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Jacob Engel invested 30 million dollars in mines in Albania, Liberia and Tanzania

Jacob Engel invested 30 million dollars in mines in Albania, Liberia and Tanzania
With the money he received from the sale of Lagna Holdings, Jacob Engel invested in the field of metal mining, where he hopes to reach a production of metals and minerals on a scale of hundreds of millions of dollars. In the meantime, he is suffering from the freezing of real estate projects in East Asia and Russia due to the crisis

By Michael Rochwerger
16.12.2008 The Marker

Last week the EngelInvest Group, owned by businessman Jacob Engel, acquired three copper mines in Tanzania. The company plans to invest tens of millions of dollars in this project, primarily on geological research, equipment, production, adaptation, operation and marketing the mines – as told to TheMarker.
In addition, EngelInvest will also operate in Tanzania in the mining of gold, nickel, iron and other metals.
EngelInvest launched the mining operations a year and a half ago. Today, excluding Tanzania, the group holds 9 chrome mines in Albania on the border with Kosovo, and 3 iron ore and gold mines in Liberia. In addition, it plans on investing in gold, tin and cobalt mines in Congo.

Aside from its mining and real estate activities, EngelInvest also operates in the field of international trade of scrap metal for the metal industry in India and China, and also owns metal factories in Eastern Europe.

"Despite the global economic crisis and the collapse of commodity and mineral prices worldwide, this is a strategic investment for us that will stretch over many years. We are taking advantage of the conditions created by the markets in order to complete deals that we could not afford at the high prices of the boom period,” said Yitzhak Amiel, chairman of the EngelInvest´s mining and metals company. Accountant Amir Najimi directs the company.

How does your business model in the field of mining operate?

Engel: Just as our strategy in the field of real estate focuses on cultivating partnerships with local landowners instead of paying for the land in cash, (which is how we reduce risks), we adopt a similar method in the field of mining.
Our method is that payments made for the franchises to owners of the land on which the mines themselves are located and for the mines themselves apply to the local partners, in exchange for percentages of future profits (valued at around 20%-25%).”

What is the scope of your investment thus far in mines you acquired?

"This is a 30-million dollar investment that is expected to grow in the coming years and reach a scope of hundreds of millions of dollars. We presently control the natural reserves valued at NIS billions. Just as we issued our real estate activity in the past, we will implement an exit in the mining field the moment the markets calm down and there is some upswing.”

In the meantime, this activity only costs and doesn´t yield profits.

"This is not accurate. Due to the fact that the business environment is more comfortable, we are even able to currently yield profits.”

Are you planning on entering additional countries soon?

"Yes. We are on our way to investing in gold, tin and cobalt mines in Congo. Congo is a huge country with numerous areas that are war-stricken, so we are currently searching for quieter areas.”

During the boom period of the real estate market back in 2006, Engel had a good sense of timing and sold his shares in Lagna Holdings (61.8%) to ultra-Orthodox businessman Shaya Bloymelgreen, for NIS 430 million, which reflected Lagna´s market value at NIS 696 million. Today Lagna is being traded at a low value of NIS 66 million and "on paper,” Bloymelgreen finds himself at a loss of NIS hundreds of millions.

After the exit from Lagna, Engel launched real estate operations in India along with partners.

A few months ago EngelInvest entered three projects in Ho Chi Min City (formerly Saigon) in Vietnam, which allegedly include construction of 9,000 residential units, whose scope of investment is expected to reach 1.1 billion dollars, with a sales forecast of 1.6 billion dollars.

Engel´s investments in East Asia and Russia were made with much less fortunate timing than the Lagna exit. The market crisis is expected to delay the project timelines and yield a decline in expected profits.

What is the status of the project in India?

"We have slowed down the pace on development; we received authorizations for land, but we will not start construction till the picture in that country clears up. I believe the operations in India will start to turn around at the end of 2009, since there, as opposed to Russia – which has created a bubble around itself – there is still high and healthy demand for modern consumption and construction.

You don´t expect to have any good news come out of Russia?

"I do not know when Russia will recover, but there is no doubt that it will take much longer than it will in India.”

[Caption: Jacob Engel: "We will exit the moment the markets calm down.”)

EngelInvest Mines

Operations: Metal Mines
CEO: Amir Najimi
Chairman: Yitzhak Amiel
Employees: 50 in the headquarters, hundreds throughout the world
Geographical Distribution of Mines: Albania (9), Tanzania (3), Liberia (3)
Investment Scope: 30 million dollars