In part 2 of our exclusive interview with resources entrepreneur Algy Cluff, he recalls his adventures exploring for gold in Africa (and arguing with Zimbabwe's Robert Mugabe), his disappointing quest for oil in China, and expresses his deep dismay over the financial crisis and state of British politics.
Read part one of our exclusive interview here:Algy Cluff: The North Sea oil pioneer on securing Britain'senergy future
Algy Cluff, of course, has been around the block many times with farm-ins, farm-outs, joint ventures and fundraisings over his career, not least through his ventures in Africa where he spent many years exploring for minerals, including gold. His decision to try his luck in Africa came shortly after Zimbabwe's independence in 1980, and followed a chance dinner conversation with the late Tony Barber, then chairman of Standard Chartered, and previously Edward Heath's Chancellor of Exchequer.
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"[Barber] had just returned from the independence celebrations of Zimbabwe, and said what remarkably good condition the country was in, that the infrastructure was in excellent shape. So I went out literally a week after independence, and well, within three years we had two gold mines in production."
By 1995, his company, Cluff Resources, had three mines producing gold in Zimbabwe as well as one in Ghana. That year the company made the biggest gold discovery in Africa since World War II what is now called the Geita mine in Tanzania. That naturally attracted the interest of the big boys, and the company was snapped up by Ashanti.
Cluff Resources was sold in 1996. Cluff promptly started all over again. That same year, backed by Anglo American, he founded Cluff Mining (subsequently re-named Ridge Mining), which floated on the Alternative Investment Market (Aim) in May 2000. This time though, he focused mainly on West Africa, including Burkina Faso, Ivory Coast, and Sierra Leone. Ridge was acquired by Aquarius Platinum Limited in 2009.
"If I were starting a new gold mining company tomorrow, I would go back to West Africa because the geology there is still very promising for gold. Also, these countries understand mining and have acceptable investment codes. They operate within the framework of English or French law, unlike Kazakhstan, or wherever. But it's the geology which is the imperative."
In 2003 he set up yet another African venture, Cluff Gold, stepping down from boardroom duties in April 2012, when he returned home to focus on Cluff Natural Resources.
Cluff had a house in Zimbabwe during his years operating in Africa, but he never spent more than a few weeks at a time in the region: "I went backwards and forwards. They were rather heady days; difficult because we were pioneering. In those days, reserve banks there didn't know even what a gold loan was. It was all a case of explanation as well as exploration there was quite a lot of executive time involved in explaining how the gold mining industry worked to new governments. Having said all that. I'd be inclined to start there all over again if I wasn't so old!"
A big disappointment in China
Just before he headed off to Africa, Cluff had suffered a couple of ill-fated years (at least in exploration terms) in China. There, the Communist government, in what must have been one of its very first moves towards working with the private sector, invited applications for oil and gas exploration licences.
"They didn't have the technology to look offshore themselves. There was a stampede to Beijing and we joined in. It was quite a daunting task. We competed for the licences and were excited because at that point there was a view in the industry that the Yellow Sea and the South China Sea were the new North Sea, that there would be large reserves of hydrocarbons there."
And indeed, there had been. But there was no cap to seal the oil in the reservoirs and so, on many occasions, Cluff and fellow explorers found the oil had become too dispersed to be a viable for development.
"We were far and away the smallest company there, but we obtained operating roles not just licences in the Yellow Sea and the South China Sea. Well, it was jolly hard work, I can tell you, but it was very interesting. There have been one or two minor, economically viable discoveries recently, but nothing really substantial."
Opening up Africa to foreign investors
Looking back on the highs and lows of his career, he cites the discovery of the Buchan Field; the discovery of the Freda Rebecca gold mine in Zimbabwe, which became the biggest in the country; and the Geita gold mine in Tanzania as his most conspicuous successes for both his companies and their investors.
Those who climbed aboard his various successful ventures at the right time have been handsomely rewarded, but Cluff adds: "I'd also like to think that what I, in a sense, achieved was to act as a catalyst in bringing investment into Africa at a time apartheid was still in place in South Africa.
"Of course, the big South African mining companies were locked into South Africa. But I think what I did was help render Africa more broadly as respectable from an exploration point of view, proved you could work there, demonstrated it was possible to do business there, raise money and get it out."
There were a few "mini-successes" that he has fond memories of too. There was, for instance, Cluff Oil Australia, the first non-Australian company ever listed on the Australian Stock Exchange: "We had a number of gas discoveries there. But we also had dry holes littered around all over the place: that's the way it goes. Still, the company was taken over at a substantial benefit to the investors."
As for the biggest disappointments, he does not hesitate: "China was the big one. Because had it worked it would have been on a massive scale."
"Labour is being rumbled by Ukip"
Cluff is clearly investing a lot of time, effort and conviction in deep underground coal gasification (UCG) and naturally hopes it will not turn into one of his big disappointments, not least because of his concern for long-term UK energy security.
"For investors unsure about UCG, I can assure them it's a very simple process. It's not science fiction. I would advise them that, in my humble opinion, the liberating of this energy source has to happen. The customary risks of geology and technology aren't really there. It's far more a question of what degree of political will will eventuate to help drive it forward, support it.
"Right now we're in a period of election fear, everything's paralysed. But I'm hoping that whatever form of government emerges in May next year, the Department of Energy will get behind UCG. I'm absolutely sure there's no hostility towards it within the Department of Energy at all. It's a question of driving this to the top of the political agenda. I think the more people read about it and think about it, the more they will appreciate that needs to be the case."
"The man in the street has realised he's been double-crossed for a hundred years by Labour. Along comes Farage and he absolutely resonates with them."
Exactly what kind of government Britain ends up with at the next election is looking impossible to say, but Cluff believes the coalition concept is not such a bad one if it gets us away from adversarial politics: "It has been the biggest problem for Britain, terribly destructive. In America, they may disagree about this and that, but they basically agree about the American way of life. Here it's like you have to vote one way in order to protect your way of life. In order to have the right to send your child to a private school, you have to vote Conservative. Well that's unheard of in America. If only we could get away from that in some form."
He is not too surprised by the rise of Nigel Farage and Ukip, though he reckons it's not the Tories who will suffer most as many assume: "I think Labour is being rumbled by Ukip. Everyone's going around saying the Tories are going to be hit hard but I don't think they will be.
"I think the man in the street, who is traditionally very Labour, has suddenly realised he's been double-crossed for a hundred years by Labour, that the party doesn't represent any of the views that he or she hold. Along comes Farage and he absolutely resonates with them. The sort of clear-thinking, common-sense view that he has introduced I think could damage Labour a lot more than the Conservatives."
British financials have seen "unbelievable levels of fraudulent behaviour"
Alongside British politics, the financial crisis and its continuing reverberations is another cause for despair: "I do find the systemic failures on a moral as well as the financial, practical, level that have occurred in Britain since the Second World War profoundly depressing. The level of fraudulent behaviour by certain financials has been unbelievable, beyond words. It's not just the banks, all kinds of British institutions have turned out to have feet of clay or worse. That's really a bit depressing.
"During the financial crisis we were in Africa, so we were sort of unaffected by it really, except so far as we needed to raise money from time to time. But now if you want to worry yourself the situation is worse now than it was then. Because these derivatives are still there. They haven't gone away. It depends on who you talk to, but the actual size of the derivative obligations that some of the big banks are carrying are in the trillions of dollars, it may as well be infinite. You and I can't really understand it."
It rankles him deeply that while the likes of financial and political institutions have been delivering so poorly for so long, others, like the Army, are continually being chipped away at despite providing sterling service.
An ex-Army man himself, he has nothing but admiration for the forces. He enlisted in 1959, aged 19, eventually ending up in the SAS at the age of 23: "I didn't volunteer," he hastens to add, laughing. "I was in what was called the Guards Parachute Company in those days, and the SAS was short of officers.
"I was in the Army for five years and enjoyed it thoroughly. They were the happiest days of my life. They were great days. I was very lucky because we were just hauling the Union Jack around the world, so I went from West Africa to Cyprus, and then to the Far East. During the period in the SAS, I spent about nine months in Borneo and that was pretty uncomfortable. It was very cold atop of the mountainous ranges there."
Cluff reveals he is writing an autobiography, tentatively titled Get On With It. He says: "It's what I keep on saying to people: get on with it'. It's one of my catch phrases I guess." He hopes to get it into the shops in time for Easter.
Tiny Rowlands was a "smiling assassin"; Mugabe "nearly got it right"
The process of writing a book about his own life has, naturally, reminded him of certain events and people that he had not thought about for a long time. "When you sit down and start writing something like this, an awful lot comes out. It's really triggered off memories of some incidents, and people. I want to sort of try and praise the people I've liked. I'm just ignoring the people I don't like," he says laughing.
On that basis there is unlikely to be much about the late Tiny Rowland, the controversial multi-millionaire businessman who was chief executive of the Lonhro conglomerate from the 1960s to the early 1990s. Rowland built much of his fortune on the gold mines of Africa. "He certainly did not impress me. He was a smiling assassin. He did have a vision, he was the first person to really appreciate the commercial opportunities in Africa, but the way he went about it was not, in my opinion, very attractive. He was a very ungenerous man in many respects."
Among the politicians who have made an impression on him and that he knows best, most are African presidents of various countries but mostly not household names. He found President Mugabe of Zimbabwe to be the "most egregious".
"I knew him very well. I remember clearly a stand-up row with him 15 years ago. But I always thought that he nearly got it right. He preached reconciliation long before Mandela did, and protected the white farmers, notwithstanding the fact that he'd won the war. I thought he behaved, for the first 15 years, really rather well."
As to what happened to turn Mugabe into one of the media's favourite despots, Cluff reckons Mugabe felt he was double-crossed by the British government that he was promised tens of millions of dollars as part of the Lancaster House Agreement, but it was never delivered to him.
The Agreement brought recognised independence toRhodesiafollowingIan Smith's Unilateral Declaration of Independencein 1965. "The money in question was partially, I think, destined for the white farmers, to buy them out on a willing sale basis. And with that [financial] consideration, I think the problems could have been defused."
Cluff feels strongly that the white farmers in Zimbabwe at the time should have but failed to meet Mugabe halfway: "They had a lot to answer for. They were in a catatonic state after independence. They should have gone to Mugabe and said: Look, we realise we've now lost this war, it's about land. Why don't we give you half our land, train some Africans to run it?' But there was nothing. They were absolutely in a kind of sclerotic state so Mugabe just got fed up after a while. Extremely regrettable."
Mugabe is now 90 years old. Cluff recalls that his first wife, Sally Hayfron, a Ghanaian who was not very popular in Zimbabwe, was a very intelligent woman who had great sway over her husband.
"When she died, I think that kind of removed a kind of calming influence. She knew the capricious character of her husband. She'd chuck a bucket of cold water over him when he started getting excitable. But when she had gone he was always very solitary anyway and never had any friends. He became more and more remote and isolated. And obsessed by this fact that Britain had, as he saw it, double-crossed him, betrayed him."
It seems unlikely Cluff will return to Africa in an exploration role again even though the thrill of the chase for him remains a powerful drug. Family life is clearly helping to keep it at bay. Happily married for over 20 years he dotes on his three young boys: "They're good boys, too. They're nice to their dad," he says smiling.
Might any of his sons follow in their father's footsteps? "Oh no, I don't think so. I almost discourage them from doing so quite honestly. I would like them to live a more cerebral life than I have done," he replies, chuckling.
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Kam is a former deputy editor at Hemscott Invest and online editor, City A.M and he was also previously the Digital Editor at IFA Magazine. Kam is currently a senior journalist at The Global Treasurer and contributes to MoneyWeek. Kam shares expertise on the FTSE 100, investing and global stocks.