BHP’s Marius Kloppers: I Was Not Sacked, Slower Demand for Minerals in Next 5 Years

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By Vittorio Hernandez | February 25, 2013 10:15 AM EST

Unlike Tom Albanese, his counterpart in Rio Tinto, BHP Billiton (BHP: ASX) Chief Executive Marius Kloppers insisted over the weekend that he was not sacked, and his retirement is part of the miner's succession plan in place since he was appointed to the top post six years ago.

He made the clarification just days after BHP announced that Mr Kloppers would step down and give way to the entry of a new chief executive - Andrew Mackenzie.

The succession plan included looking for the future chief executives from inside and outside BHP. In 2007, the choice was between Mr Kloppers, who then headed the miner's base metals group, and Chris Lynch, the carbon steel materials chief then.

Under Mr Klopper's term, he led the unsuccessful bid to takeover Rio Tinto and Potash, but the global financial crisis of 2009 slowed down the expected big growth for BHP under his stewardship.

Among his legendary quirks were his preference for no personal items on the office desk and insistence on tidiness that there are talks he was once seen late one night, cleaning the street-level window of BHP's headquarters on Lonsdale Street in Melbourne.

Mr Kloppers also warned of slower demand for minerals in the next five years which would require mining firms to cut costs. He forecast that despite the continuous strong demand from China for coal and iron ore, the growth rate in demand for these minerals would be in the vicinity of 2 to 4 per cent a year from the current 15 to 20 per cent.

"That means the suppliers will be able to respond and meet demand and therefore you have to be low cost and you have to take into account that price is not going to help you here," ABC quoted Mr Kloppers.

The Steel Index indicated that prices of iron ore could go down to $110 a metric tonne by the end of 2013 as mines in China hike their production output and reduce imports. As of Feb 22, iron ore traded at $153.60.

In view of the anticipated slowdown in demand, Mr Mackenzie said that under his leadership, BHP will apply the most modern management strategies and technology to ensure the minerals are developed sustainably, safely and in a way to ensure global demand would be met.

Mr Mackenzie was pirated by Mr Kloppers from Rio in 2007 to head BHP's copper division. In the year of hiatus after he left Rio, Mr Mackenzie mastered the Spanish language to help him in deals with South American miners. He worked for Rio in 2004 as chief executive of the miner's industrial minerals units, marked by the establishment of a $5 billion titanium mine in Madagascar.

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