The Western Australian reported that it is fair or not the reality is that the managers of Australia's major miners need to justify their jobs.

There is no doubt that they have no control over falling iron ore and coal prices, which are the result of external factors. So it comes down to their readiness to deal with the challenging environment and their mitigation strategies.

Should they have anticipated the fall in commodities prices and are their balance sheets in order to weather the storm?

Rio Tinto's Tom Albanese narrowly escaped the dole queue after paying a top-of-the-market price for Alcan. Rio is iron ore-heavy but has a relatively robust balance sheet.

Mr Andrew Forrest, whose Fortescue Metals has the most troublesome balance sheet, has immunity because he is the major shareholder.

It has been BHP Billiton boss Mr Marius Kloppers whose tenure has been the subject of speculation as his investment roadshow has trundled through Britain and Australia.

The most recent trigger is the slump in the price of iron ore over the past couple of months and its particularly sharp decline over recent weeks.

He has already copped criticism for the acquisition of AUD 20 billion of oil/shale gas assets in the US, which after only a year have been written down.

Mr Kloppers sees the push into oil and gas that these assets have delivered as a strategic tick for him and the company, and takes the view this has put him in good stead with the investment community.

In theory the buffer that energy assets provide the company is a plus, but the price paid and the particular assets in question have turned a critical market eye on BHP.

Previously he has had to wear blame for the failure to execute a merger with Rio, and to get his hands on Canadian potash assets, both of which in my view were strategically sensible moves.

The potash price has remained stable in the 18 months since BHP attempted this acquisition.

Mr Kloppers now faces his biggest challenge to convince investors that BHP was prepared for an iron ore price that is below USD 90 a tonne and that the group can weather this situation better than its peers.

BHP's first line of attack is to outline how tough the market is, but also to push to investors that the company provided them with ample warning.

In particular, BHP now regularly refers to the two significant addresses one given by chairman Jac Nasser to a business lunch in Sydney and one by Kloppers to an investor conference in May.

Source - www.watoday.com.au

(www.steelguru.com)