Marius Kloppers, CEO BHP Billiton
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» Market dominance might hinder BHP Billiton - Lavan Gopaul, Cortex Securities
» BHP Billiton might look at Anglo - David Shapiro, Sasfin
» Heat turned up on reticent Rio
» BHP Billiton pushes for Rio deal despite rebuff


Anglo guns for value on back of BHP bid
David McKay
Posted: Fri, 23 Nov 2007

[miningmx.com] -- ANGLO American acknowledges there was a quickening of the corporate pulse early in November after BHP Billiton proposed combining its business with that of Rio Tinto. If successful, it would create a US$350bn mining and resources behemoth. As matters stand, Rio Tinto has rejected the overtures; BHP Billiton hasn’t yet taken the matter hostile.

“The story has a long way to run – possibly six months to a year,” says Liston Meintjes, chief investment officer at Metropolitan Asset Managers. Meanwhile, the possibility of major corporate action creates opportunities for groups such as Anglo American, quite often viewed in the past as vulnerable to such action.

Nick von Schirnding, Anglo’s head of investor and corporate affairs, says: “Whenever the tectonic plates start shifting, everyone has to sit up and take notice. We’re looking at the value-enhancing that may come of this.”

There have been some commentators who believe merging Rio Tinto and BHP Billiton would create dominance in aluminium and iron ore and possibly copper and uranium production. Marius Kloppers, BHP Billiton’s relatively new CEO, has suggested there are no great obstacles in that.

Brenton Saunders, a hedge fund manager at Craton Capital, says: “Intuitively, I’d agree. Anti-competition must be a big consideration. But they’ve resolved the problem with the authorities already or meeting the demands of the competition authorities is palatable.”

That could mean a combined BHP Billiton/Rio Tinto may have to dispose of certain assets for which Anglo may bid. “Clearly, we’ll do what drives the most value,” says Von Schirnding. “We’re not ruling anything out.”

It can be safely assumed that Anglo CEO Cynthia Carroll, who has bought mines in South and North America this year and quickly brought Anglo Platinum’s empowerment transaction to a successful close, will not be as reticent as her predecessor, Tony Trahar, might have been regarding this fluid situation.
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Anglo’s share price gained 11% on 8 November when BHP Billiton confirmed it wanted to discuss a deal with Rio Tinto. Investors may have speculated Anglo could become drawn into the bidding process, although Rio Tinto has since ruled out discussing a merger with another player as a means of defence.

As for Kloppers, it’s a statement of intent that the 45-year-old former South African means business. He’s one of three newly appointed CEOs of mining majors this year - the others being Carroll and Rio Tinto’s Tom Albanese. True to his name, Kloppers intends knocking his competitors out of his league.