Perth office’s ‘zero’ impact on Worsley

AMALGAMATION of BHP Billiton’s stainless steel and aluminium groups and headquartering them in Perth, rather than London, will not result in “a closer eye on the Worsley refinery”.

Two company spokesmen this week said the Perth office would have “zero” impact on Worsley.

Andres Landerretche, the new external affairs and communications manager said: “The change in the management of the Aluminia and Nickel CSG will not have any impact on the operations.”

Worsley’s recently installed chief, Ricus Grimbeek, officially titled “head of the Worsley asset”, is responsible for local management.

The Perth office’s function is support and liaison between Worsley and Nickel West (Australia), Cerro Matoso (Colombia), Mozal (Mozambique), Hillside and Bayside (South Africa) and two non-operated joint ventures, Alumar and Mineracao Rio do Norte (Brazil).

The giant company announced last week it would create a new group, to be named Aluminium and Nickel, with Glenn Kellow as president. He currently heads the Stainless Steel Materials group.

The move comes after months of speculation that BHP could be preparing to divest one or more assets in those struggling sectors, which are being hurt by low prices, currency challenges and competition from China.

That speculation was fuelled earlier this year by chief executive Marius Kloppers’ declaration that the aluminium sector was undergoing a “structural, not cyclical” shift.

Mr Kloppers also said assets would have to perform well to keep their place on BHP’s balance sheet.

BHP group executive Alberto Calderon confounded forecasts by saying the new division demonstrated BHP’s desire to retain long-term exposure to those sectors.

“Despite the current challenges, BHP Billiton is committed to aluminium and nickel as commodities that may benefit from later phases of economic development in the emerging economies,” he said.

A long-time observer of BHP said its vow that it was “committed” to aluminium and nickel would send a message to unions, workers and the market.

“Does it mean they won’t sell a single asset in either nickel or aluminium? No, but generally speaking it means most of those assets are not on the block,” he said.

Poor market conditions may have saved some of the assets by eroding confidence in the prices BHP could expect in a sell-off.

Rio Tinto is trying to sell a collection of Australasian aluminium assets, meaning further sellers would risk flooding the market

BHP Billiton’s aluminium, nickel and corporate development chief executive, Alberto Calderon said the combination of these into a single business unit will provide appropriate scale within the BHP Billiton.

It would also simplify the functional structure of the business to make it a more efficient and competitive.

The two divisions are already merging and moving into their new Perth offices, a spokesman said this week.

In March BHP Billiton announced aluminium president Jon Dudas would be leaving after 21 years with the company. He became aluminium boss just a month before approval of the then $US1.9 billion Worsley alumina expansion, whose problems blew costs out to more than $US3b.

Fairfax financial reporter Peter Kerr reported Mr Dudas was relieved of his position because of health and safety issues.

In early February, Deutsche Bank analysts said BHP may consider selling about $10 billion of aluminum, nickel and coal assets, including Worsley.