For BHP’s board and management, size has always mattered. The “Big Australian” has pursued a strategy of only holding mining assets that offer significant scale, are long-life and low-cost. Any mining assets deemed too small, or non-core, have been sold over the past two decades.

But has such a strategy resulted in it allocating capital well? Stockbroking analysts such as JP Morgan, Shaw and Partners, and Angus Aitken at Aitken Mount Capital, have criticised how BHP allocates capital, and questioned how good its board and management have been in their forecasts, especially since BHP announced this month an $8.4 billion bid for Oz Minerals, which controls a handful of copper mines.

One of Oz Minerals assets is Prominent Hill, a substantial copper mine in South Australia. Two decades ago, BHP owned a 51 per cent interest in Prominent Hill when it was a promising copper deposit that was still in its exploration phase. BHP had funded most of the exploration at Prominent Hill through a joint venture with Minotaur Resources, Sons of Gwalia and Newmont.

Despite funding the exploration, the Big Australian decided to exit the investment in 2003. At the time, Minotaur managing director Derek Carter explained BHP’s decision and then added a caveat.

“It’s just basically not up to their size criteria,” he said. “But just because it’s too small for them doesn’t mean it can’t be a hugely successful mine.” Carter was talking his own book, but he was also right.

Two years after selling out of Prominent Hill, BHP went on to spend a whopping $9.2 billion acquiring Western Mining Corporation in 2005. WMC owned Olympic Dam, a uranium, gold and copper mine, which is considered to have one of the world’s biggest copper deposits. Olympic Dam is located 130 kilometres away from Prominent Hill.

Now BHP wants to spend $8.4 billion acquiring Oz Minerals and its portfolio of copper, gold and nickel assets, including Prominent Hill, and also West Musgrave. A few years ago, BHP also exited its interest in West Musgrave, a copper, nickel and cobalt mine, in Western Australia, as it was not deemed of sufficient size.

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“Anything these guys sell from a coking coal asset to a minerals sand business to an exploration asset you should buy from them, you won’t lose money,” Angus Aitken, a partner at Aitken Mount Capital, wrote in a note to clients on Friday. The note was criticising BHP, Rio Tinto and Anglo American for their capital management.