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BHP Billiton's Andrew Mackenzie

DAVID STOBBE/The Globe and Mail

Andrew Mackenzie, an oilman for most of his career, had something of a revelation when he swapped BP for mining company Rio Tinto in 2004. As head of industrial minerals, he inherited a partly-owned potash project in Argentina and quickly realized that, as far as commodities go, this one had long-term winner written all over it.

"I could see that potash had a lot of potential," he says. "I concluded that it was relatively scarce and that the desire of a growing population to eat well would only create significant demand."

Ultimately, Rio's little potash play fell into the maw of Vale, the Brazilian mining heavyweight. But Mr. Mackenzie knew that, sooner or later, any big diversified mining company would have to make a splash in the potash market. At the time, he could never imagine that he would be the executive making that splash.

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Today Mr. Mackenzie is the point man on BHP Billiton Ltd. 's $39-billion (U.S.) bid for Potash Corp. of Saskatchewan Inc. If the hostile offer wins, the world's biggest mining company will be the world's biggest producer of potash, an essential and irreplaceable nutrient for crop fertilizers on a planet where food demand will rise by half by 2030, according to the Food and Agriculture Organization of the United Nations.

Mr. Mackenzie, 53, joined BHP in 2008 at the invitation of CEO Marius Kloppers. He remembers having several conversations about potash with his new boss in the early days on the job. Every mining company's perennial debate - buy or develop? - was discussed at length. What was known was that getting into the potash market in a big way was inevitable. "It was an idea whose time had come; it was going to happen," he says.

BHP ended up with a dual-headed strategy. It made plans for its own potash development in Saskatchewan, known as the Jansen project, which could chew through $10-billion (Canadian) of capital by the time the mine opens in five years or so. And in mid-August it launched a hostile bid for Potash Corp., an investment that could reach $50-billion (U.S.) if the value of the opening $130 a share offer is bumped up.

While Mr. Kloppers is the public face of the bid, the takeover effort is very much Mr. Mackenzie's show. A more unlikely corporate raider is hard to imagine.

Mr. Mackenzie is the most senior London-based executive of the Australian mining group. He is an intensely private science buff from Scotland with an amazingly low public profile, given the fact that he is a member of BHP's senior management committee and is the chief executive of all of the company's non-ferrous commodity activities, from Peruvian copper and Australian uranium to South African aluminum and Canadian diamonds. That makes him responsible for about one-third of the BHP's sales ($52.8-billion in the last fiscal year) and capital investment, and about half of the company's 41,000 direct employees. Yet outside of the clubby mining world, he is unknown and likes to keep it that way.

He was born just north of London, where his father, a doctor, was doing his military service. He was taken to Scotland when he was only three days old and grew up in Kirkintilloch, a coal-mining town near Glasgow. He won all sorts of science prizes in high school, went on study geology and organic chemistry in university and did post-doctoral research on the chemical constitution of hydrocarbon reserves.

In 1982 he joined BP (the former British Petroleum), where he attained the titles of chief technology officer and chief reservoir engineer. His last BP job was in Chicago, where he ran the company's petrochemicals business.

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He left in 2004, after BP decided to ditch petrochemicals, to become the head of Rio Tinto's industrial minerals division. During his four-year stint at Rio, he got to know Mr. Kloppers at rival BHP. The BHP job offered to him was too big to turn down and he became part of Mr. Kloppers' inner circle in 2008.

Potash Corp. CEO Bill Doyle and his defence team in Saskatoon must be killing themselves trying to build a psychological profile of the man, all the better to judge his next move in the Great Fertilizer War. Good luck, for Mr. Mackenzie has never been involved in a hostile takeover before BHP thrust Potash Corp. onto the auction block. He has, of course, been involved in takeovers, but only on the periphery. When BHP was trying to buy Rio in late 2007 and 2008, Mr. Mackenzie recused himself from the deal because he had just arrived from Rio (BHP dropped the hostile bid during the 2008 financial crisis).

In spite of his scant takeover experience, Mr. Mackenzie, true to his reserved Scottish style, claims to be as cool as an autumn Highland breeze while the hostile takeover runs apace. "Nothing keeps me up at night," he says. "Things are going more or less to plan."

Mr. Mackenzie calls the potential acquisition of Potash Corp. "significant," rather than "a defining moment" for BHP. That's because, as big as the Saskatchewan company is, it's relatively small compared with BHP itself, which has a market value of more than $200-billion and was willing to buy Rio for as much as $147-billion during the height of the commodities frenzy.

He also seems unperturbed by the endless rumours of a rival bid from a Chinese-led consortium. While he's not ruling out competition, he is well aware that a consortium bid can be a cultural and financial nightmare and that BHP, as a non-sovereign bidder with an all-cash offer, must present an elegantly appealing proposition to many shareholders. "We at BHP like to keep things simple," he says. "Simplicity greatly enhances your chances of success and it would be hard to see anyone rivalling that simplicity."

Simplicity, however, is not what BHP is offering to Canpotex, the cartel used by Potash Corp. and two smaller fertilizer companies to market and export potash. Mr. Kloppers has made it clear that Canpotex is not BHP's style. The company likes transparent, market-based pricing and typically runs its mines flat out to squeeze competitors and capture market share. The Saskatchewan government is in concerned that BHP, shorn of Canpotex, will crank up production, a scenario that would lead to lower prices and lower royalties. About 10 per cent of the province's budget comes from potash royalties.

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As the point man on the bid, Mr. Mackenzie is saddled with the politically sensitive job of making nice with the provincial government and Canpotex's partners. He says BHP likes the potash delivery infrastructure built by Canpotex and can live with the joint marketing arrangements, but has a problem with supporting prices by fiddling with production volumes.

"At BHP, our behaviour follows a different path," he says. "This is where we will have the greatest engagement with our partners, but we don't do anything that's not in the best interests of BHP Billiton and Saskatchewan."

Translation: Mr. Mackenzie's obscurity and desire for privacy is about to vanish in the unlikeliest of places - Saskatchewan - as BHP (assuming it wins Potash Corp.) tries to negotiate a new future for Canpotex, a cartel that has served the province well for decades. This, as much as running one of the biggest hostile deals in takeover history, is bound to test his reputation for cool, reserved Scottish professionalism.

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About the Author
European Columnist

Eric Reguly is the European columnist for The Globe and Mail and is based in Rome. Since 2007, when he moved to Europe, he has primarily covered economic and financial stories, ranging from the euro zone crisis and the bank bailouts to the rise and fall of Russia's oligarchs and the merger of Fiat and Chrysler. More

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