Delaney, too, was in a tough spot. Together with his then partners, Eric Sprott and Bruce Walter, he had just won control of Sherritt in a proxy fight — a victory that at the time appeared hollow. “The only reason I’d been able to take it over was because it was functionally insolvent,” he explains. “We had a nickel refinery with nothing to refine.”
Proxy fights — in which one shareholder convinces others to throw out existing management — gained notoriety during the ’80s, when takeover kings Ronald Perelman and Carl Icahn prowled Wall Street, but they have always been relatively rare in Canada, where most large publicly traded companies are protected by entrenched interests or by regulation. Nevertheless, Sherritt’s vulnerability made it a target, and Delaney’s 1990 coup marked him as an assertive force in Canadian industry.
His first challenge upon ascent was to reopen Sherritt’s Alberta metals refinery, which had been languishing for two years for want of a nickel feed. The best targets seemed to be Russia and Cuba. He investigated Russia but says he couldn’t get comfortable there. Then, by happenstance, he was invited to lunch with a group of Cubans who were touring Canada. Among them was Raúl de la Nuez, formerly Cuba’s minister of foreign trade. “We were laughing through the whole lunch,” says Delaney. “It was just rock and roll.” So in January of 1991, he went for a visit.
In Havana, he met Marcos Portal Leon, then the minister of basic industries, who arranged for him to inspect the nickel operations at Moa. “So we get on some old Russian jet,” says Delaney, who has trained as a pilot and asked if he could handle flying duties. When his hosts said yes, he found himself navigating a Russian-made flight deck covered in Cyrillic characters he couldn’t read. But they arrived without mishap, allowing Delaney to inspect a mine that, prior to the 1959 Cuban Revolution, had been the property of what is now the American mining company Freeport-McMoRan. In state hands, it was running way below capacity.
The party then flew on to Varadero, where Delaney got a first-hand view of the country’s nascent resort industry. But he hadn’t yet bagged the real prize: an audience with Castro. The opportunity presented itself on his second day in Varadero, over lunch. The group included a member of Castro’s council of ministers, who asked Delaney how he took over Sherritt. Delaney started explaining what a proxy fight was, but the man stared back at him, uncomprehending. Delaney tried again. “A shareholders’ revolution,” he said, this time getting his point across. “Who were the shareholders?” the minister asked. “The institutions — pension funds, financial institutions — responsible for the savings of workers,” Delaney replied.
He got his audience with Castro soon after. They met at the Palace of the Revolution, the former law courts in downtown Havana, which had been erected by the pre-revolutionary dictator of Cuba, Fulgencio Batista.
“Castro is a very skilful interviewer,” Delaney says. “It’s sort of a defence mechanism. He wants to control the conversation, and the best way to do that is to seek your opinion.” Delaney, needless to say, is the kind of person who always has an opinion. “Later, once I’d gotten to know him, I realized there is no person of consequence on this planet who has not had lunch or dinner with Fidel Castro. What am I gonna tell him? So I started interviewing him.”
The strategy worked, leading to Delaney’s first deal for Cuban mining rights, in early 1991. Three years later, it bloomed into an ambitious joint venture: a profit-sharing initiative between Sherritt and Cuban government–run General Nickel. The venture allowed for nickel and cobalt to be mined in Cuba, processed at Sherritt’s Alberta refinery, and then sold to international markets other than the United States. Cuba also threw in the underperforming mine at Moa.
In 1995, Delaney proposed a new deal to the Cubans: he wanted to be designated a “welcome” investor. (He sold the idea to Sherritt’s board with an analogy to nineteenth-century Canadian parliamentarians, who offered liberal terms to European investors to secure capital for the Canadian Pacific Railway.) The Cuban government agreed and sent him a letter outlining the terms. Delaney later included it in a shareholder prospectus, as proof he had negotiated secure access to the resources the company needed for the indefinite future.
At the time, the United States was in the process of passing the Cuban Liberty and Democratic Solidarity (or Helms-Burton) Act, designed to stiffen the trade embargo against Cuba. Delaney knew that anti-Castro forces there wouldn’t approve of Sherritt’s activities, so he decided to split the company up, placing its Cuban operations under the auspices of Sherritt International. Then he went to his directors and offered them a choice. If they were comfortable with being on a US blacklist, they were welcome to stay. If not, they could move to one of Sherritt’s new divisions.
