Packer’s mining lament

James Packer was in an unusually expansive mood at a corporate lunch held in Sydney yesterday, waxing lyrical on everything from politics and corporate governance to interest rates and the state of the Australian economy.

But it was Packer’s comments on the impact of the rise of China and the mining sector that were most interesting.

Reports of the Australian Financial Review luncheon show Packer said several times his Consolidated Press Holdings had missed the great opportunity to participate in the China boom via the surging resources sector.

“The best way to play China is clearly on the mining side and the commodity side and we missed that as an organisation. We don’t participate in that great opportunity,” Packer said.

”There are a number of people with equity in mining projects, and good luck to them.”

“They saw things that more people in this room wish they had seen than they did, myself obviously included.”

I am sure plenty of entrepreneurs big and small are ruing the fact that they missed out on the resources boom, which has propelled billionaires such as Andrew Forrest and Gina Rinehart to previously unheard of heights.

But while Packer probably did have opportunities to get on board the mining train – he is close friends with Forrest – I do wonder if he was right to stick to his core industries of gambling and media.

The history of the Rich List suggests that there are plenty of risks with going outside of your area of expertise. While the Packer family have previously used equity investments in mid-sized investments to expand into sectors as diverse as retail (Pretty Girl Fashion) to cosmetics (Jurlique) there are plenty of reasons that James Packer shouldn’t have taken a punt on resources in the last three or four years.

It should be remembered that Packer’s fortune fell from $6.1 billion to $3 billion in the 12 months to May 2009 as the GFC weighed heavily on his media and gaming interests.

He’s since rebuilt his fortune to $4.16 billion, thanks mainly to the strong performance of Crown Limited. But clearly Packer has taken a reasonably cautious approach to business in recent years, focusing his attention on a smaller number of assets.

It’s more than understandable that he may have been reticent to make a big punt on the resources story.

Anyway, as Packer pointed out yesterday, he hasn’t completely missed the China boom – his casino business in the Chinese gambling centre of Macau continues to perform well. He’s also got a holding in one of China’s largest online job portals.

It’s also worth noting Packer’s reflections on Australia’s two-speed economy and particularly the fact that Crown’s Burswood casino in Perth has seen no benefit at all from the mining boom.

“The two-speed economy is to Australia’s great benefit. My point is that I’m not sure how many people are in the fast lane.”

Packer would like to see an interest rate cut. After spending a fair bit of time with entrepreneurs this week, I think that this is a view very widely held.

* NOTE – I will be looking at a few more rich list regrets on Monday, so stay tuned.