BHP Billiton

Amid the mining boom of southeastern Australia in the late 19th century, a ranch hand named Charles Rasp working near the western border of New South Wales found some intriguing rocks. Tests of the specimens showed them to contain silver and lead. He brought in about a dozen co-workers and acquaintances to form a mining operation they named Broken Hill Proprietary after a nearby town.

Before long they were all rich. BHP hit on one of the greatest deposits of silver ever discovered, and within a few years of its founding in 1885, the company was employing hundreds of workers to extract and process the ore, which also included scores of other minerals. By the beginning of the new century BHP was also mining iron ore in South Australia, and in 1915 the company began using that ore to make steel at a facility at Newcastle in New South Wales. This pushed the company into coal mining to provide coking coal for the mill.

The steel business took off with the demand created by the First World War. After the acquisition of Australian Iron and Steel in 1935, BHP gained near monopoly control over steel production in the country. In 1939 BHP finally abandoned its exhausted mines in Broken Hill. In the early 1940s the company got involved in shipbuilding, and during the Second World War it produced munitions and participated in a consortium that made aircraft.

The management of BHP decided in the 1960s to expand its mining activities beyond that required to supply its steel operations. This strategy was first pursued through a joint venture with the Australian subsidiary of Standard Oil of New Jersey (now Exxon Mobil). The partners struck natural gas and then oil in the Bass Strait between the mainland and the island of Tasmania. BHP then began mining iron ore, manganese, and later coal for export.

By the 1980s BHP was working hard to turn itself into a global natural resources company. The biggest step in this direction was the 1984 acquisition of most of Utah International, the big mining operation that the U.S. company General Electric had bought in 1976 for what was then the astounding sum of $2.2 billion. The purchase gave BHP a major presence in North and South America, including interests in U.S. coal mines, the huge Escondida copper mine in Chile, and an iron ore project in Brazil. BHP went on to acquire a series of U.S. petroleum companies, including Energy Reserves Group, Monsanto Oil, and Pacific Resources.

These purchases were not only part of a diversification strategy. They also served to thwart a long-running takeover effort by Australian raider Robert Holmes à Court by swelling the company's debt. Yet Holmes à Court was not deterred, and by 1986 he had built up his holding in BHP to some 28 percent. His takeover did not succeed, though he did win a place on the company's board of directors that he held until the stock market slump forced him to sell is holdings back to the company in 1987. As part of its takeover defense, BHP acquired a 37 percent stake in the Australian brewer Foster’s.

In the following year the company continued to expand its far-flung mining and other natural resources activities. In 1987 BHP moved further into the U.S. petroleum business by purchasing a minority interest in Hamilton Oil; four years later it bought the rest of the company. The company also expanded at home, purchasing the Mount Goldworthy iron ore project in Western Australia in 1990. Soon it joined the diamond mining rush that swept Canada by developing the Ekati mine together with Dia Met Minerals, which BHP later acquired.

BHP bought the U.S. company Magma Copper in 1995 when copper prices were high, but those prices soon slumped. This and other setbacks prompted to embark on a restructuring effort that led to the elimination of various businesses and some 20,000 workers. The next major step came in 2001, when BHP merged with the U.K.-owned, South Africa-based resources company Billiton, which had been created in 1997 as a spinoff from the South African conglomerate Gencor Ltd. The combined corporation, renamed BHP Billiton, became the world’s largest diversified resources producer.

In 2002 BHP Billiton spun off its steel operations into a separate entity initially called BHP Steel. Three years later, BHP Billiton won a takeover contest for Australian mining company WMC Resources. That was the last major acquisition BHP has completed. In 2007 it made an ambitious move by offering to pay about $140 billion to take over its rival Rio Tinto. Although BHP raised its offer to $147 billion, Rio Tinto continued to resist and European regulators raised objections to the deal. In November 2008 BHP withdrew the bid.