BHP’s tenacious CEO faces third strike in Potash deal

By James Regan

SYDNEY (BestGrowthStock) – Three strikes and you’re out?

For the third time in as many years, Marius Kloppers, the South African chief of BHP Billiton, faces another setback in his daring quest to find new avenues of growth for BHP.

The Fulbright scholar, whose idea of a good time is watching cricket on television with his children, might have a fight on his hands as speculation grows he may soon be forced to go.

“For a lot of people, Potash is seen as make or break for him because nothing big has been acquired on his watch,” said an Australian mining executive with another company who did want to be quoted on the record talking about Kloppers.

“Still, he guided BHP through the financial crisis with great acumen and that’s got to count for something,” he said.

Kloppers is known for his tenacity and others who have had dealings with him say he would go down swinging. As an 18-year-old conscript in South Africa’s war in Angola, he reportedly carried his heat-stricken German Shepard through the desert rather than let him die.

“The fat lady hasn’t sung yet,” said Andrew Pyle, a wealth advisor at Scotia McLeod in Canada. “It’s not over,” Pile said referring to BHP’s chances to keep its bid on the table.

Kloppers, 47, will be under more pressure to finally launch a share buyback as he comes to terms with the Canadian government’s decision on Wednesday to block BHP’s $39 billion takeover of Potash Corp.

“Marius Kloppers is going to be pretty frustrated,” said Cameron Peacock, an analyst at IG Markets in Melbourne.

The buyback is something investors have long called for and could endear him once again with shareholders sour over Klopper’s push to acquire the Saskatchewan fertilizer company.

“It is hard for them (BHP) to deploy their money,” Evy Hambro, head of mining investments for BHP’s largest shareholder, Blackrock Inc told Reuters recently [ID:nSGE69Q07O]. “What is available to them is their own shares.”

Early in his tenure at the helm of BHP, a diversified mining house known as the “Big Australian,” Kloppers launched an audacious but ultimately mistimed play for rival Rio Tinto just before the global credit crisis hit commodities markets in 2008.

If the deal had succeeded it would have been the second-largest takeover in corporate history.

After that, Kloppers attempted a $116 billion merger of BHP and rival Rio Tinto’s vast iron ore businesses, infuriating steel mills which buy the ore and leading competition regulators on three continents to reject it.

ONUS ON BHP

Canada blocked BHP’s bid, saying it would not benefit the nation and offered only the slimmest of chances of accepting a modified offer.

Ottawa has given BHP 30 days to revise the offer and show how it would provide benefits to the country.

Some think this gives Kloppers one more swing. Others counter the 30-day rule is a mere formality and that the deal is dead.

In pursuing Potash, Kloppers is betting an increasingly hungry world will pay dearly for the super-fertilizer ingredient potash, first employed in 14th-century Ethiopia and sought after by farmers worldwide.

About 150 countries use potash for their crops, but it is only produced in about a dozen.

Although it has explored for potash, BHP has yet to produce any. Potash on the other hand, commands a 20 percent share of global potash capacity. The biggest profits in commodities come from suppliers with the largest production runs, which is why Kloppers is trying on Potash for size.

Kloppers, who turned vegetarian after a steady diet of fish and meat school lunches in apartheid South Africa, criticizes developed countries for hoarding food and using sugar cane, palm oil and other food crops to manufacture biofuels.

“I think biofuels are a selfish way for the West to placate itself and to basically impose the cost on the developing world,” Kloppers told the Age newspaper in Australia.

“We are making hundreds of millions of people worse off with biofuels because it’s pushing up food prices.”

(Editing by Anshuman Daga)

BHP’s tenacious CEO faces third strike in Potash deal