BHP Billiton chief executive Marius Kloppers is a lucky man, and not just because, as a US regulatory filing has revealed, his remuneration jumped 51 per cent to some $10m in 2008-9. Rather, because his audacious and frankly half-baked plan to merge with Rio Tinto failed. Had it succeeded, BHP would have had to refinance up to $40bn of Rio's debt, instead of escaping with an enviably strong balance sheet and a diversified spread of businesses.
A takeover of Rio would also have left BHP disproportionately exposed to aluminium, where the pricing outlook is arguably the weakest. Broker RBC reckons aluminium will account for 30 per cent of Rio revenues in 2009, but only seven per cent of cash earnings. But debt and aluminium prices remain Tom Albanese's problems, not Marius Kloppers'.
And the good fortune didn't end there for Mr Kloppers. Squeezed in its aluminium vice, Rio agreed earlier this year to fold its iron ore business in Pilbara, western Australian, into a joint venture with BHP's contiguous operations. Iron ore was always the synergy driver of the mooted merger, so ironically, BHP may achieve its aims anyway, through this different track.
Finally, Rio's intransigence in the benchmark annual iron ore price negotiations with Chinese steel mills has all but scuppered contract talks, creating the space for BHP to push its preferred model of a spot index-linked regime on some customers.
Will Mr Kloppers continue to enjoy such a charmed life? The iron ore venture faces many of the anti-trust issues a full merger raised, and China still wants to block it. Meanwhile, Chinese state-owned enterprises are fostering a veritable insurrection in the behemoths' backyard - striking prices with emerging third Australian iron ore exporter Fortescue that undercut the big two, and investing in other junior Pilbara players, while agreeing to fund new rail and port export infrastructure.
The Fortescue-led push to prise open BHP and Rio's stranglehold across Western Australia's infrastructure is nearing success. Little-noticed in Mr Kloppers' August results presentation was his admission that BHP Billiton now plans for a "freight haulage regime" - a regulated opening-up of BHP and Rio rail lines in the Pilbara to other miners, something both dread due to fears it will hamper efficiencies.
