The Age

One last deal for the 'nuggety little patriot'

Date: 05/08/2009
Words: 822
Source: AGE
          Publication: The Age
Section: Business
Page: 4
Chairman Don Argus' dream for BHP Billiton is almost a reality.

IN MAY, Don Argus gave a speech at one of Brisbane's exclusive private boys' schools, Anglican Church Grammar School, otherwise known as "Churchie".

Argus is a Churchie old boy, although he only attended the school for a couple of years. The event was notable as one of the first public appearances by a senior BHP Billiton figure since the company's audacious takeover attempt of rival Rio Tinto was abruptly cancelled last November.

After sharing his downbeat views on the outlook for the global economy, Argus chose to end on an optimistic note. "There is no limit to what we can achieve as a nation, as Australian businesses, or as individuals," he said. "Except the limits we impose on ourselves by lack of confidence or application."

The comments were telling. Over the past decade, with Argus at the helm, BHP has never lacked for confidence or application. It has grown in size, clout and profitability with a string of successful takeovers  Billiton in 2001, WMC Resources four years later. The WMC deal, secured for the bargain-basement price of $9.2 billion, delivered BHP the closest thing Australia's mining industry has to a magic pudding  the fabled Olympic Dam, rich in copper, gold, silver and uranium.

But when, in November last year, BHP Billiton abruptly pulled out of its determined takeover pitch for Rio Tinto, it seemed that the giant had, perhaps, finally overreached. It had tried to push a deal against the wishes of its major customers in China, which quickly intervened in the guise of Chinalco's swoop on 9.3 per cent of Rio shortly after BHP's bid became public.

How things change. Now, less than a year later, Rio has dumped Chinalco and its proposed $US19.5 billion ($A23.2 billion) alliance. With the two companies having agreed to a $US5.8 billion plan, Argus' BHP is tantalisingly close to realising the most crucial part of a Rio Tinto merger  a tie-up of the two companies' Pilbara iron ore operations. A definitive agreement, plus regulatory clearance, is still to come.

It would be fitting if Argus' tenure was to end with the successful completion of the Pilbara deal. Along with the company's determined expansion, the elusive goal of a Rio Tinto merger has been the defining story arc of Argus' decade as chairman.

That decade kicked off with board-level discussions about an iron ore merger in the late 1990s.

That approach, which was abandoned by then BHP chief executive Paul Anderson, was never made formal. There was Brian Gilbertson's botched plan in 2002 that led to a spectacular falling out between Argus and Gilbertson, and Gilbertson's sacking.

Chip Goodyear started plans for the proposal that Marius Kloppers launched in November 2007, mere months after Argus and the board gave him the top job.

Kloppers, it is said, was chosen because he convinced the BHP board that he could pull off the Rio Tinto merger. Pointing to the performance of Goodyear and Kloppers, many cite Argus' role in the selection of BHP's chief executives as one of his strengths while at BHP.

Argus was often described as one of Australia's first celebrity chief executives back when he ran National Australia Bank. He came to BHP in 1996, and took over as chairman in 1999, the year he stepped down from NAB after taking the bank to the brink of the world stage. It was there that he earned the nickname "Don't Argue", which stuck in later years. That same year, he also took on the chairmanship of troubled pallet business Brambles, from which he retired last year.

Despite his high-powered roles, those close to him describe Argus as self-deprecating and not fond of the limelight.

But he is perhaps best known for his advocacy of the concept of "national champions". BHP Billiton is now the very model of a national champion, an Australian company that strides the world stage.

In the wake of NAB's mixed-at-best record of overseas expansion, BHP is Don Argus' dream made reality.

"That [national champion] idea has been belittled by people since the time Don first proposed it," says a former colleague who remains a close associate.

"There was a time in Australia when people felt they just couldn't have world-class companies, and Don just wouldn't have any of that. He believed you could, and he's had that consistency through all of these leadership roles."

Robert Macklin, the co-author of a new book about BHP Billiton, The Big Fella, describes Argus as a "nuggety little patriot", adding that "the general direction of the company has, to some extent at least, been determined by Argus' attitudes, his ambitions and his prejudices".

It is "tremendously important" for Argus that the Rio deal is completed.

"He worked hand in glove with Marius Kloppers on that takeover," Macklin says. But he adds that, in some people's opinion, the deal would have been done five years earlier if Argus not fallen out with Gilbertson.

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