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The boy with the black stuff

Tony Haggarty has made millions from coal, not once but twice, writes Paddy Manning.

On the Rich List since 2005, Tony Haggarty does not seek the limelight. ''I have no desire to be recognised in the street,'' he says. ''It's a curse. You can't go back from it.''

Widely regarded as one of the smartest operators in the industry, Haggarty has built up two substantial coal producers: with a tight team, he started Excel Coal from scratch and eventually sold it to Peabody for almost $2 billion; now he runs Whitehaven Coal, Australia's largest independent coal company after sealing a $5.1 billion friendly merger with coal baron Nathan Tinkler's Aston Resources earlier this month.

He's not done yet - only this week, Whitehaven launched an off-market, cash bid for listed junior Coalworks, which is threatening to turn nasty - but Haggarty expects this will probably be his last executive role.

Born in 1957, Haggarty grew up on a dairy and beef farm at Dungog and now has his own beef and grain farm near Tamworth. With Whitehaven mining exclusively in the Gunnedah Basin, Haggarty is on both sides of the incendiary farmers versus miners debate on the fertile Liverpool Plains. On the day we meet, he is off to see the NSW Premier, Barry O'Farrell - with his Minerals Council hat on - to put the industry case after last week's anti-coal seam gas rally in Macquarie Street drew 4000 protesters upset at the lack of ''no-go'' areas for miners in the state's strategic regional land use policy.

Haggarty is keen to differentiate coal mining from coal seam gas extraction. ''There are quite different issues and it is clearly a campaign to muddy those waters.''

Haggarty is a coal industry champion. The stickers on his first hard hat - kept over a bookshelf near his desk - tell the story of a long career: Clutha Development, bought by BP Coal, Agipcoal, National Coal Week 1991, PWCS, Stratford Coal Project 1995, etc.


Haggarty entered the industry in 1980, after winning a BP-sponsored undergraduate traineeship, studying commerce at the University of NSW. ''Unfortunately those sorts of programs are very rare these days,'' he says. ''That was a great opportunity for 10 young blokes.''

The mid-1970s oil shock pushed the world's oil companies into coal. The trend would reverse over the next decade as supply increased, coal prices fell back and coal became unfashionable again.

In 1990 Haggarty was lured by his old boss at BP, Rick Chadwick, to join former BP colleagues Allan Davies and Chris Ellis at the mining division of Italian oil company Agip, which had interests in half a dozen mines in Australia. They were a tight crew.

Then came the first major milestone: in 1993 Haggarty and co were working on the acquisition of what was known as the ''Gloucester'' coal assets, from Exxon and Boral, when Agip decided to get out of mining. Exxon and Boral had planned a large-scale thermal coal mine but Haggarty and the team decided it was suitable for small-scale coking coal development.

''We went to Agip and said 'look, we're here to help you sell the business, tidy things up, but we'd also like to pursue this project on a personal account, independently'. They said 'Go ahead, do it on your own time and your own money'.

''There were some examples of small-scale coal start-ups, [but] it was quite unusual in those days. There weren't many listed coal plays - it wasn't very fashionable.''

They had no money, but were able to acquire the Gloucester assets under an option. Enter the Resource Finance Corp, started by Roger Massy-Greene and Andy Plummer, who charged on a success-only basis, taking fees as equity, and forming the so-called ''Gang of Six''.

Resource Finance Corp lined up a ''farm-in'' partner - which later became Gloucester Coal - to fund the mine development and operation, in exchange for a 70 per cent stake. Effectively, the men got their 30 per cent share for no outlay.

''I think it's probably still the fastest mine development in NSW,'' Haggarty says. ''We built it from turning the first sod to railing our first train of coal in six months, including a rail loop and washery.''

Gloucester quickly bought out their minority partner, for about $30 million net of debt in 1996, turning Excel into a cashed-up little company looking for a project.

A lull of a few years ensued as the partners tried and failed to find the next opportunity, including an adventure in Venezuela. In 2001 Excel was able to buy a very old Hunter Valley mine, Wambo, which had a great resource but needed re-engineering. They started accumulating assets: the Metropolitan long-wall coking coal mine in the Illawarra; ex-BHP mines at Lake Macquarie, and then won tender to build the Wilpinjong mine out at Mudgee, which was going to be a core supplier to Macquarie Generation.

About 2002-03 the market picked up, as the world woke up to China's industrialisation. Excel Coal listed in 2004 and two years later US miner Peabody, which had been in and out of Australia, made an approach.

Peabody bought Excel for almost $2 billion, with Haggarty's own stake worth about $220 million.

''That was a major milestone for us all,'' Haggarty says. ''Quite a life-changing event.''

In 2007 the board of Whitehaven Coal, about to float, approached Haggarty and Plummer to help them do a repeat performance, joining as non-executive directors and taking small stakes. The following year, Haggarty was asked to step in as managing director. Plummer joined in a business development role and Davies become chief operating officer - three of the Gang of Six were back together.

''The board asked me to pull the boots back on, which I reluctantly did,'' Haggarty says.

Whitehaven now produces 5 million tonnes per annum and, with its Narrabri mine moving into serious production at the end of this month, and the Aston project at Maules Creek coming on in late 2013-early 2014, the group's output is set to quadruple, to 20 million tonnes.

Haggarty is confident the company has the talent - with or without him - to manage the expansion, and talks about succession planning.

His 7 per cent stake in Whitehaven is worth $160 million - just part of his wealth, estimated by BRW at $489 million - and Haggarty says ''this is probably my last senior executive role''.

Not that he's looking for the high life. Haggarty has no plans to buy a sporting team or private jet. ''I do fly a helicopter,'' he says. ''I've got my own licence. I love it.''

Haggarty is on a rolling monthly contract and has given the board no commitment to a specific period. His commitment is ''about making sure the company is well managed, is in exceptionally good hands, and will go on doing its thing''.

''I'm not about to jump out the door, but I think one of the benefits of the merger is it's given the company the size and scope to be a very attractive place to work.''

Whitehaven's $142 million offer for the rest of Coalworks - which is becoming a messy tussle with Singapore-listed commodities trader Noble Group and investment bank Macquarie - is ''a special case'' given its two principal assets, Ferndale and Vickery South, have close links with Whitehaven.

Beyond Coalworks, Haggarty says: ''There's nothing on the radar … We're not driven to buy every toy in the store. We'll be very discerning.''

Haggarty also believes Whitehaven is better placed to withstand softness in the thermal coal market than many Queensland projectsm especially as port access through Newcastle is cheaper.

In the long-term, demand will increase. ''I don't see any technological alternative today to replace fossil fuels,'' Haggarty says.