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* BHP more exposed to oil, coking coal
* Rio's iron ore business yields higher profit margins
* Ultra low interest rates could fuel investor interest
By Barbara Lewis
LONDON, Sept 7 (Reuters) - The backgrounds of the leaders ofthe world's top mining companies illustrate the choice facinginvestors, with BHP Billiton's chief executive having worked inthe oil industry and Rio Tinto's new boss more focused oncopper.
After aggressive cost-cutting and asset sales to drive downdebt, the two mining giants are positioning themselves tocapture growth as commodity markets begin to recover from acrash that dented company balance sheets.
French-born Jean-Sebastien Jacques has led Rio only since July, while his counterpart at BHP , Scotsman Andrew Mackenzie, has been in place for theturbulent past three years.
Both men sang from the same songsheet when presentingfinancial results last month.
They ruled out the reckless spending of the past that almostled to financial ruin and promised to be safe, boring anddisciplined, buying assets only when the price was right andmaintaining the focus on lowering costs.
Rio is widely regarded as the better pick, with moreanalysts rating it a "Buy" than BHP, according to Reuters data.
Rio has the advantage of having cut debt faster, whileinvestors have also been put off BHP by a dam burst at an ironore mine in Brazil last year that could lead to years oflitigation.
But there are signs of a shift in sentiment as investorsweigh the two miners' exposures to different commodities.
Since the start of the year, BHP has rallied more than Rio-- 31 percent versus 17 percent on the London stock market --and some analysts see better potential for BHP's coking coal andoil assets, compared with Rio's greater exposure to iron ore.
"It's pretty much a tie. Both are cautious and both have hadbig failures in the past," one industry source said, speaking on condition of anonymity. "Oil is the swing factor and that's afairly safe bet longer term."
Chris LaFemina, managing director at Jefferies, upgraded hisrecommendation on BHP to "Buy" from "Hold" last month, havingalready rated Rio a "Buy".
He cited BHP's potential to cut costs further and its biggerexposure to coking coal and oil.
Coking coal has rallied because of demand in top consumerChina, while oil needs an output agreement from the Organizationof the Petroleum Exporting Countries to get a meaningful boost.
RISKS REMAIN
Frances Hudson, investment director, at Standard Life saysit is pragmatic to have exposure to at least one of the two bigminers given their heavyweight presence on the FTSE index ofleading British stocks.
Rio's market capitalisation is 43.7 billion pounds ($58.7billion), while BHP's is almost 59 billion pounds, according toReuters data.
Reuters lists Standard Life Investments as the 15th largestinvestor in Rio's London-listed share. It does not appear amongthe top investors in BHP, but does have a smaller stake.
Not everyone feels it is time to reinvest in the miningcompanies after BHP plunged more than 40 percent last year andRio lost around a third of its value.
Liberum investment bank rates both Rio and BHP a "Sell".
Liberum analyst Richard Knights said BHP's Samarco Brazilianjoint venture, liable for last year's dam burst, was a smallasset for the company in financial terms. However, the concern is that no one can rule out massive damages being awarded afterlegal arguments.
Rio has been boosted by its greater exposure to iron orewhich has rallied by around a third this year on the DalianCommodity Exchange.
Iron ore, used in making steel, results in higher profitmargins than oil because it requires less reinvestment tomaintain output, analysts say, so it provides cash to improveRio's balance sheet and boost dividends.
Analysts, however, question the durability of the iron orerally given the global oversupply.
"Rio has the best assets in iron ore and aluminium, butthose are commodities have two of the worst supply/demandoutlooks in my opinion," Knights said.
DIFFERENT PORTFOLIOS
Jacques got the top job at Rio after winning praise for hiswork on the Oyu Tolgoi project in Mongolia, which when completedwill be the world's third-biggest copper mine.
Known as "JS", he is the first copper man in decades to runthe company and his appointment was seen as a shift away fromiron ore.
Rio gets less than 10 percent of its core profit from energyand roughly 60 percent from iron ore.
BHP's boss Mackenzie held a number of senior roles at oilcompany BP, and also headed the diamond and mineralsdivision at Rio.
For BHP, iron ore makes up roughly 40 percent of its EBITDA- earnings before interest, tax, depreciation and amortisation - and oil assets around 30 percent. Coal, including thermal andcoking, accounts for some 5 percent.
BHP last month listed the swing factors that could affectits core profit.
The firm would receive a $42 million boost for each $1increase on the price of a tonne of coking coal.
Another dollar on the oil price would add $79 million to EBITDA in the current financial year, while an extra $1 pertonne for iron ore means $217 million in extra profits.
This year hard coking coal has nearly doubled, while oil hasincreased roughly 25 percent.
Rio sets out its exposure differently. "Rio Tinto's exposureto commodity prices is diversified by virtue of its broadcommodity base," it said in its results statement.
COPPER BET
Analysts say its geographical reach takes Rio into riskierparts of the world than BHP, which is focused on OECD countries,giving Rio more potential to grow and broaden that base,especially in copper.
Combined with diamonds, copper now provides some 11.5percent of Rio's EBITDA.
Essentially flat since the start of the year, copper has failed to match rallies elsewhere, but analysts andexecutives say the laggard could become a leader.
In an interview with Reuters shortly after becoming CEO,Jacques said he believed copper could be the first commodity to"get out of the over-supply environment".
At the end of 2015, Rio had 252 million pounds of coppersales provisionally priced at 217 cents per pound.
A 10 per cent change in the price of copper from provisionalprices, would increase or reduce net earnings by $36 million.
For some investors, the sluggishness of copper, regarded asa commodity bellwether, fuels their doubts about further gainseven if low interest rates have renewed interest in miners.
Roger Jones, head of equities at London and Capital, said hebelieved investors had limited their exposure to the miningsector for the last few years "but the magnitude of theunderweight has been reduced".
London and Capital, which has around $3.2 billion of assetsunder management, does not hold share in either Rio or BHP.
"In our view, both share prices are assuming a strongrecovery in end markets which we believe is unlikely as currentcommodity markets are likely to move sideways at best over themedium term," he said. ($1 = 0.7442 pounds)
(additional reporting by Pratima Desai; Editing by Keith Weir)
