Does BHP's CEO Kloppers Owe Investors a Beer?

In December, Marius Kloppers, CEO of the world’s largest miner BHP Billiton, said he would buy investors a beer if he announced plans to offload the company's struggling nickel operations. On Monday, Michael Langford, Proprietary Trader at StreamTrading.com, told CNBC, the CEO should now pick up the tab.

Getty Images BHP Billiton Center in Melbourne, Australia

“I definitely think Marius owes all his investors a beer,” Langford said, following a company statement last week that BHP could cut around 150 employees at its Mount Keith Nickel mine in Western Australia as part of a restructuring.

“The restructure is clearly reducing manpower in the nickel side of the business and hence from a company perspective emphasis on nickel,” Langford added.

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[BLT.L  Loading...      ()   ] responded to these comments by saying that the miner is not “offloading” its nickel division. “We merely have made production adjustments to our Mount Keith Nickel mine,” a company spokesperson told CNBC.

Overall nickel production is not set to fall, as BHP will process existing stockpiles of ore to prevent a decline in output, the spokesperson said.

Langford says he doesn’t support Kloppers' move to downsize its nickel division because demand for stainless steel, of which nickel is a component, is set to climb. Worldwide stainless steel output is forecast to grow by 5.8 percent year on year in 2012, to hit a new record total of 33.9 million tons, he said.

But nickel prices have been falling over the past 12 months. Currently the three-month Nickel contract on the LME is trading at $21,195 a ton, down from a peak of $29,150 in February last year.

“They already got rid of Ravensthorpe (in Western Australia), they have gotten rid of other nickel refineries and now they are getting rid of this nickel asset off the back of Marius saying that he wasn’t going to get rid of it.”

“They seem to be taking an axe to what the company has been traditionally known for which is base metals and bulk commodities,” he said, adding that BHP's views are “at odds” with fundamentals.