Dear Dryblower
 
It has been amusing to read in the press that BHP's Spinco should be named Billiton and to share your cynicism on the role of management consultants from MBA land. However, an opportunity beckons in Spinco. For years now, when looking at exploration and development opportunity in Australia, most of us find ourselves considering opportunity generated by former Australian stalwarts such as WMC, CRA and MIM. It has been decades since there was such comprehensive exploration effort made in Australia by single companies, Rio and BHP have all but abandoned Australian exploration. Who will find the next Olympic Dam?
 
The great opportunity presented by Spinco is to recreate that culture and have a new Australian champion. Roy Woodall at Diggers lamented how WMC lost its way and became driven by the short term, this new entity with Australian nickel, silver-lead, coal, manganese and alumina, could with vision, become our industry leader, a genuine Australian diversified miner. Haddon King wrote a great collection of essays many years ago titled "the rocks speak". This is still the foundation of our industry. In Australia the rocks speak loudly but the big boys are no longer listening. As you note, management will be key and let's hope Spinco will be managed by true mining people who listen to the rocks rather than management consultants.
 
Given the company will be founded on WMC's nickel assets, why not call it WMC redux.
 
Regards,
 
Alistair Cowden
 
Spot on analysis of course.
 
You may also be reasonably sure that the management consultancy already has a draft of a 10-point presentation calling for BHP to move (back) into less-correlated commodities to smooth out the swings in BHP's results.
 
Rinse. Repeat.
 
Josh Clarke
 
Along a similar line of thought is the use of major contractors in the mining industry and particularly iron ore by BHP/BHP Billiton …
 
In the early 1990s BHP (and other major players) thought it a good idea to engage contractors (such as at the time "market darling" Henry and Walker and Roche Bros, etc) ostensibly because BHP itself was too fat and contractors were cheaper and much more efficient (and with little or no stated safety or IR problems). Part of this was that these organisations had only passing regard for these issues nor substantial internal expertise to deal with them. In effect, I guess this was a previous manifestation of "splitting"
 
Twenty years on these contractors were pretty bloated themselves but BHPB "buys" Leighton's mining division in the Pilbara which had existing contracts with BHPB. This turn-around was I believe, in part, to control IR and safety issues which had materialised and to generally have greater control as well as take advantage of economies of scale.
 
Ironically, Leighton had sucked up the mining contract division of HWE, which itself was a merged entity of the above mentioned Henry and Walker plus Eltin. Now all back in the BHPB fold. I'm sure a few management consultants had gainful employment along the way as well … I'll look forward to around 2025 for the next iteration!
 
Just thought this was interesting. Really enjoy your articles, Dryblower.
 
Declan Hoden
 
Agree entirely Dryblower. Ironic that BHP aims for a re-rating by spinning out many of the same assets that it acquired via the expensive merger with Billiton.
 
Gavin Wendt
 
This article is the reason I love Dryblower. Despite what might be seen to some as a cynical view, he quite often simply cuts through the hype, jargon and spin to present what is likely the kernel of truth.
 
Keep it coming.
 
Coogee Barbuzza
 
Letters to the editor are always welcome. Email editor@miningnews.net. Some letters may need to be edited.