Impala Platinum bid from BHP Billiton effectively ruled out by CEO Kloppers

In as strong an indication as one is likely to get from the CEO of a major mining company, BHP Billiton's Marius Kloppers, in response to a question from Mineweb, effectively poured cold water on the South African inspired rumours that the company was preparing to bid for Impala Platinum.  The speculation followed the appointment of former Impala CEO, Keith Rumble, to the mining giant's Board a week ago.  While platinum, as an industrial metal was indeed of interest to BHP, Kloppers seemed to rule out Impala as a target because of some of the inherent dangers to personnel working underground in South Africa's platinum mines - and Impala's production is virtually all from underground mines.  BHP obviously does not want its global record tarnished by South African mine fatalities to which the platinum sector seems prone because of the labour intensive, narrow working, type of mining used.

Kloppers was speaking at a press briefing in London to comment on matters around BHPB's preliminary results, which are detailed elsewhere on the site.  The briefing took the form of a question and answer session, with no preliminary introduction by the softly-spoken BHP CEO.

He was confident that the minerals sector would remain strong by virtue of growing demand for metals and minerals.  China, which has been the biggest market is not export led averred Kloppers, but driven by growing domestic demand, so that and many of the other developing world markets should continue to grow.  Coupled with supply constraints and bottlenecks which mean it is difficult for companies to build production, will keep prices relatively strong.

When questioned about the possibility of sweetening the bid for Rio Tinto, Kloppers' comment was "You pay what a company's worth!" and that BHPs continuing growth has anyway, in effect, already raised the value of the bid vis a vis Rio's performance.

On mineral exploration, Kloppers feels that history has shown that big mining companies are not the best at finding new deposits and that consequently BHP's greenfields mineral exploration spend will remain relatively low in favour of exploring around existing operations.

He also had some interesting comments to make on political risk saying that companies tend to underestimate risks inherent in constructing mines in new areas and to overestimate the risk of working in more traditional areas.  He noted that the only major project being constructed from the ground up by BHP in what could be described as a new politically risky area was that of an aluminium smelter in Guinea.

Overall, Kloppers was confident that BHP would continue to grow year on year, while he felt that many other companies were struggling just to stay where they are - perhaps a dig at Rio Tinto.  BHPB's big bulk commodity interests - iron ore and notably coal where in some cases margins of $200 a tonne are being achieved - will stand it in particularly good stead compared with its competitors.