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Charles Fipke: 'The world needs our commodities'

John Greenwood, Financial Post Published: Wednesday, December 31, 2008

Charles Fipke examines a Kimberlite core sample at his C.F. Mineral Research Laboratory in Kelwona, B.C. His personal fortune is estimated at $800-million.

Almost overnight Charles Fipke became one of the wealthiest people in Canada when he discovered the country's first diamond mine in 1991. Today, the Ekati mine in the Northwest Territories is one of four working mines in Canada which together produced about 17 million carats in 2007, or about 10% of all the diamonds produced in the world. Widely known as an eccentric, brilliant entrepreneur, Mr. Fipke made the record books again in the late 1990s after splitting with his wife in what was described as the biggest divorce settlement in Canadian history. These days Mr. Fipke, 62, divides his time between his two passions: mineral exploration -- he says he's developing another potentially monster diamond mine in Angola-- and breeding race horses. Mr. Fipke, whose personal fortune is estimated at more than $800-million, spoke with commodities reporter John Greenwood about the future for metals prices, Chinese demand and the fate of the world economy.

Q What do you think is the best way to fix the economy?

A I think bringing interest rates down is a wise move. There will be a lot of people out of work no matter what happens. I'm in commodities myself. A lot of people are going to go under on this, and it's too bad. What the government could do in particular with commodities, but also for other industries, too, is just make the taxes lower.

There is no doubt about it, if we reduce our taxes the way, for instance, Ireland has done, this would be an extremely competitive place to work and invest. But governments can't get their head around that. They just love that tax money rolling in and they don't mind peeing it out, wasting it.

It's the old story, you put your hand in the cookie jar, if you try to take out too many, you can't get your hand out. You have to drop some cookies off, just enough to get your hand out. That's what the government should always remember.

Q Do you think the commodity boom is dead?

A I think it will come again. China is the key. But China's been really hit now, too. I was there in August, there were furniture companies that were totally reliant on exports. Now, to survive they have had to look at their own market, but they have definitely been really hard hit. But I think with their sheer population and low costs, they are in a very good position to come out of this. When that happens, I think the commodity market will come around.

Q How does the current financial crisis compare with past economic downturns?

A I never saw the Great Depression because, fortunately, I'm not old enough. I don't think this is going to be that bad myself, though maybe I'm being optimistic. I think it's going to start turning around a lot sooner than people think. But the circumstances for the Depression are a little different from what we have now. I think the governments are trying to bolster the financial community.

To be honest, I'm not in favour of handouts. I think that companies and individuals, the ones with foresight, should save for a rainy day. GM, Chrysler and Ford got themselves into the mess because they didn't do that. And they shouldn't have submitted to the union demands. If the unions can get the wages they want, all the power to them. But now it has come time where they have to build an auto industry that's competitive and they can't do it with the wages they've got.

Q What started this financial crisis? How did we get into this mess?

A I'm not really a George Bush hater, but his government did make a big mistake in that they promoted Fannie Mae and they decided that every American should own a home. And that's a noble thing. But, unfortunately, some people can't afford it. They just shouldn't have given loans to people who couldn't afford it. The people that couldn't afford houses, they had a chance to get one and now that chance is gone. And the people the investment community that took those loans that people couldn't afford, that's their poor financial insight. Now the taxpayer is bearing the cost of their mistakes.

Q What's the next big thing?

A When things start picking up, I have heard that China wants to build maybe 38 new reactors. But to build those reactors you need steel, you need copper, you need a lot of things. They also need to build factories and it's the same with factories. To do those things they will need commodities, they will need power. Everybody's trying to get away from oil, but if they build nuclear they will need commodities for that. I think that's the way the world will go. I think manufacturing in Canada is dead because the wages are just too high. But the rest of the world needs our commodities.

Q What's your next project?

A One thing we're doing, for instance, is we are in the headwaters of the Quango River in Angola and we are drilling there right now. The Quango is the most diamondiferous river in the world and I think it is only a matter of time before we find the source for all the diamonds.

Q You've had a long and colourful career. Do you have any regrets?

A To be quite honest, the worst thing that happened to me is my divorce, but in the long run I'm really happy it went through because it wasn't right from the start. So I'm happy about that. I don't have any regrets. I've just been a very lucky person.