A handout photo shows Ken MacKenzie, a former Australian packaging executive, who has been named as mining giant BHP Billiton's next chairman.  Picture:  BHP/Handout via REUTERS
A handout photo shows Ken MacKenzie, a former Australian packaging executive, who has been named as mining giant BHP Billiton's next chairman. Picture: BHP/Handout via REUTERS

Sydney/Melbourne — Mining giant BHP on Friday named successful packaging executive Ken MacKenzie as its next chairman, handing him the job of tackling calls to dump its oil business and overhaul the board.

MacKenzie, 53, succeeds Jac Nasser as of September 1 at a time when the world’s biggest miner is being challenged by activist shareholders to revamp its structure and improve returns.

Investors welcomed the appointment of MacKenzie, who said he plans to meet shareholders in coming weeks to listen to their views. He was seen as one of Australia’s most successful chief executives in his 10 years running Amcor.

"It’s an important first step in the right direction. Hopefully it creates a platform to be able to review what’s amiss with the company in the eyes of some and address the concerns," said Brenton Saunders, an analyst at BT Investment Management, which owns shares in BHP.

Canadian-born MacKenzie presided over a long stretch of prosperity at Amcor, which makes packaging for food producers, industrial companies and pharmaceutical firms, that coincided with the end of a boom period for mining companies.

Hedge fund Elliott Management has fired a barrage of criticism at Nasser and BHP Chief Executive Andrew Mackenzie since publicly releasing a roadmap of changes it wants at the company, most notably an exit from US oil and shale businesses.

Elliott also wants BHP to collapse its dual listing, and earlier this week called for a board shake-up, blaming long-tenured directors for bad investments and ill-timed share buybacks.

That could place MacKenzie, who joined BHP’s board just last year, in good standing. Focused on capital discipline, he replaced 75% of Amcor’s top 80 managers in his first two years at the company.

On Friday, Elliott said it supported the appointment of MacKenzie as a "constructive step in bringing much needed change to the direction of BHP."

Portfolio managers at another activist shareholder, Tribeca Investment Partners, were not immediately available to comment.

Nasser has defended the company’s 20 billion investment in shale acquisitions in 2011 against Elliott’s criticism.

BHP also faces a key juncture in the Samarco mine dam liability saga in Brazil, which is due to be settled in September.

A burst dam at Samarco, a joint venture between BHP and Brazil’s Vale, killed 19 people and caused the country’s worst ever environmental disaster in late 2015, when mud and waste destroyed a village and polluted the Rio Doce river.

Shaw and Partners mining analyst Peter O’Connor said MacKenzie would face a chorus of shareholders seeking change and rejuvenation of the board.

"He really needs to hit the ground running," he said.

Despite being the world’s biggest mining house, BHP has a history of appointing executives from outside the sector as chairs. Since 1984 only two out of six chairmen had mining backgrounds.

BHP’s shares were little changed on Friday but have suffered a stretch of underperformance against arch rival Rio Tinto. The stock is down about 18% from its 2017 peak in late January.

Reuters

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