WEEKEND READ: In Hegarty's shadow

Zinifex's new chief executive Andrew Michelmore shouldn't have to sell himself – he has a stellar CV including key roles at WMC Resources, energy and aluminium company EN Group and aluminium giant Rusal. But now Australia's investment community is pitting him against mining darling and industry luminary Owen Hegarty and by all appearances, he seems to know that if he can't win over Oxiana's extremely loyal shareholders, he won't be the one to lead the merged company, if the merger goes ahead.

When Zinifex and Oxiana announced their planned merger in March, many were surprised that it wouldn't be the colourful Hegarty who would take the reins of the combined entity, but instead Zinifex's newly appointed chief executive Michelmore, who has a much lower profile in these parts after heading overseas to work for Russian Oleg Deripaska.

When two companies merge, the question of who will lead the newly formed group can cause friction and some backstabbing, and is sometimes enough of a threat to put the deal itself at risk.

There is precedent of mergers running into hot water because of the choice of chief executive to head up the new company. In the case of Australian Stock Exchange's $5.8 billion merger with the Sydney Futures Exchange in 2006, Tony D'Aloisio was forced to step aside after major institutional investors threatened to veto the merger unless SFE boss Robert Elstone was given the top job at the new company.

Another example is Dick McIlwain of UNiTAB, who replaced Tattersall's chief executive Duncan Fischer after the pair's merger, despite Fischer originally being chosen to become the head of the merged company.

But in the case of Oxiana and Zinifex, there is one resounding difference – Hegarty has made it quite clear that he doesn't want the job.

At the Oxiana annual general meeting this week, Hegarty faced loyal shareholders who voiced their anger that he would not continue in the driving seat, even though he does plan to take a directorship in the as yet unnamed new entity.

At a meeting of 730 mining professionals in Melbourne today, Andrew Michelmore explained that Hegarty said early on in the pair's talks that the new boss would need to commit for at least five years – a commitment 60-year-old Hegarty is not willing to make, after 35 years in the industry – starting with CRA, continuing into Rio Tinto and finally the Mighty Ox.

But just because Hegarty doesn't want the job, doesn't mean Michelmore isn't in the ring with this larger than life character. Hegarty has become part of the fabric of Australia's mining industry, as much for building Oxiana up from some assets rejected by Rio Tinto into a company worth around $6 billion, as for his Oxiana-isms and frequent, public mentions of his fanatical support for Essendon – even in media briefings and at AGMs.

His ability to talk directly to his shareholders without pretension, has won him a legion of fans and Michelmore, despite his experience and Hegarty's strong public support, is facing a popularity contest that he probably can't win. But Michelmore knows this and is taking an alternative route – during his speech, he emphasised with great vigour his experience and wider perspective, coming back to Australia from overseas.

But in a tight-knit and sometimes parochial Australian mining community, that may not be enough.