Corporate Spotlight: BHP Billiton

Over the last several months, Canadians, whether they are in the mining industry, financial analysts or interested members of the general public, have been hearing the name BHP
Billiton.

Primarily, the company has been in the news as of late for its involvement in the Alcan Inc. sale. Most recently, BHP has continued its efforts to purchase Rio Tinto Canada Holdings Inc.

Should the sale take place, it will be another shining example of how BHP Billiton has come to be one of the largest companies in the mining industry through a myriad of mergers and
takeovers.

Growth through acquisition
Like many companies today, BHP Billiton began as two separate companies. The Broken Hill Property Company Limited (BHP, later changed to BHP Limited) was first incorporated in 1885 in Victoria, Australia, just two years after the Broken Hill Mining Company had been established by a seven-member group . Broken Hill, however, was dissolved when BHP was founded.

It didn’t take long for BHP to make its mark in the mining world. The fledgling company began operations in New South Whales, mining silver, lead and zinc in the province until 1939. Their mining practice would grow, as would other ventures such as Australian Wire
Rope Works Limited.

By 1957, however, BHP had gained full control over the company after starting with only
22 per cent ownership. Other takeovers were in the cards for BHP, including Rylands Bros. (Aust) Pty Limited, and Australian Iron and Steel Pty Limited.

Though BHP’s primary work would continue in Australia, the company would also expand to international territories. In 1979, BHP ventured to Indonesia and began production at the
Kelapa Kampit tin mine. Over the next two decades, expansion would continue as BHP would either set up shop or takeover projects in the US, Chile, Peru and Mali. Near the turn of the century, BHP would make its first venture into Canada, establishing the Ekati Diamond Mine in the Northwest Territories.

Billiton’s history, though not as colourful as BHP’s, is equally as historic. The company, originally called NV Billiton Maatschappij, was officially established in 1860 in the Netherlands, with a focus on mining for tin in Indonesia. The country would continue to be a focus for Billiton in other minerals, as in 1935, the company established its first bauxite mine on Bintan Island. Like BHP, Billiton would not remain in one country and eyed international expansion, as the company would stake in Suriname in 1941. Just over two decades later, Billiton would expand into Thailand.

BHP’s operations continued through 1969 when it began to move into acquisition
mode, gaining 50 per cent interest in Kempensche Zinkmaatschappig and would fully own the company one year later. In 1970, however, Billiton would be taken over by the Royal/Dutch Shell Group. Soon, the company would have unprecedented growth, expanding into markets such as Peru, Brazil, Columbia and Canada, where it would gain partial ownership of the Nanisivik zinc and lead mine.

Billiton would again change owners in 1994, as South Africa-based Gencor purchased Royal/Dutch, and just three years later, the Billiton name would be fully restored as the company split in two, with base metal and coal assets all going to the new Billiton Plc.

The major merger
The end of the separate roads for BHP and Billiton came in 2001. After shareholder agreements and regulatory approvals, BHP Billiton was officially born. Now, one of the biggest mining companies in the world, the company thrives in part because of its ability to stick to a well-laid game plan, which includes the following three missions, as
stated on the company web site:

With these credos firmly in place, BHP Billiton will continue to grow and be a continued force in the international mining market.