UPDATE 1-BHP starts search for new chief executive - FT

Tue Nov 6, 2012 7:55pm EST

* CEO hunt could take 1 to 2 years - FT

* CEO Kloppers in top job since October 2007

* No reason to replace Kloppers yet - investors

* BHP shares flat

MELBOURNE, Nov 7 (Reuters) - Top global miner BHP Billiton Ltd has started hunting for a new chief executive in a process that could take one to two years, the Financial Times reported on Wednesday.

The search to replace Chief Executive Marius Kloppers, who has been in the job for five years, was being led by Chairman Jac Nasser, the newspaper said.

BHP declined to comment on the specifics in the report, but said succession planning was ongoing and a key task for the board.

"BHP Billiton's board has always ensured that it has a well-integrated, continual succession process in place for our most senior executives," the company said in a statement emailed to Reuters.

The company has not turned to an outsider for the top job since tapping American Paul Anderson in late 1998.

The report raised eyebrows among some investors who see no need for the company to replace the 50-year-old Kloppers.

"He's been quite a powerful CEO over the years. Some commentators may think otherwise, but I think on balance he's done a sensational job," said Paul Xiradis, managing director of Ausbil, which, like most Australian investment funds, owns shares in BHP.

Kloppers led the company through the global financial crisis, with BHP weathering the storm with the strongest balance sheet among the biggest global miners.

Xiradis also praised Kloppers for streamlining the company and almost single-handedly overhauling pricing in the iron market from annual contracts to much more transparent daily settlements.

But the South African has faced criticism for failing to clinch three major bids he launched -- a full takeover of rival Rio Tinto , a merger with Rio Tinto's iron ore business and a bid for Canada's Potash Corp -- and then splashing $17 billion on two shale gas takeovers in the United States just before gas prices slumped.

Kloppers gave up his bonus this year after BHP took a $2.8 billion charge on the value of its shale gas assets.

"I think the biggest, more general mistake, was not focusing on their own businesses enough and looking externally at what they could do," said a portfolio manager at an Australian fund, who declined to be named because he did not want to add to speculation about the top job.

He said that if BHP had concentrated on developing its own iron ore assets in Western Australia rather than chasing a deal with Rio Tinto, it would not be facing competition now from Fortescue Metals Group.

"Fortescue went and took leases out from under their noses," the fund manager said.

BHP took on a new chief financial officer earlier this year after CFO Alex Vanselow quit, a decision that was seen at the time as a sign that no one was going to get a run at Kloppers' job anytime soon.

"There's no reason to get rid of him at this stage," said Tim Schroeders, a portfolio manager at Pengana Capital.

Shares of BHP were flat on Wednesday morning, against a 0.2 percent rise in the broader market.

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