Months of speculation came to end today with the announcement by BHP (ASX: BHP) that its board had selected Ken MacKenzie as its new chairman.
It is the week’s most significant corporate news in the resources world.
Mr MacKenzie, a former Amcor chief executive and a non-executive director of BHP since September last year, will succeed Jac Nasser on September 1.
As a Canadian by birth, 53-year-old Mr MacKenzie breaks a long line of Australian chairmen at BHP, the world’s biggest mining company.
In isolation, the expected changing of the guard at the helm of BHP’s boardroom is a significant moment but one that should cause few ripples in the way the company goes about its business.
But seen another way, Mr MacKenzie’s appointment is the trifecta in a series of repositioning actions by BHP over the past few months, which promises a different approach by the Melbourne-based giant.
Having only just begun its rebranding from BHP Billiton to BHP – the removal of the Billiton name follows the spin-off of most of the Billiton assets, acquired in the 2001 mega-merger, into South32 – the miner is also dealing with the fallout from an aggressive and highly public campaign by US hedge fund investor Elliot Management for a structural overhaul of the dual-listed company.
The Elliott campaign has focused attention on the future of BHP’s onshore US oil and gas business and the market’s perception of the company’s engagement with stakeholders, particularly investors.
The BHP rebranding plays to the second point, and is a recognition that the company – like the entire mining industry in Australia – has failed to win public recognition for the jobs it creates, the economic growth it produces, and the taxes its pays.
Although Mr MacKenzie’s appointment as BHP’s new chairman had been expected, his experience running a global packaging business with operations in more than 40 countries speaks to the value the BHP board places on stakeholder relations.
Mr MacKenzie has also been widely credited with exercising rigorous fiscal discipline at Amcor, including during a frenzy of industry consolidation, which culminated in him becoming a multi-year winner in the highly regarded investor sentiment research barometer Corporate Confidence Index.
Mr MacKenzie’s appointment today has won immediate applause from Elliott, which pointed to his Amcor past.
“As a large investor in BHP, Elliott encourages Mr MacKenzie to use his leadership skills to address BHP’s poor capital allocation and underperformance, nominate diverse and qualified directors, and review the executive management team,” Elliott told The Australian’s Matt Chambers.
All this may seem a long way removed from WA’s mining sector.
But that ignores the impact BHP has on the local mining scene, not just as a major operator in iron ore, oil and gas and nickel, but also as an industry leader and bellwether – and joint venture partner.
Each chairman presides over an era – Don Argus was an architect of the Billiton merger and witnessed the start of the China mining boom, Mr Nasser’s reign included the US onshore energy push and the successful South32 spin-off but also the end of the boom – and the headwinds that face BHP today will largely shape Mr MacKenzie’s era, as well as his board’s eventual selection of a successor to incumbent chief executive Andrew Mackenzie (not related).
“Ken MacKenzie brings extensive global executive experience and a strategic approach,” Shriti Vadera, BHP’s senior independent director who lead the chairman’s search, said.
“He has a proven track record of delivering value for shareholders. He has the operational and financial capabilities as well as the rigour necessary to effectively oversee BHP’s capital allocation framework.”
The takeaway here is that even though change at a supermajor like BHP can appear glacial from the outside, there will be change and likely across all facets of how the Big Australian goes about its business.
The trickle-down effect will be significant once it arrives.
