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The Most Influential People in Mining 2010

December 30, 2010 4 comments

2010 has been an exciting year for the mining industry. The Australian Super Profits Tax debate came to a climax; the iron ore pricing mechanisms was changed to a system related to the spot market after 40 years of benchmark pricing; the Western Australian Iron Ore Joint Venture between Rio Tinto and BHP Billiton was cancelled; BHP attempted to acquire PotashCorp; 33 Chilean miners were at the center point of global media attention when they were rescued after 68 days underground. Who have been the world’s most influential people in the mining industry this year?

The Business of Mining.com gives a top 25. Based on a combination of metrics on ‘Opinion Impact’ (both public opinion and boardroom opinion) and ‘Decision Impact’ (both for 2010 and for the future). The list features a combination of industry leaders, politicians, journalists, advisors and regulators. 24 men; 1 woman. 5 Australians; 4 South Africans; 3 Chinese, 3 Americans; 2 Indians; 2 Canadians; 2 Brits; 1 Guinean; 1 Kazakh; 1 Mongolian; 1 Brazilian. The figure below gives an overview of the 25 most influential people in mining in 2010.

(Blue dots: industry leaders; green dots: journalists; orange dots: advisors; red dots: politicians; black dots: regulators)

1. Marius Kloppers – CEO BHP Billiton

Heads the world’s largest mining company. Tried to add potash to the portfolio of the company by (unsuccessfully) offering $39bln for PotashCorp of Saskatchewan. Earlier in the year not only played an active role in the debate about the Australian super profits tax, but also in the attempt to form a Joint Venture for iron ore export from Western Australia. Is furthermore seen as one of the key drivers behind the change of the iron ore pricing scheme.

2. Tom Albanese – CEO Rio Tinto

Heads the world’s third largest mining company. Worked with Kloppers on the Pilbara iron ore JV, the new pricing mechanism for iron ore, and the lobbying against the super profits tax as proposed by Kevin Rudd. Used 2010 to restructure the capital structure of his company and to strengthen the ties with Chinese industry and government via various deals with Chinalco.

3. Roger Agnelli – CEO Vale

Heads the world’s second largest mining company and largest iron ore producer. Less well-known in the west than Kloppers and Albanese, but certainly a powerful leader in the mining industry. Secured development opportunities in Guinea and in potash production expansions while carefully building relationships with the Brazilian government and the new president: Dilma Rousseff.

4. Tony Clement – Industry Minister Canada

The man that killed BHP Billiton’s hopes of acquiring PotashCorp by imposing unacceptable conditions in order to secure the deal’s ‘benefit for Canada’.

5. Cynthia Carroll – CEO Anglo American

The only women in the list, heading the fourth largest diversified miner in the world. Led the company back to profits after a dramatic 2009. Was appointed chairman of related Anglo Platinum this year and holds directorships of De Beers and BP. Furthermore plays a role in the debates about the future of the industry at the World Economic Forum.

6. Graeme Samuel – Chairman of the Australian Competition and Consumer Commission

Head of the regulating body that was the key obstacle for the Joint Venture between BHP Billiton and Anglo American to export iron ore from Western Australia as the JV would have given the two companies a position that would threaten global competition.

7. Michael (Mick) Davis – CEO Xstrata

Heads the world’s fifth largest diversified mining company, build rapidly by acquisitions under the helm of Davis. Proposed a merger with Anglo American in 2009, and continues to look for expansion options. Plays an important role in the debate around a potential merger of Xstrata with trading house Glencore, the company’s largest stakeholder.

8. Kevin Rudd – Former Prime Minister Australia

The brain behind the Australian super profits tax, designed to skim the ‘excessive profits’ of mining firms. The public debate around the tax was one of the reasons Rudd was not re-elected. Although not in the office anymore, the idea of the super profits tax was implemented by the new government in an adjusted form.

9. Julia Gillard – Prime Minister Australia

Benefited from the drop in popularity of Kevin Rudd to take over the position of Prime Minister of Australia. Did involve the miners in redesigning the law into the Minerals Resource Rent Tax (MRRT), eliminating its major shortcomings. However, the new law, which will become active in 2011, will drastically increase profits for the mining operations in Australia, forcing many mining firms to re-evaluate investments.

10. Jacques Nasser – Chairman of BHP Billiton

The man behind the scenes at BHP Billiton. Worked with Kloppers on all major events this year, including the super profits tax, the Pilbara JV, and the PotashCorp offer. Appointed former British Minister Shriti Vadera on the company’s board and prepared the decision to restart high dividend payments to shareholders.

11. Xiong Weiping – President Chinalco

12. Anil Agarwal – Executive Chairman Vedanta Resources

13. Partha Bhattacharyya – Chairman Coal India

14. Ivan Glasenberg – CEO Glencore

15. Mahmoud Thiam – Minister of Mines and Geology Guinea

16. Sukhbaatar Batbold – Prime Minister Mongolia

17. Brad Wall – Prime Minister Saskatchewan

18. Xi Jinping – Trade Minister China

19. Vladimir Kim – Chairman Kazakhmys

20. Duncan Sloan – Global Mining Lead Accenture

21. Mike Elliott – Global Mining & Metals Lead Ernst & Young

22. William MacNamara – Mining Analyst Financial Times

23. Robert Friedland – Founder Ivanhoe Mines

24. John Chadwick – Editor International Mining

25. Chen Yan – Governor China Development Bank

 

©2010 | Wilfred Visser | thebusinessofmining.com

Is BHP Billiton too big to grow?

November 5, 2010 1 comment

The (provisional) refusal of the Canadian government to let BHP Billiton acquire PotashCorp of Saskatchewan is the third regulatory limitation to growth the company faces in a short period. As regulators around the world are afraid the company gains a dominant position in mineral markets, what options does the CEO, Marius Kloppers, have left to grow the company?

Observations:

  • In February 2008, shortly after mr. Kloppers took over as CEO, BHP did a hostile takeover bid for its largest rival: Rio Tinto. The offer, worth approx. $165bln, was withdrawn in November 2008 after regulators indicated the deal would not gain anti-trust approval and the access to debt dried up in the capital markets.
  • After the failed acquisition, the two companies agreed to try to realize a significant part of the synergies the merger would have created by setting up a Joint Venture to develop the Pilbara iron ore deposit in Western Australia. However, after both Australian and European regulators indicated this would create an iron ore player that would be too dominant, the plans were cancelled last month.
  • The $39bln offer for PotashCorp appears to be a move in which BHP Billiton does not build up a dominant position in any market. If BHP manages to break the cartel-based pricing system for potash the deal might actually benefit the world economy. Still the Canadian government seems to be inclined to let the deal stall to protect the domestic industry and tax revenues.

Implications:

  • BHP Billiton has approx. $12bln cash on the balance sheet and is earning more cash rapidly due to the high iron ore price. Typically mining companies need approx. 2-3% of asset value in operating cash, leaving BHP with some $10bln excess cash. The low leverage and the high credit rating of the company enable it to raise at least $30bln additional cash by increasing debt. However, it is hard to select acquisition targets that might actually lead to a combination that will be approved by regulators.
  • The company will either need to focus on acquiring large players in markets where it does not have a strong presence yet, or focus on acquiring many smaller players or individual assets. As the company is trying to reduce the portfolio complexity, expansion into completely new markets is unlikely. Potential acquisition targets might be Newmont, Goldcorp, Freeport-McMoran or Eldorado in the gold market and Eramet, Inmet Mining and Outokumpo in the base metal market. Expansion into the industrial minerals sector would also be an option.
  • The best way for mr. Kloppers to make a name for himself would be to make BHP Billiton the first major western mining company to build up a strong operating presence in China and/or India. Creating a Joint Venture with a local player might be the best option to achieve this.

©2010 | Wilfred Visser | thebusinessofmining.com