Is BHP's (NYSE:BHP) Marius Kloppers Becoming a Liability?

There is pretty much one thing on the mind of shareholders of BHP Billiton (NYSE:BHP), and that is expansion. And the nature of the business of BHP is it will have to be, for the most part, expansion through acquisition.

What's interesting about this from the point of view of BHP CEO Marius Kloppers, is it seems he has something else on his mind besides expansion alone when he's making these attempted deals, which three in a row have failed.

Although the attempted deal with Rio Tinto (NYSE:RIO) failed, it actually did something much more profound for the iron ore industry, and that was to break up the cartel-like steelmakers who had had the best of the pricing deals on an annual basis.

Kloppers changed that with his imposition of a pricing system of a much shorter duration and which was based on spot market prices of iron ore.

After following Kloppers and the way he bid for Potash Corp. (NYSE:POT), it made me wonder if he had a secondary and more important agenda in the bid, which would be to expose and weaken Canpotex, the price-fixing, potash marketing monopoly in Canada, which was the reason for the deal being rejected, contrary to any other reasons asserted.

Kloppers said from the beginning that he would eventually leave Canpotex and compete on market conditions rather than the artificial holding back of production in order for the socialist Canadian province of Saskatchewan to continue taking in royalties at prices they prefer.

With BHP having recently acquired a large potash project in Canada, it could have been his purpose to undermine the cartel and monopoly in order to do things his way when production begins.

Some believed if Kloppers didn't get Potash his job may be in trouble, but I'm not yet convinced of that. The share price of the company is hovering near all-time highs, and you just can't get much better than that as far as performance goes.

The question is what type of future is Kloppers preparing for BHP shareholders, and there's where the weak point of his performance is, or at least is perceived to be.

But one has to take into account the way he led the battle against China and others to implement the new pricing system for iron ore, and that will benefit BHP in the long run from that segment of the company.

The other question about Kloppers is if he has good insight when attempting to make deals. With Rio many feel he shouldn't have bothered with the attempted merger with their iron ore business, as it never had any chance of being allowed to go through with the opposition in many countries around the world.

One thing to like about Kloppers was his unwillingness to overspend on Potash, when he could have increased the bid by a lot more and not diluted BHP much, although they would have had to work through the added costs over time.

Pressure is slowly mounting on Kloppers to come up with something, and it may be he will have to add several smaller companies to make the type growth impact shareholders want to see.

The challenge he and all others in mining and raw materials face is everything is at a premium price now, and very little could be acquired at a good price.

So to placate investors he may have to pay out more than he would ever want to in order to show a commitment to growth. Doing that with smaller companies is much safer and probable than with the huge companies he's been targeting.