The Clem Lack Memorial Oration

MOUNT ISA'S RUSSIAN CONNECTION

by K.H. Kennedy

Presented at a meeting of the Society 28 March 1985.

M.I.M. Holdings is Queensland's largest pubUc company; the group activities extend not only inter-state but also to the United Kingdom, U.S.A., West Germany and other countries. Its annual report for 1983-84 disclosed sales from the year's operations approaching $1000 miUion; total assets were valued in excess of three billion dollars; and output from the mine at Mount Isa - the foundation stone of the company - totalled more than nine million tons of ore. One particular table in the report, on the distribution of shares, illustrated the company's strong Unks with the giant American concern, ASARCO: ASARCO holds 44% of its shares, while M.I.M. Holdings in tum holds neariy 20% of ASARCO. The ASARCO connection has always been widely known; it has histor­ ical roots dating back to 1930 and was personified locally in Julius Kruttschnitt, whose work at Mount Isa extended over a quarter of a century. What is less widely known, however, is that Mount Isa had another intemational connection, one with direct links to Tsarist Russia through the Anglo-Russian corporation, Russo-Asiatic Con­ solidated and its remarkable Chairman, John Leslie Urquhart. This side of the story of Mount Isa and M.I.M. Holdings resurfaced briefly in April 1982 when a number of metropolitan newspapers carried a report on a possible claim to the "Zotoff Millions", which I will examine later in this paper. The Russian connection was fully documented a year later when I completed a biography of the mercurial Leslie Urquhart, Russia's mining Tsar. The study clearly

Dr. Kett Kennedy is senior lecturer in History at James Cook University of North Queensland. The author of The Mungara Affair and editor of two volumes of Readings in North Queensland Mining History, he has also published numerous papers on mining history. He has recently completed a biography of Leslie Urquhart, commissioned by M.I.M. Holdings. 184 demonstrates that the nature of development and company practice at Mount Isa was intertwined with Russian experiences, and with money won from the base metal mines of Siberia. To trace the Russian influence from its beginnings, I have divided the paper into segments covering: the career of Leslie Urquhart, the early years of Mount Isa, and the Russian legacy. JOHN LESLIE URQUHART Leslie Urquhart was one of the most conspicuous men on the intemational mining scene during the period from the tum of the century to the Great Depression. An engineer with outstanding entrepreneurial talent and considerable influence in intemational financial circles, he was involved in projects on several continents during his lifetime, but it was in Imperial Russia that he earned his reputation. Born in Asia Minor in April 1874 of Scottish parents, Urquhart received his elementary education in Smyma, the commercial port for British merchants trading with Persia. When he was thirteen years of age, his mother removed the family to Portobello outside Edinburgh, partly so that her children could complete their education, and partly because Urquhart's father, a liquorice merchant, had decided to undertake a new liquorice operation at Oudjari in Transcaucasia on behalf of the Orient Trading Company of which he was a director and general manager. After attending public school in Edinburgh, Urquhart was appren­ ticed to Glasgow engineers, and in the evenings attended the Glasgow and West of Scotland Technical College, studying mechanical and electrical engineering. In 1895, he was introduced to a new field- chemistry, speciaUsing in oils - and subsequently worked at the Broxborn and Lanark refineries. He was tempted by an offer from a French shale concem, but under pressure from his father accepted a contract with the Orient Trading Company in late 1896. He spent Christmas of that year en route to Oudjari. One of Urquhart's early tasks was to learn Russian. In only three months he was reading Russian novels: Dostoevsky's short stories became particular favourites. Urquhart in fact had a flair for languages. Before he left Smyma in his early teens, he was proficient in English, French, Greek and Turkish. By his twenty-third birthday, he had acquired Russian, German and Azerbaijani, in addition to smatterings of many of the local dialects of the Caucasus. This talent for languages was important to his subsequent business career, making it easy for him as a Briton aboard to operate comfortably in alien surroundings. Urquhart remained with the Orient Trading Company for nearly Itf six years, during which time he assumed greater responsibility for its management. They were years of adventure, hard work, monotony; at Oudjari he leamed the fundamentals of business management, how to deal with a cosmopolitan workforce, how to adapt to foreign cultures. But Urquhart was highly ambitious and increasingly looked to the petroleum boom at Baku on the shores of the Caspian, where fortunes were being made.

Leslie Urquhardt, 1922. (M.I.M. Holdings) 186

At the turn of the century, Baku was the centre of the Russian oil industry: for a short time its fields, barely thirty-five square miles in area, gave up more cmde than the total output of the United States. Urquhart came to the gaunt, poorly lit, windblown metropolis in 1902 as assistant manager of the British-owned Schibaieff Petroleum Company. Within months he was appointed general manager follow­ ing the death of his superior and friend, Alfred Wagstaff, the first Briton to be buried in the ancient city of fire. It was, however, a troubled inheritance to which Urquhart succeeded. Depressed prices, declining production and increased drilling costs obliged managers to cut wages. This, in tum, led to a series of strikes in high summer 1903, which were ruthlessly suppressed by Cossack regiments, only to set in motion a new wave of clandestine revolutionary agitation. For his part, Urquhart was proving to be an excellent oilman, energetic and shrewd. In the latter part of 1904, he was the chief intermediary in the scheme to create a single agency for distributing petroleum and kerosene. Known as Mazoot, the cartel, which involved Nobel, Rothschild and various Russian and British pro­ ducers, was formaUsed in Paris in March 1905, Urquhart personally drafting the contracts in English, French and Russian. His initiative was highly praised in the City of London, and he was subsequently offered the management of three other British oil concems - Russian Petroleum & Liquid Fuel, Baku Russian Petroleum and Bibi-Eybat Petroleum. Aged only thirty, Urquhart had in prospect a position with few rivals among foreigners in the world of Russian commerce. His work and future in the petroleum industry however would abmptly come to an end in only eighteen months. In early 1905, a combination of revolutionary activities and an orgy of race butchery, which cost the lives of thousands upon thousands of Armenians and Tartars, paralysed Baku's oil industry. Month after month, strikes and riots afflicted the bleeding city. Then in September 1905, as Russia was fast sliding down the path of revolution, tensions at Baku climaxed, obliging Urquhart to assemble the British colony and remove them offshore on one of his company's tankers. For the slaughter and turmoil had spread beyond the city and engulfed the oilfields where derricks were fired and sabotage was rampant. When the blood-lust abated, Urquhart was an intemational celebrity, nominated for the Albert Medal first class, the civilian equivalent of the Victoria Cross, for bravery and heroism. The action which won Urquhart his award was a forced march in the company of a stablemen, and two Cossacks who deserted before its end, to reUeve four Britons besieged at Zabrat. One of them later paid tribute to Urquhart's courage in the rescue when he wrote: 187

I have since seen his Russian companion, who avers that he would never in his life repeat that ride, not even for a hundred wives. That he got through unscathed was mainly due, he told me, to Mr. Urquhart's thorough command of their language, and, to a great extent, also owing to his possessing such an exceptional knowledge of life in the Caucasus, whereby he has acquired the air, if not the authority of a chieftain in his intercourse with the people. But time was mnning out for the British oilman, who now carried additional responsibility as His Majesty's vice-consul. Urquhart had favoured the Tartars over the Armenians who in 1906, through their secret society Dashnaksutiun, were working hand in glove with Baku's Bolsheviks. Simultaneously, the reaction­ ary and fanatical Black Hundreds were stepping up their campaign of murder, extortion and incendiarism. Urquhart himself received two death threats. Then on the evening of 8 September, his carriage was mshed by assassins. At least six bullets were fired at point blank range - that was the number of holes in his jacket- yet, almost miraculously, his only wounds were in the webbing of his left hand and four grazes across his stomach. An attempt on the Ufe of so influential an emissary of foreign capitaUsm caused concern, but being the British vice-consul to boot was a very serious matter. Accordingly the Russian author­ ities reacted swiftly and informed the British embassy that the guilty party had been arrested but was shot trying to escape. RecaUed to London, Urquhart never commented on the matter; but ten years later he insisted that the attempt was the work of six members of the Dashnaksutiun, all of whom were dispatched by the Cossacks within the week. Of immediate concem for Urquhart, however, was his future. All of his working life had been in Russia; to turn his back on his accumulated experience seemed a waste. His worries were shortlived. At Christmas 1906, he was given an opportunity to retum to Russia, not to Baku, but to the richly mineraUsed tracts of the Urals.

RUSSIAN INDUSTRIAL DEVELOPMENT The successful re-introduction of Russian securities in London and the upsurge in world metal prices, especially copper, enticed British speculators to reconsider Russian industry as an avenue for capital exports. By the end of 1906, Britons were taking a keen interest in the Urals: it was the selective penetration of this region by westem capitalists in search of the red metal which shaped Leslie Urquhart's future. The sequence of events leading up to Urquhart's acquisition of the Kyshtim properties is a long and complex tale. Suffice to say, that with the support of influential City bankers and former colleagues in 188

the petroleum industry, and after negotiations with Baron Vladimir Meller-Zakomelsky, a distant relative of the Tsar, he was able to secure for the Kyshtim Corporation control over four large estates with a combined area of approximately one and a half million acres. Urquhart had discovered that the estates were heavily mineralised, that no systematic prospecting had ever been undertaken, and that modem smelting techniques were non-existent. With ample capital at his disposal, he subsequently set about creating what would become in less than ten years Russia's largest base metal enterprise, and second only to Rio Tinto in Europe. Between 1908 and 1912 Urquhart set a furious pace in transform­ ing the estates. He engaged American engineers and metallurgists as consultants, ordered a vigorous diamond drUling programme, re- equipped the mines with the latest technology, and erected a new electrolytic refinery connected by Ught railway to the refurbished smelter. The iron works and sawmills were modemised; financial procedures were rationaUsed; a change in managerial staff was effected. Equally important, Urquhart never lost sight of the needs of his workforce. In time, on each of the four estates would be built a hospital with over 100 beds including a maternity section, libraries, stores and chemist shops which sold goods at cost price, churches of Russian and Mohammedan faiths, and people's palaces incorporating theatres and cinemas and playgrounds. No fewer than thirty schools and creches were constmcted, further extending Urquhart's patri- archial authority over the district. Towards the end of 1911 when it was apparent that Kyshtim Corporation was on the verge of declaring handsome dividends, Urquhart decided to retum to London, perhaps to settle permanentiy now that he was married and had two small sons. He had performed his tasks at Kyshtim commendably, and was keen to cement his network of contacts in the mining world. Equally important he had the opportunity to promote other mining ventures in Siberia, to undertake new challenges, the first of which was Tanalyk at the southern end of the Urals in Bashkir territory. Tanalyk Corporation was registered in 1912. What was striking about its hierarchy was the preponderance of technical experts - Oilman Brown, Deane Mitchell, Herbert Hoover, Chester Beatty- and Russian businessmen and bankers, a novel experiment which was to prove highly successful, and which Urquhart would repeat in future years. No sooner had he pronounced Tanalyk "fait accompli" than he set his sights on yet another venture, even larger and more remote. Whereas Kyshtim and Tanalyk were primarily copper operations, the Irtysh enterprise was silver-lead-zinc and coal. The Ridder mine ^

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•••* t i il e^fv'^ -: 1 -i 190 was located in the Altai mountains; six hundred miles to the north west was the Ekibastous coal basin. Urquhart planned to Unk the mine by railway with Ust Kamenogorsk where ore would be loaded on to barges for a 200 mile trip down the Irtysh River to a new port named Ermak, only to be reconsigned by rail to Ekibas where zinc smelters would be constructed. When completed, the Irtysh operation would even outstrip Kyshtim. Within a few short years, by the eve of the Russian revolution, Leslie Urquhart was the foremost British entrepreneur in Russian industry. Not yet forty-three years of age, he had created in the space of a decade a virtual mining empire in Siberia which contributed one hundredper cent of Russia's silver-lead production, most of her zinc, nearly sixty per cent of her copper and a substantial proportion of her gold. Moreover, to accommodate wartime demands, he had installed plants to produce sulphuric acid, dynamite and pyroxeline, and factories to produce hand-grenades and aerial torpedoes. His work in developing Siberia's natural resources had been recognized by the Tsar who, in May 1916, awarded Urquhart the Order of St. Stanislav, second class with star, a high ranking imperial honour. He was however precluded from accepting it under regulations governing British subjects and foreign decorations during war-time. The fall of the Romanoffs and the advent of the Provisional Government in early 1917 gave Urquhart no cause for concem that political instability might jeopardise the profitabUity of his enter­ prises; on the contrary, in May 1917, he stationed himself in Petrograd in order to complete plans for yet another venture - the opening up and exploitation of the massive porphyry copper deposits of the Kirghiz Steppes. When news of continued reverses at the front reached the capital, and when the Bolsheviks staged an abortive uprising, Urquhart made it known that foreign capitalists could no longer work while Kerensky and his supporters mled Russia. Leaving for England in August 1917, he pinned his hopes on a counter­ revolution. However, with the failure of the Komiloff coup and the subsequent Bolshevik seizure of power two months later, Urquhart suddenly found his enterprises endangered. By decree in January 1918, the assets of his companies were nationalised - some £56 million worth, for that was the claim he registered, fully documented and carefully costed. In the past, Urquhart had eschewed politics; now, after describing the Bolshevik regime as "artificial and cannot last", its leaders as "scum", and doctrine as "rotten international trash", he made the eradication of the Bolsheviks a personal crusade, first by fully supporting the proponents of Allied Intervention and subsequentiy by committing the resources of his enterprises to the White Armies of Admiral Kolchak. More than three years of mass terror and brutal civil war ensued 191 until finally the vast territory of the Romanoff empire was brought under Lenin's authority. A river of blood, a deal of it innocent, was spiUed as the Cheka mthlessly eliminated enemies and rivals. Millions lost their lives in a civil war which was not entirely a Russian affair, prolonged and confused as it was by foreign military ex­ peditions, ill-conceived and ineptly conducted. And, tragically, the legacy of the cataclysm was famine in horrific dimensions. Russia's agony during these years reflected no credit on any of the interests struggling for poUtical and economic control of a despairing popu­ lation. Urquhart's enterprises were operated by his staff until mid-1919 when his managers were forced to flee Trotsky's relentless Red Armies. Meanwhile, in London, Urquhart had formed Russo-Asiatic Consolidated, the holding company for his Russian interests, through which he was to pursue his claim for compensation and the retum of his properties. For nearly three years he left no stone untumed, pressing his case at the highest levels of politics. A glimmer of hope appeared in 1921 when he retumed to Moscow at Lenin's invitation to discuss a concession arrangement. The following year he signed an agreement with Leonid Krassin, the Soviet Foreign Trade Commissar but this was torpedoed at the eleventh hour on a flimsy political pretext even though Lenin himself reaUsed that Russian industry required western technology and capital to revive. Urquhart would continue his fight for compensation until the day he died, although after the non-ratification of the 1922 agreement he knew within his heart that he would never see Siberia again. Personally Urquhart was a wealthy man; he could have retired after 1922, but he refused to abandon shareholders who had given him loyalty over the years. Moreover, his ego dictated that he could create yet another mining empire. Throughout the first half of the 1920's he tried. He took over mines in France to keep Russo-Asiatic alive, and his technical team together. He was beaten by a whisker in acquiring copper properties in Rhodesia; at his own expense he investigated mines in Algeria and South America, His engineers scouted even further afield. In late 1924, in a moment of despondency, he wrote to his wife: My own day for making money I am afraid is past. I had my day in Russia. I had a flair when I was younger & could take risks. I cannot do this anymore now & the best I can & must do is to conserve what I have got & perhaps occasionally when oppor­ tunity offers make a thousand or so in a hopeful speculation in a smaU way. If we are satisfied with this position I think we shall all be much happier. I have tried to do better lately & you know how badly I have fared and how my depression has influenced you & at times I am sorry made you also unhappy. 192

But Urquhart was first and foremost an optimist; his moods passed, and he continued his search for a proposition that one day might rival his lost Russian enterprises. The end to his impatient waiting came in early 1926. THE EARLY YEARS OF MOUNT ISA John Campbell Miles discovered Mount Isa less than six months after the Council of People's Commissars rejected the Urquhart concession agreement. It was not however until late 1926, when the properties were under option to the Anglo-American Corporation that Urquhart became interested, first by acquiring shares on his own account, and subsequently by finding out the details of Anglo- American's confidential reports on Mount Isa's prospects. In short, no sooner had Anglo-American decUned to finance Mount Isa than Urquhart stepped in. He contacted the Sydney board of Mount Isa Mines Limited with an offer on behalf of Russo-Asiatic ConsoUdated, at the same time stressing absolute secrecy in the matter. It is certain that the decision to involve Russo-Asiatic was Urquhart's alone: his board knew nothing of his approach until his terms had been accepted by Sydney as a basis for negotiations; neither did WiUiam Corbould, then en route to London seeking fresh funds for the mines, even though he was a director of the Australian company. In fact, Urquhart's handling of the business was extremely clever. He realised that Russo-Asiatic was in no position financiaUy to embark on new ventures, but he was confident that he could reconstmct the company successfully and clinch the deal. The intricacies of Urquhart's resourceful if somewhat surreptitious manoeuvre to acquire major equity in Mount Isa for £950,000 have been carefully detailed in a number of published works. All that need be said is that when the arrangements were concluded, both Mount Isa and Russo-Asiatic shares rose markedly, the former from 18/6 to 28/6 after Urquhart and some friends purchased 100,000 shares. The capitalisation of the mines was assured. Over the following months, Urquhart gave his undivided attention to technical, administrative and financial matters. The American mining engineer, H.H. Knox, and the metallurgical engineer, J.H. Allen, both of whom had acted as consultants to Kyshtim, were retained to draw up plans on mine development and metallurgical processes. F. W. Draper, Russo-Asiatic's principal engineer who had worked at Kyshtim, Tanalyk and Ridder, concentrated on plans for the surface infrastmcture, under Urquhart's constant scmtiny. In fact the former mining tsar was revelling in the challenge of developing Mount Isa to a projected output of a million tons of ore per annum and worked late into the nights on costings and specifications. He was 193

keen to inspect the mines in person, but was forced to put back his visit for several months until his health improved. It was not until December 1927 that Urquhart, Corbould, the Russo-Asiatic engin­ eer and director, Deane Mitchell, and a valet named Edward departed London for remote Mount Isa. The records relating to his visit are quite extensive. His letters to his wife are equally revealing on many aspects of Mount Isa's development, aside from illustrating a wry sense of humour. Notwithstanding the careful attention Urquhart gave to financial details, over which he had sole authority, there was one particularly worrying concem - the labour question. He knew that wage levels in Australia were among the highest in the world and were protected by industrial tribunals. Moreover, given his experience in dealing with a belligerent labour force in his last months in Russia, which had reinforced his bias against unionism and socialism, and given the anti­ union stance of the British press which had recently reported on troubles on the Australian waterfront, it is understandable that Urquhart's fears were confirmed when his ship was delayed at Fremantie. He subsequentiy wrote: In a word conditions are so bad at the docks that there is a strong revulsion of feeling aU over the country & I am hopeful that when we are ready to export metals the conditions will be healthier. Anyway I am going to take no risks in this connection & will use labour saving machinery wherever it is possible, even if it costs no less to handle than by labour. An encounter with a receptionist at the Palace Hotel in Perth also surprised him. As he recounted: When the young Australian Miss heard my name, she readily wrote out Leslie, but was flustered with Urquhart, so she volunteered the suggestion: "Well, my! with a name like that you are not likely to get any Christmas presents you are not expecting"!!! "I doubt", he commented, "that you would receive the same criticism at the Ritz". Urquhart's initial impressions of Australia were soon forgotten however when he disembarked in Melboume and turned his complete attention to business. After a luncheon with the Govemor-General who fumished him with letters of introduction to influential political and business identities, Urquhart travelled to Sydney, For almost a week he was engaged with board meetings, conferences with solicitors and bankers, and private dinners, one of which was with Theodore, the former Queensland Premier soon to become Federal Treasurer: As he wrote afterwards: 194 195 We had a long discussion on labour conditions here. Naturally Russia and communist influence here formed also a not small subject of our conversation, but I liked the man & feel that if they were all as broad minded as Theodore and McCormick [sic] the present PM of Queensland, we will make good. In Brisbane, Urquhart focussed on rail freights: "so much depends on cheap freights", he wrote. He dined with the Mines Minister, A.J. Jones and McCormack who assigned him an official railway carriage, with "a good chef on board & a servant" to joumey to Mount Isa: I must say that the Govt, is doing everything possible to help us, & the whole thing is becoming a matter of Queensland & political importance. This has been brought about because of the failure of other mines or their closing down because of depleted reserves of ore, and also by the droughts which has caused a loss of 15,000,000 sheep to Queensland alone during the past three years. At Townsville he had talks with railway and harbour authorities before joumeying west to Mount Isa, not knowing what lay ahead yet impatient for the moment of tmth to arrive. Urquhart reached the north-west at the height of summer; it was more than twenty years since he had experienced such heat. His first taste of discomfort came at Cloncurry where "the heat was that of Hades" and "the electric lights in the car attracted every bug & moth in the universe", some of which "died inside my shirt and trousers", forcing him to discard his collar, tie and coat! Urquhart wrote only one letter from Mount Isa. It reflects the dispelling of doubts about the value of the mines and highlights his personal influence in many matters. As he wrote, even though little work had been done: Mt. Isa is the largest & richest mining venture I have ever been concemed with & will repay all & any expenditure we may incur in its development into the largest lead silver zinc producer in the world, yes and repay many times over during a long life possibly of from 80 to 100 years. It will take a lot of money .... In three years time [he concluded] the world will know and feel sure that all our hopes & anticipations are not chimeras or possibilities but accompHshed realities. Urquhart appreciated that large expenditures would have to be made on water supply and accommodation. He approved the final design of the Rifle Creek dam and pipeline costing £100,000 as "without this life & work here would be impossible"; he initiated a costiy housing programme to attract married men to the work force; he gave from his own pocket for recreational facilities such as the tennis club. No Australian mining company to that time had ever concemed itself with such a broad array of responsibilities towards it employees. 196 but for Urquhart such obligations were far from novel- in Russia, they had been mandatory. Urquhart rounded off his Australian visit in Brisbane where he met with govemment officials, trade union leaders and Cabinet Ministers to discuss leases, railway charges, labour conditions and state assistance. Legislation conferring water rights and virtual perpetual lease over the properties was drafted; agreement was reached on freight rates and charges for transporting equipment from Townsville and coal from Bowen; regulations governing employment were amended; and pledges of taxation reUef were given - these were but some of the fmits of his week long negotiations. Two months later, Urquhart stood before Russo-Asiatic shareholders who greeted his chairman's address with infectious applause - it had been more than a decade since he had been given such a reception. It seemed just a case of waiting until the "Urquhart group" was restored to its pedestal in the eyes of London's financial circle. His dream however was short lived. THE MINING TRUST By early 1929, Russo-Asiatic engineers reported that more funds would be required to complete the work at Mount Isa, but the coffers were bare. Urquhart spent a troubled Easter period devising ways and means of obtaining the necessary money. He announced his remedy in late May; the main features were: Russo-Asiatic would hold the Russian properties and claims against the Soviet Govemment; all non-Russian interests would be vested in a new company. The Mining Tmst; Urquhart and his friends would transfer various options and shares in other concerns, together with £580,000 in cash, to the new company in retum for nearly two million Mining Trust shares. This scheme made available £1.5 million to complete the Mount Isa project. Urquhart made his second and last visit to Australia in 1929. The same pattern of negotiations with govemments and of close inspection of progress at Mount Isa can be ascertained from company records, as, in contrast to his 1927-28 visit, no personal correspondence remains. Confident enough that Mount Isa's days of difficulty had passed, he told a meeting of nervous shareholders in November 1929 - less than a month after the Wall Street Crash - that within two years Mount Isa would not only be eaming profits but that their entire development programme could be "carried out within the present financial limits of this company". His predictions were welcome tonic for the meeting, reflected by the statement of John James, a long­ standing Russo-Asiatic shareholder: ... it is evident from your enthusiasm that your heart and soul are in it, and that you are doing your best for us. Now, sir, I do not 197

know whether the other gentiemen will support me, but I would like to say that what ever happens in the future, from now on I will always trust you. We will trust blind. Go on, sir, make good. Two years later, James would severely criticize Urquhart, quite unjustifiably, for allowing Mount Isa to pass into the hands of the American Smelting and Refining Company, What James failed to appreciate was that Urquhart was powerless to prevent the American entry into Mount Isa, that economic circumstances and a series of mishaps over which he had no control had forced him to accommo­ date ASARCO. A combination of factors over a short period was responsible for the Mining Trust's predicament. Metal prices continued to fall to uneconomic levels; the non-Australian activities of the Mining Tmst sustained increasing losses; and the metallurgical plant at Mount Isa was proving a costly rogue. The straw which broke the camel's back was the news in early April 1930 that shaft sinkers had struck water, inflowing at the rate of two million gallons a day. Additional pumps had to be mshed to Mount Isa to save the drowning mines. Not even a debenture issue could supply funds sufficient to aUeviate the Mining Trust's financial dilemma. By June 1930, share prices were stiU sliding. It was at this point that ASARCO's vice president, H.A. Guess, on the urging of the financial advisor, Bemard Bamch, made a bid for virtual control of Mount Isa. As Guess recorded, given that Mount Isa was valued at nearly £4,000,000, and that ASARCO would be up for less than a million, "the purchase will represent the most important mining acquisition the ASARCO has ever made and the best bargain". Reluctantly Urquhart gave way: he could not believe it was possible for a project to absorb three million pounds before a single ton of ore was raised and treated. As Geoffrey Blainey metaphoricaUy described the Mining Trust's plight: "The lords of the greatest group of mines in the old Russian Empire had been humbled by the greed of an outback Australian mine. The cost of drilling and developing the huge ore-bodies and the cost of erecting the treatment plant had outstripped the estimates so carefully compiled by one of London's most gifted committees of engineers and financiers". Leslie Urquhart remained Chairman of the Mount Isa Mines and the Mining Trust until his unexpected death in March 1933, not yet aged 59, During the last two years of his life, however, his role in Mount Isa's development was increasingly diminished, as full tech­ nical and financial control of affairs was vested in ASARCO from October 1931. Though several years would pass until the mines earned the profits he predicted, there was solace for his former colleagues in the knowledge that it was Urquhart's faith, optimism and drive which was responsible for the development of the enormous 198 ore bodies on so large a scale. Urquhart himself had committed to the mines most of the fortune he salvaged from his Russian days. Moreover, he left the stamp of his own experiences in Russia on the company's relationship with the workforce which has continued for over half a century. And yet, in his efforts to finance Mount Isa, there has been another legacy, one which has proven a bane for successive company secretaries. THE RUSSIAN LEGACY When Urquhart created the Mining Trust, Russo-Asiatic share­ holders were allotted one Mining Trust share for every eight Russo- Asiatics. Thereafter the holding company remained a paper tiger, periodically pressuring successive British govemments for satis­ faction of its claim against the Soviets. Finally in October 1957, almost forty years after Lenin grabbed power and expropriated Urquhart's properties, it was decided to place Russo-Asiatic with Uquidators, whose report in September 1963 recommended a capital distribution of 0.3648 pence per share. The rights to the claims of the Urquhart group were passed to Mount Isa Mines Limited, but as the Soviets wiU never compensate the company, and as the respective properties are now worthless for varying reasons, these claims are essentially an historical curiousity. On the other hand, the fate of the Mining Tmst holds more than mere academic interest. In 1948, the Mining Tmst was reconstmcted and shareholders, most of whom had gained their entitiement through Urquhart's 1929 reorganisation of Russo-Asiatic, received a similar number of shares (but at reduced par value) in the new Mining Tmst in addition to one £1 stock unit in Mount Isa for every two shares held in the old company. Thus many former Russo-Asiatic shareholders indirectly became shareholders in Mount Isa Mines Limited. Three years later, in what JuUus Kmttschnitt described as "a step in the way of vertical integration". Mount Isa Mines absorbed the Mining Tmst by an exchange of shares. However it was subsequently discovered that some four hundred and fifty listed shareholders had not exchanged their shares by February 1952; their entitlement was transferred to trustees. Of the 450 listed shareholders, most last-known addresses were in the United Kingdom, including individuals such as Andrei Feodorovitch Kabanoff, former director and general manager of Urquhart's Tanalyk Corporation; others were in westem Europe, some in the United States. In addition however there were fourteen Usted shareholders with last-known addresses inside the Soviet Union, one in Moscow, thirteen in Petrograd (now Leningrad). Most prominent of them were the Zotoffs, who in Febmary 1979 when the London branch share register was closed, were entitled to more than 150,000 shares in M.I.M Holdings. Others with large stakes were two Petrograd banks from Tsarist times, tiie Discount Bank and Private 199

Commercial Bank with share entitlements of 39,515 and 14,968 respectively. Augustovich Alexis Davidoff, banker and director of die Irtysh Corporation whose address was care of Urquhart's Petrograd offices at Nevsky Prospect, 1, was entitied to 6526 from his 85 Mining Trust shares, while Vladimir Keler of the same address was Usted with 14,821 M.I.M. Holdings shares from his original 150 Mining Tmsts. For years dividend cheques had mailed to those Russian shareholders, only to be retumed marked "not known at this address". The dividends were then lodged with the PubUc Trustee. It was not as though M.I.M. Holdings had made no effort to trace these shareholders. On the contrary, the company had even retained a firm of London genealogists, but met with little success. Finally in July 1981, the company decided to transfer the total shareholdings of the "lost" shareholders to the Public Tmstee. It seemed that the curtain had closed on Mount Isa's Russian connection. But not so. Nine months later, in April 1982, Terry McCrann, business editor of The Age, wrote an article entitle "Mr. Zottof [sic], you ARE a rich man", in which he revealed that the family could lay claim to shares in M.I.M. Holdings, currently worth $1,4 miUion. It was an interesting piece, and quite unexpectedly drew an equaUy interesting response. A forty-two years old Adelaide widow, Natalia Duvane, who lived with her aged mother, Helena Zotova, contacted the company to ascertain if in fact she was descendant of the Petrograd Zotoffs and accordingly was entitled to a beneficial interest in the shares and dividends held in trust. On the evidence, it is almost certain that Mrs. Duvane is, in fact, a relative of Alexander Alexandrovitch Zotoff, a former Siberian gold-miner. There are, however, many legal complexities to be resolved before any beneficial interest can be determined, but in the interim M.I.M. Holdings will continue to pay any dividends, which on the Zotoff shareholdings alone amount to more than a million doUars since 1947, to the Public Trustee. Meanwhile, Mount Isa's Russian connection has conferred on the Queensland Govemment ironic financial benefits that Leslie Urquhart could not have foreseen when he predicted the Russo-Asiatic's coming to Queensland would prove a boon to the state's economy.

SELECTED REFERENCES J.L. Urquhart Papers (in possession of author, courtesy M.I.M. Holdings). P. Bell, "International Investment in early Mount Isa", in K.H. Kennedy (ed.), Readings in North Queensland Mining History, Vol. II, Townsville 1982. G. Blainey, Mines in the Spinifex, Melbourne 1960. M.I.M. Holdings Historical Records. J. Kmttschnitt, "A Brief History of Mount Isa Mines" Financial Stmcture; Its Trials and Tribulations", A.I.M.M. Proceedings No. 171, 1953.