DON ARGUS, chairman of BHP Billiton, pushes a letter across the table with a chuckle. “I didn’t put him up to it,” he smiles in an avuncular way.

A resident of Camberwell – Camberwell in Melbourne, not London – has written to Rio Tinto chairman Paul Skinner, asking him to talk to BHP Billiton about its takeover plan, and pointing out that Rio’s shares would slide if the deal were scrapped.

“That’s what the market should be asking Rio’s board,” said Argus. “What happens to your share price if we walk away?”

Argus, one of Australia’s most powerful and respected businessmen, has been the quiet force behind BHP’s takeover bid, the public face being Marius Kloppers, the group’s effervescent chief executive.

But in an interview with The Sunday Times, Argus, 69, has broken his silence to speak out in favour of the takeover, saying it would save billions by eliminating duplication of effort between the companies, and create a mining player with true global scale.

He also revealed his part in merger talks between the companies that took place nearly a decade ago.

Argus made his name internationally as chief executive of National Australia Bank, which he turned into an international force in financial services through a series of acquisitions – at one stage making it Australia’s largest company by stock-market value when it overtook BHP. In Britain, he bought Yorkshire Bank, Clydesdale and Ulster’s Northern Bank. During the due diligence on Clydesdale he met a young Fred Goodwin, and had him lined up as National Australia Bank’s next boss until Goodwin decided to join Royal Bank of Scotland, where he is now chief executive.

As well as chairing BHP Billiton, Argus heads the board of Brambles, the industrial services group. Both have the same, unusual, corporate structure with dual listings in London and Australia.

It is a structure shared by Rio Tinto. BHP and Rio have a long and intertwined history, having traded assets and competed for decades. They have also studied the possibility of a merger more than once before.

In 1999, Argus and Paul Anderson, then BHP chief executive, talked to Rio about a merger of their iron-ore businesses. “Paul and I flew to Singapore and met a couple of the Rio directors. And I think there had been discussions even before I was on the scene – nobody is owning up to who spoke to whom, but there had been discussions.

“Bob Wilson [former Rio chairman Sir Robert Wilson] didn’t like our petroleum division and he didn’t like steel. If we had tried to merge at that stage we would have left a lot of value on the table for BHP shareholders.”

There was another attempt in 2003, when Brian Gilbertson, then chief executive of BHP, talked to Wilson – reportedly without the board’s knowledge. He left shortly after, with Argus at the time citing “irreconcilable differences” between the chief executive and other directors.

Argus said the timing of the current proposal is right for both sets of shareholders. “The compelling argument here is scale. If there is one thing I have learnt from my banking days it is that scale counts. People often say their companies have scale – and the question is ‘but is that real?’ The resources business is a real scale game.” A takeover would avoid duplication, said Argus. “The established mining groups are at the moment all stomping round in each other’s sandpits. We are just wasting capital.”

He said he was puzzled by the Rio board’s reluctance to talk. “They were keen enough to keep talking on the previous occasions, which makes it difficult for me to see why they don’t want to talk now. I hear the stories about personalities getting in the way, but that can’t be the case. There must be something there, or they just have completely unrealistic expectations about value.”

Argus thinks the author of the Melbourne letter has made his best point for him. “You have this big upside in [Rio’s] share price now. You can argue that this proposed transaction has made the market revalue the industry, and there is an element of truth in that. But there is also an element of us being there underpinning the Rio price.

“My family owns Rio shares and they are asking what will happen if we go away, and I have to say I can’t answer that.”

Argus said a bid was not inevitable. “I can tell you categorically there has been no decision taken to move from proposal to bid. If we get a divided board on this, then we will not go ahead.”

Argus arrived at BHP as a director in 1996, when the company’s outlook, and the industry’s was much less rosy than it is now.

BHP made an ill-fated run at Magna Copper and then was hit by boardroom upheaval. “There was one stage when you might reasonably have suggested that BHP might have been having trouble to find the cash to pay a dividend,” he said.

Salvation, said Argus, came with the appointment of Anderson, who instilled management discipline. “He did a tremendous job, and he brought in Chip [Goodyear, Kloppers’ predecessor].”

If BHP is successful in its swoop on Rio, it will create by far the world’s biggest resources group, a kind of Exxon of mining.

Would it be the crowning moment of Argus’s career. “Well, I had some pretty good moments at the bank,” he said.

And will Argus stay on? He is uncharacteristically coy. “It’s something we haven’t really looked at yet. I will do whatever is in the interests of the company.”

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