He and Mackenzie share one of the great highlights in BHP’s modern history, the toppling – against the odds given the far larger scale and nature of their resources and infrastructure – of Rio Tinto and Vale as the world’s lowest-cost iron ore producer.
Another big related tick for his candidature was a 60 per cent reduction in the frequency of high-potential injuries in the Australian business – he can cut costs and improve productivity and safety at the same time. Safety metrics are good indicators of the quality of management in a resource business.
Chairman Ken MacKenzie and his board followed corporate best practice and considered both external and internal candidates for the job including reportedly, Anglo American’s Mark Cutifani.
Given its own scale, the size of the Australian portfolio, Henry’s track record and the natural proclivity of boards to prefer someone they know well, it would have been very hard to go past him, particularly once the other most logical internal contender, chief financial officer Peter Beaven, apparently withdrew his name for family reasons.
The board’s job was made easier – and the transition from Mackenzie to Henry made remarkably brief, at less than 50 days by the condition of the group.
Mackenzie became CEO of BHP six-and-a-half years ago in the aftermath of the puncturing of the bubble in commodity prices that destabilised a sector bloated and leveraged by the China-inspired boom.
Where his predecessor, Marius Kloppers, had presided over rapid and ambitious expansion, Mackenzie’s brief was to bring discipline to the group’s operations and portfolio and he has done that.
The demerger of South32 dramatically simplified the group. It instantly transformed BHP from a group with more than 40 assets across the globe to one with 12 very large and high-quality basin-focused assets. While it took some time – and some massive write-downs – Mackenzie also extricated BHP from the biggest of its boom-time mistakes, its foray into the US onshore shale sector.
He de-leveraged the balance sheet, released enormous productivity gains and, with Ken McKenzie and Beaven, introduced a new capital management framework that has imposed financial discipline and which ultimately released a tide of cash and capital for BHP shareholders while creating a highly conservative balance sheet.
There’s been significant investment in the petroleum business, footholds in copper exploration in South America, exploration success in South Australia and (in another tick for Henry) the restoration of a Nickel West business that was once earmarked for distressed sale but now looks highly strategic in the dawning era of electric vehicles.
The low-point in his tenure – but one in which his own response was whole-hearted, genuine and admirable – was the tailing dam disaster at Samarco in Brazil.
Mackenzie has left Henry with some growth options, mainly from within the existing portfolio, and some challenges, the biggest of which is ensuring that the portfolio he inherits can evolve in line with a long-term shift in the nature of those commodities in demand as the world’s raw material needs themselves evolve.
A decision on whether to proceed with the Jansen phosphate project in Canada will need to be made early in his tenure.
The historically sub-economic performance of the potentially very valuable Olympic Dam project in South Australia has to be fixed , the future of thermal coal within the portfolio will have to be determined and new greenfields growth options will need to be identified.
Henry will also, as his predecessors have throughout BHP’s history, have to deal with the routine volatility and deep cyclicality of the resources sector while continuing to keep BHP’s practices and culture evolving with the times and the external conditions.
Mackenzie has been, at times, controversially progressive in his views, putting the group at the forefront of debates and resource industry action on climate change and affirmative action and seeking to improve conditions for indigenous communities.
Henry isn’t expected to walk away from that progressive positioning. His own history is one of championing diversity. BHP says he has nearly doubled the number of women in its Australian workforce while increasing indigenous employment materially.
He might also be expected to lead BHP further into the new world of mining technology, of automation and artificial intelligence, and continue Mackenzie’s early work on an ambitious and longterm transformation agenda that is as much about BHP’s culture and a devolution of responsibility and accountability as it is about digging more stuff up and shipping more stuff out.
Stephen is one of Australia’s most respected business journalists. He was most recently co-founder and associate editor of the Business Spectator website and an associate editor and senior columnist at The Australian.