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[BHP-Billiton’s] Mackenzie’s clean break is bigger than you think – by Robert Gottliebsen (Business Spectator – February 25, 2013)

http://www.businessspectator.com.au/

I have personally known every BHP chief executive (they used different titles) for the last 50 years. During that time there has never been a BHP chief remotely like Andrew Mackenzie. The company is headed for a period unlike anything in the last 50 years of its history and I suspect this is a once-in-100-year change.

BHP shareholders, employees, and Australian governments need to understand what it means to have Australia’s largest company change direction and become more interested in productivity and shareholder distribution than expansion. The directional change is in part a response to what is happening in China (China will spoil Australia’s energy equation, February 22), the demands of shareholders, and the high cost of capital investment in Australia. The directional change by our largest miner will be followed by others, including Rio Tinto, and heralds a far less expansive Australian mining industry.

And remember the BHP board chose Andrew Mackenzie because they have embraced the plan he put to them as he pitched for the top job. During the last 50 years each BHP chief executive has aimed to leave his successor with more resources. Better productivity and shareholder distribution have always been in the agenda but have been swamped by expansion and other issues.

Andrew Mackenzie is aiming at allocating more money to dividends/capital returns plus lower borrowing so new investment projects will have to be very good. Given the high shareholder payouts and lower gearing agendas of BHP, the Big Australian might even find itself short of capital to do what it would have done without hesitation during most of the last 100 years.

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With blood in the water, mining’s great white shark is on the hunt – by Eric Reguly (Globe and Mail – February 23, 2013)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

ROME — Beheadings are putting the mining world through something akin to the French Revolution. Mining bosses who landed their jobs in the bubble era – 2006 and 2007 – or did their signature top-of-the-market deals in those years are being fired with alacrity. Or they are announcing their retirements, much to the delight of shareholders grown weary of the value destruction borne of stunningly overpriced takeovers and soaring costs.

The changing of the guard started in the autumn, when Cynthia Carroll said she would quit as chief executive officer of Anglo American. Not long after, BHP Billiton, the world’s top mining company, revealed that it would replace Marius Kloppers, the man who made a wrong bet on shale gas and botched the attempted takeover of Potash Corp. of Saskatchewan (the new CEO is Scotsman Andrew Mackenzie). Last month, it was Rio Tinto boss Tom Albanese’s turn. The biggest sinner of them all, he was knocked off for his boneheaded purchase of Montreal’s Alcan in 2007 for $37-billion (U.S.), most of which has now been written off.

Canadian mining bosses have been frog-marched to the guillotine too – Tye Burt of Kinross Gold and Aaron Regent of Barrick Gold were two of the late 2012 victims. A year earlier, Roger Agnelli was pushed out of Vale, the Brazilian company that paid an eye-watering price for Canada’s Inco.

The last man standing is Ivan Glasenberg, the Glencore International CEO who is about to become the head of the mining and trading colossus to be formed by the merger of Glencore and Xstrata, the Anglo-Swiss miner that owns Falconbridge.

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BHP Billiton appoints new CEO as miner suffers worst profit drop in decade – by Sonali Paul (Reuters/National Post – February 20, 2013)

The National Post is Canada’s second largest national paper.

MELBOURNE — BHP Billiton Ltd appointed the head of its non-ferrous business as its CEO to replace Marius Kloppers, the fourth global miner this year to change its top brass as the industry enters a new era of austerity.

Miners are now focusing on squeezing the most out of their best assets after coming under pressure from investors for splashing out on expensive projects and acquisitions and allowing costs to spiral out of control in the boom years.

BHPís appointment of Andrew Mackenzie, 56, as its CEO is a sign that miners are turning to men with strong operational credentials to focus on capital discipline, rather than deal makers, as commodity prices wane. Rival Rio Tinto appointed former iron ore chief Sam Walsh as its CEO last month.

The era where these big mining companies such as BHP go out and engage in these expensive corporate deals is over. Mackenzie and Walsh prove that, said Gavin Wendt, an analyst for MineLife in Australia. They can no longer go out and spend and spend as their investors stand on the side and watch in bemusement. Mackenzie, wooed by Kloppers from Rio Tinto in 2007, will move into the top job in May.

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BHP’s Andrew Mackenzie: A new chief, a new direction – by Paul Waldie (Globe and Mail – February 20, 2013)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

LONDON — The new chief executive of mining giant BHP Billiton PLC says mergers and acquisitions will not be a major part of his strategy.

Andrew Mackenzie, who is taking over as chief executive officer from Marius Kloppers, said during a media conference call Wednesday that his main priority will be to “run our very impressive ore bodies extremely well.” He added that while BHP won’t completely rule out mergers, they are “not central to my strategy.” Instead, he plans to concentrate on cutting costs and improving the company’s “capital discipline.”

BHP announced late Tuesday that Mr. Kloppers will resign in May after a near 20-year career at the miner including nearly six as CEO. He had come under pressure recently for sharp writedowns of some assets and a couple of failed takeovers including a $40-billion (U.S.) bid for Potash Corp. of Saskatchewan Inc. in 2010 which was thwarted by the Canadian government.

Mr. Kloppers, 50, said during the conference call Wednesday that the decision to leave was difficult but he that he felt “the time is right to pass the baton to Andrew.” He added that he was leaving with pride at what he had accomplished at BHP. And he said he has no plans after leaving BHP beyond returning to his native South Africa for a while.

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