BREAKING NEWS

Global miner BHP taps Australia head Henry as new CEO

Global miner BHP taps Australia head Henry as new CEO
BHP Chairman Ken MacKenzie and Mike Henry are seen at a news conference to announce Henry as BHP's new CEO from January 1, 2020, at BHP's Melbourne headquarters, Australia November 14, 2019. REUTERS/Melanie Burton -
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MELANIE BURTON(Reuters)
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By Sonali Paul and Melanie Burton

MELBOURNE (Reuters) – BHP Group Ltd <BHP.AX> <BHPB.L> on Thursday named its Australian head Mike Henry to succeed Andrew Mackenzie as the miner’s chief executive, shunning calls from some investors for fresh blood from outside the Anglo Australian giant.

Mackenzie, 62, will step down on Dec. 31 ending nearly seven years in charge of the biggest global miner, during which time he overhauled the company, spinning off a raft of assets and cutting costs sharply.

Henry, a 53-year-old Canadian who joined BHP in 2003, has led its Australian operations over the past three years, including its biggest earner, iron ore, and the world’s largest metallurgical coal operations.

He takes the helm just as slowing growth in China, the company’s biggest customer, as well as environmental and social issues, raise new risks and threaten to dent profits across the industry.

In his first year, he will have to lead the group’s decision on whether to go ahead with a long-planned $17 billion push into potash mining in Canada.

Analysts and investors who welcomed his appointment said he was a sensible choice among the candidates who were touted.

“This internal promotion is a positive development for BHP as we view Mike Henry as a pragmatic, operations focused manager with a unique set of international and BHP-specific experiences,” said RBC analyst Paul Hissey.

BHP’s shares initially fell 1.6% after the announcement in a flat broader market, reflecting some investors’ disappointment, but then recovered to trade down 0.4%.

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

PERFECTMIX

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.

BHP Chairman Ken MacKenzie said Henry’s integrity, exacting standards and deep operational and commercial experience in a career spanning the Americas, Europe, Asia and Australia made a “perfect mix” for a BHPCEO.

“I’m confident that his discipline and focus will deliver high performance and returns,” MacKenzie told reporters.

Henry said his top priorities were safety, maintaining social licence, trimming the group’s environmental footprint, digital transformation and staff diversity.

“I have the luxury of being able to lead a company that is in really good shape. We have a great strategy. I see that my job as the next CEO is to build on the foundations to accelerate that performance,” he told reporters.

Investors and analysts, however, said the Australian minerals business under Henry had experienced some 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.

Some Australian institutional investors had been pushing BHP to consider external candidates to replace Mackenzie as CEO.

Names mentioned included Anglo American Plc <AAL.L> CEO Mark Cutifani and former Fortescue Metals Group CEO Nev Power.

Under Mackenzie, BHP spun off a raft of assets into South32 <S32.AX> and quit its ill-fated U.S. 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 tarred by the reputational damage from a dam disaster at an iron ore mine in Brazil.

BHP said Henry will earn a base salary of $1.7 million a year.

Graphic: BHP new boss – BHP lags Rio during Mackenzie’s tenure – https://fingfx.thomsonreuters.com/gfx/breakingviews/1/1257/1774/BHP%20graphic.jpg

Graphic: BHP new boss – BHP lags Rio during Mackenzie’s tenure (interactive) – https://fingfx.thomsonreuters.com/gfx/breakingviews/1/1257/1773/DataStream-Chart.htm

(Reporting by Sonali Paul and Melanie Burton in Melbourne; Additional reporting by Nikhil Kurian Nainan in Bengaluru; Editing by Lisa Shumaker and Richard Pullin)

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