Martin Vander Weyer’s Any Other Business
The winter is arctic and the economy is a long way from spring, but commodities are hot again. Gold, the doomsters’ favourite, has a charmed life of its own, though its recent ascent has run out of oomph. Copper, the metal of choice for professionals betting on global recovery, perked up at the beginning of 2009 and has climbed steadily most of the way back to its 2008 peak. Nickel, zinc and aluminium bounced last spring in anticipation of a surge of industrial demand and continue to zigzag upwards, offering good returns for those who get their timing right. But the natural resource du jour is a basic commodity for which, until the snow started falling a month ago, no hair-gelled hedge-fund player would have shown any appetite at all, except on the rim of his margarita glass or his platter of foie gras: plain old salt.
It’s rather pleasing that the quiet little towns of north Cheshire — which have been mining salt since Roman times but have long been looked down upon by posh folk from Chester to the west and footballers’ wives from Wilmslow to the east — have suddenly become the Klondike camps of a midwinter gold rush. Two-mile convoys of trucks have been waiting to pick up precious supplies of grit treated with brine from the Salt Union depot at Winsford and rock salt from British Salt at Middlewich. For anyone interested in industrial history, it’s also pleasing to discover how these forgotten corporate veterans have survived.
Salt Union, as its name suggests, was an amalgamation (in 1888) of numerous Cheshire mining operations. Its product was distributed by barge, hence its headquarters at Runcorn where the Manchester Ship Canal met the Bridgewater and the Weaver Navigational, providing distribution throughout new industrial England. The company eventually became part of ICI until it was spun off in 1992, and is now owned by Compass Minerals Inc of Kansas — the world’s third largest salt producer, whose shares have risen steeper than the copper price since last summer when the smart money decided to ignore long-range weather forecasts and bet on a big freeze.
British Salt, meanwhile, turns out to be majority-owned by you and me, the British taxpayer, by way of the private equity arm of what used to be Lloyds TSB. And a third player in the industry — processing raw product from Salt Union — is Ineos, the industrial chemicals giant assembled in recent years by a bold but low-profile entrepreneur called Jim Ratcliffe. Ineos made headlines in 2008 by standing up to strikers at the Grangemouth oil refinery, provoking a memorable example of BBC anti-business bias when Eddie Mair, the presenter of Radio 4’s PM programme, snarled at Ineos’s local manager: ‘You’re venture capitalists, aren’t you?’
Well, it’s lucky they are, and that they and other investors have kept faith with Cheshire’s saline heritage — otherwise we might have to depend on that nice Mr Putin to keep our winter highways open, just as we are becoming dependent on him for energy supplies to keep our central heating running. Salt mines, mostly in the Perm region of the Urals, used to be big business in Russia, and have special significance in the collective memory there as places of incarceration and punishment. So I’m guessing that when Boris Yeltsin staved off state bankruptcy in March 1995 by auctioning Russia’s most valuable natural resources to a gang of would-be oligarchs, the bidding was less keen for the salt than it was for the oil and gas. ‘Haven’t you heard, Comrade President? The latest data from East Anglia says by 2010 we’ll never have to de-ice the roads again. And Western diet faddists won’t even eat the stuff these days.’ But no doubt some wily dealer picked up the salt mines at a rock- bottom price. Perhaps it will turn out to be that nice Mr Deripaska, better known as the alu- minium billionaire and Corfu holiday chum of George Osborne, Peter Mandelson and Nat Rothschild. If so, the revelation will add yet more seasoning to the controversial forthcoming flotation in Hong Kong of Deripaska’s master company, Rusal.
But I digress. One final salty thought: the suffix ‘-wich’, as in Middlewich, Nantwich and Northwich in Cheshire and Droitwich in Worcestershire, is a pretty good indicator of the presence of ancient salt workings. So if that’s how your village name ends, it may be worth digging through the snow and sampling the subsoil. You could be sitting on a fortune. You’ll have to be quick, though: the thaw’s coming, and the next boom will be in sandbags to protect against the floods.
Zurich vs Geneva
While parts of Britain turn temporarily alpine, parts of London’s financial community are talking about making a more permanent transformation by moving to Switzerland to avoid 50 per cent income tax and the bonus supertax. In an FT survey of banks last week, not one respondent offered a simple ‘no’ to the question: ‘Will you consider diverting future expansion outside the UK and/or leaving London altogether?’ while one banker estimated that 5,000 to 10,000 City jobs could move to the Continent within six months. Well, maybe: Swiss-owned investment banks such as UBS might repatriate some high-paid executives, but the Brits and Americans are more likely to stay in Canary Wharf and devote their efforts to avoiding the taxes. The smaller partnerships of Mayfair’s Hedge Fund Alley are highly mobile, however, and disturbed by the threat of heavier regulation as well as tax. I’m told there is a growing buzz among them about the scarcity of decent Swiss apartments to rent, the varying tax rates in different cantons, and the joys of weekend skiing — issues that will no doubt be addressed next Wednesday at a seminar offered by the West End estate agents King Sturge, succinctly titled ‘London vs Zurich/Geneva’.
If you’re already at the point of trying to decide which of the two Swiss financial centres is the one for you, here’s a quick seminar from me. Both are stultifyingly small compared to London, and critically short of office space. The private banker Hans J. Baer’s memoir It’s Not All About Money is a useful guide to the xenophobic dullness of gnome-town Zurich. Geneva is more cosmopolitan, and you can have a fine entrecôte frites at the Café de Paris in the rue du Mont Blanc — but there’s also the risk of being shot dead by your dominatrix while wearing a latex catsuit, as happened to the financier Edouard Stern in his apartment in the rue de Villereuse in 2005. On balance, I’d recommend staying in Mayfair.
This article first appeared in the print edition of The Spectator magazine, dated January 16, 2010