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Mike Henry, incoming CEO of BHP, speaks during a news conference at the company’s headquarters in Melbourne, Australia, on November 14 2019. Picture: BLOOMBERG/CARLA GOTTGENS
Mike Henry, incoming CEO of BHP, speaks during a news conference at the company’s headquarters in Melbourne, Australia, on November 14 2019. Picture: BLOOMBERG/CARLA GOTTGENS

Melbourne — BHP on Thursday named its Australian head Mike Henry to succeed Andrew Mackenzie as the miner’s CEO, shunning calls from some investors for fresh blood from outside the Anglo-Australian giant.

Mackenzie, 62, will retire on December 31, ending nearly seven years in charge of the biggest global miner. Henry, 53, will step into the top job on January 1, after leading the Australian operations since 2016.

BHP’s shares fell 1.6% in early trade after the announcement in a flat broader market, reflecting some investors’ disappointment.

“The board had the chance to reinvigorate, re-energise. Now we get more same, same,” said Shaw & Partners analyst Peter O’Connor.

The appointment of a new CEO was not a surprise, but the timing was a bit sooner than some had expected, as Mackenzie has repeatedly said over the past year that he is keen to stay on.

Under Mackenzie, BHP has overhauled itself, spinning off a raft of businesses and quitting its ill-fated US shale business to focus on iron ore, coal, copper and conventional oil and gas.

At the same time, it faced down investor pressure to collapse its dual-listed structure, spin off its entire petroleum business, and slash carbon emissions to tackle climate change.

But Mackenzie’s legacy has been tainted by the reputational damage from a dam disaster at an iron ore mine in Brazil.

Earlier in 2019, Reuters reported that some institutional investors in Australia were pushing BHP to consider external candidates to replace him as CEO.

Names mentioned included Anglo American CEO Mark Cutifani and former Fortescue Metals Group CEO Nev Power.

“They might have been a difficult fit culturally. Mike (Henry) knows the business quite well. He’s the most logical candidate,” said Argo Investments senior investment officer Andy Forster.

Mining challenges

Henry, who has been with BHP since 2003 and has spent 30 years in the industry, takes over at a time when global economic risks, such as softer demand and volatile prices, could hurt future results of the dual-listed miner.

BHP chair Ken MacKenzie said his deep operational and commercial experience in a career spanning the Americas, Europe, Asia and Australia made a “perfect mix” for a BHP CEO.

“We will unlock even greater value from our ore bodies and petroleum basins,” Henry said in a statement, adding that BHP must operate safely and reduce its effect on the environment.

The main issues for Henry will be deciding whether BHP should push ahead in 2021 with a massive investment to start mining potash and dealing with social licence issues, which he has embraced.

“I suspect his knowledge across the company will enable him to steer BHP through the next five to six years that are going to be extremely challenging for big miners,” said Fat Prophets analyst David Lennox.

Investors and analysts, however, said the Australian minerals business under Henry had experienced difficulties, including long-running problems at its Olympic Dam copper and uranium mine and a runaway iron ore train that had to be derailed to avoid a disaster.

“For us, Olympic Dam is an important test, because it’s a challenging asset and it needed to be managed closely and carefully … and that hasn't happened,” said a fund manager who declined to be named because the issue was sensitive.

According to the statement, Henry will earn a base salary of $1.7m a year (R25.4m).

Reuters

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