Marius Kloppers is helping to build China. As boss of the world’s biggest miner, BHP Billiton, he’s sating what, up until now, has been the Asian economic powerhouse’s unquenchable thirst for commodities.
But things aren’t all roses for the South African-born cricket nut. China’s once-bulletproof growth rate has been recently forecast down from 8% to 7.5% (compared to 9.2% last year). With a third of its business in China, BHP Billiton will be hoping that any hiccup is simply indigestion.
“If China does well, my company will do well. If China does not do well, this company will not do well,” Kloppers said during an interview with Chinese media outlet caixin.com earlier this month.
Kloppers has already suggested that should uncertainty, rising costs and falling commodity prices continue, BHP Billiton may have to put some of its mooted $80 billion in expansion plans on the back burner. Those investments include the Olympic Dam copper and uranium project, Jansen potash expansion and an outer harbour in Port Hedland.
“At the end of the day, resources … remains a cyclical business. And I emphasise: it’s a cyclical business both for BHP Billiton and for Australia,” he told a Perth conference recently.
He’s right on that point: softening demand in China doesn’t just cause sleepless nights for Kloppers, it’s bad news for Australia as well. With dark clouds continuing to hover over Europe and the US, what we dig out of the ground is helping prop up Australia’s enviable growth and unemployment levels. If the market for iron ore evaporates, things could turn nasty.
Regardless of what happens, Kloppers and the company they once called “The Big Australian” (it’s part British now) have made a killing out of China’s insatiable demand for resources. Together with Pilbara rival Rio Tinto, BHP Billiton has cashed in on an infrastructure boom which has seen iron ore prices rise from $US13 per tonne a decade ago to $US140 today.
In that time, total production has gone from around 80 million tonnes of iron ore per year to 500 million tonnes, with the company’s share price up 200%. By 2020, BHP Billiton thinks it can export 350 million tonnes a year on its own.
But tempting as it may be, it’s not all about steel for Kloppers. There’s also the company’s diverse portfolio of commodities assets for him to worry about, including copper, coal, zinc, silver, natural gas, uranium and more.
Diversification fits in with Kloppers’ strategy of acquiring “tier one” assets (large, long-life and low cost), which has prompted BHP Billiton buy up shale gas drillers Petrohawk Energy for $12.1 billion and Chesapeake Energy for $4.75 billion, as well as launch failed bids for Rio and Canada’s Potash Corp. That big-spending strategy has copped some flak in the past, with some analysts saying Kloppers is making large bets at the top of the cycle.
Still, BHP Billiton is a corporation of gorilla-sized proportions, with profits of $22.5 billion and a market cap of $162 billion (at last check). It is so big it can regularly be found on lists of top 10 largest companies in the world — sitting alongside behemoths like Apple, Exxon Mobil and PetroChina.
It’s enough to have the federal government hounding Kloppers and friends to “share the benefits of the boom”, otherwise known as the Mining Resources Rent Tax. That duty, of course, replaced Kevin Rudd’s doomed Resources Super Profits Tax, which the mining industry — led by giants such as Kloppers – successfully opposed. BHP Billiton, alongside Rio and Xstrata, helped design the new, more palatable tax, which comes into operation this weekend.
So what’s the man himself like? Those who work with him say he’s complex, incredibly smart and a big family man. He’s also got a bit of a temper.
“He can lose it if he’s not happy about the way things are going or thinks you’ve f-cked up,” one colleague told The Power Index, adding that Kloppers rarely lets emotion control his decisions.
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