The Big Australian comes home on Australia Day

The country’s biggest company BHP has come home to Australia but it faces some challenges such as its near total reliance on iron ore and China.

BHP has some ‘interesting’ challenges, not least its near total reliance on iron ore and china. Picture by: Rebecca Le May

Call me sentimental, but there was something exactly appropriate – if also rather exquisitely weird – in an English court allowing, on the very eve of Australia Day, Australia’s biggest company BHP to come home to Australia.

Whether you call it “The Big Australian” or “Australia’s Own”, after some 20 years, now finally and fully gone is the disastrously conceived, clumsy and clunky, so-called dual-listing edifice of a BHP PLC listed in London and a BHP Group Ltd listed downunder on the ASX.

From January 31, there will be just one Big Australian – the Aussie entity BHP Group Ltd, listed on the Australian Securities Exchange.

Trading, though, in its shares and quasi-shares will continue on the London, Johannesburg and New York stock exchanges - as is more than appropriate for Australia’s biggest and easily most globally significant company and business.

Late Tuesday evening BHP announced that the relevant UK Court had sanctioned the PLC scheme of arrangement to effect unification.

From January 31, only the Australian company BHP Group Ltd will be listed on the ASX.

PLC shareholders had to vote to extinguish their company and so an English court had to endorse that - a bit like what happened running up to that other ‘Australia’ Day, January 1 1901. Now it’s obviously right and necessary for BHP to trade on the London and NY exchanges, but why the Johannesburg exchange?

Yes, we have a shared history in mining, but the reason is much more specific. There are large numbers of – very satisfied - BHP shareholders in South Africa. Thanks to the events of 2001 as opposed to 1901.

That was the clumsy and clunky dual-listing – the disastrous merger of BHP and Billiton, and which for more than a dozen years gave us BHP Billiton, before the company sensibly buried the Billiton name.

While BHP might have buried the name it couldn’t wash away the disaster of the merger. Under it, BHP gave Billiton holders 42 per cent of the group’s enlarged ongoing equity for a bunch of mixed assorted assets which made up Billiton and which, to be generous, were worth around four-fifths of five-eighths of copulating all.

Those Billiton holders were largely in London, where the money for Billiton came from, and in Johannesburg where it was headquartered and most of its mines were.

If they were smart they would have ridden the seemingly never-ending BHP profit boom off its always owned Australian mines and especially those up in the Pilbara.

As over the years BHP quietly closed or sold the newly acquired Billiton ‘assets’.

Indeed, you would be hard pressed to find a single dollar of profit coming from an ‘old’ Billiton asset in the BHP of 2022.

Now it was also argued that the BHP of 2001 desperately needed to ‘buy in’ dynamic management after the torpor of the 1990s.

Well, that also certainly worked out well. Not.

First off, the dynamic boss of Billiton, Brian Gilbertson walked in the door at the bottom end of Bourke St in Melbourne ...

… And just as promptly walked out with a cool $50m, plus the profits on his new BHP shares, when – maybe it was a language thing - he didn’t take the hint from his new chairman’s nickname, Don ‘Don’t Argue’ Argus. Gilbertson did and exited.

BHP also bought in with Billiton an even younger and even more dynamic South African, one Marius Kloppers.

He became CEO in 2007 and promptly took BHP into US shale oil, where it lost somewhere between $20bn and $30bn. Sorta made Gilbertson’s $50m look cheap. So, that’s all history. The rest of BHP’s life starts now. It’s got some ‘interesting’ challenges, not least its near total reliance on iron ore and China.

Life is even more ‘interesting’ for Rio, which is even more reliant on iron ore and China and still locked into its dual-listing mess.