. But let them be and always encourage people’s strength and balance their weaknesses.”
Balancing strengths and weaknesses is achieved by, for example, ensuring a CEO with a financial background has strong technical support from the staff. Another major element of the management philosophy is ensuring that employees are properly rewarded and given incentives. “We believe that people should be paid well but there should be a base,” says Stan. “We don’t pay a big base salary but we give our CEOs or Executive Vice Presidents a decent base salary plus stock options. Then we give them good bonuses for performance. And that performance can be somewhat arbitrary. It depends on the board but we make it clear that part of the package is going to be bonuses, which will be paid at the board’s discretion. And that motivates people.”
A key element of Forbes & Manhattan’s success is picking the right companies and projects. To do that, according to Stan, it applies certain criteria to identify where to invest. He remarks: “The main areas right now, obviously in addition to gold, are the bulk commodities — coal, iron ore is hot, agriculture is a great place to be, energy as well. And I think that uranium, next year, is going to make a big comeback.
“We’re focused on going to countries where there are good assets, where they’re relatively cheap. We establish our own offices there, working with the local government, local engineers and local geologists. For example, we’ve opened offices in Mongolia and Vietnam this year and these are countries we think, over the next 5-10, will be huge in resources. We also think Laos, Cambodia, Indonesia and Malaysia are very good countries and we’re always strong in Africa and South America.”
When buying into a company, Forbes & Manhattan will look at the strength of the management and will not hesitate to change it if necessary as part of the deal. Unlike some of its competitors, it becomes actively involved with all its companies: Stan comments: “They don’t manage the deals themselves. Our big strength is actively managing. We put our name behind a deal and we live and die by the deal.”
With the company’s heavy involvement in resource businesses globally, Stan is obviously interested in the resource cycle and has clear views on it. He says: “I think the last real bull cycle in resources was from about 1968 to 1981, when we saw oil go to $40 a barrel, nickel go to $3 a pound, copper at that time made $1 a pound, which were big numbers. Gold, of course, went to $1000. And it was totally counter-cyclical to the main market, where the Dow barely hit 1000. It stayed flat for fifteen years and inflation came back.
“Typically, commodities run counter to the main sector and I think that decoupling will happen again. Since then, this is the second leg of that commodity cycle. We were in a bear market for commodities from 1981 until about 2003. Now we’re in the second leg and we expect this to last for another 5-10 years.”
Resource Summit in Palm Beach
Forbes & Manhattan’s latest venture is a Resource Summit it is holding in Palm Beach on the third through the fifth of November, this year. “The idea is to discuss the whole resource sector,” explains Stan. “Where it and the world’s economies are going, how the resource sector is playing a bigger and bigger role in world economies.” The event has several keynote speakers, including Eike Batista, a mining and oil and gas magnate from Brazil, ex-Australian Prime Minister Bob Hawke and talk show host Larry King. With 200 to 300 people expected to attend, this may be the first of several such events for Forbes & Manhattan.
For more information: http://www.forbesmanhattan.com
Stan Bharti a Modern Founder and Leader of Successful Emerging Diversified Companies.