London - Jacques Nasser, chairman of BHP Billiton, said he plans to step down from the world’s biggest mining company after helping guide it through a deadly tailings dam spill in Brazil.
The 68-year-old chairman, who’s been in the role since 2010, told shareholders at the company’s annual meeting in London on Thursday that he won’t seek re-election to the board next year. He had intended to announce his retirement last year, but was persuaded to stay as BHP responded to the Samarco disaster that killed as many as 19 and was described by Brazil as its worst-ever environmental disaster.
“The board believed it was important that I continue on as chairman to provide stability as we responded to Samarco,” said Nasser, who hails from Australia. Now that the “basic structure” of BHP’s response is in place, he doesn’t plan to seek re-election.
Brazilian prosecutors filed criminal charges including homicide against 21 people linked to the mine’s operator, Samarco Minercao SA, and its owners, BHP and Vale SA, according to a statement by the prosecutors on Thursday. All three companies rejected the charges in written statements.
Nasser, a former chief executive officer of Ford Motors, helped steer BHP through a downturn in commodities sparked by a slowdown in China and a glut in everything from iron ore to copper to coal. That forced BHP and its peers to rein in spending, focus on reducing costs, retreat from M&A and shed smaller assets to help trim debt as profits fell.
“We had to carefully pivot the company. We had to carefully look for other opportunities in other commodities that would be better represented in a world that was developing at 3 percent, rather than this maybe once-in-a-century boom that China had,” Nasser told reporters after the shareholder meeting.
He pointed to rising global concern about the impact of climate change during his tenure and the company’s relentless focus on productivity as key areas where he helped shape BHP’s strategy.
“We kept the balance sheet very strong,” Nasser told reporters. “This is a sector where you can blow up the balance sheet very easily and we’ve seen our peers who have done that.”
“We didn’t do that. We didn’t have to issue new shares. We kept a solid A credit rating through the valley of the commodity price death,” he said.
Commodity mix
BHP advanced 0.7 percent to A$23.00 at 10.04am in Sydney trading, extending its advance this year to 29 percent.
Getting the commodity mix right during the downturn was a key deliberation Nasser and the board faced during his tenure, he said. Back in 2011, BHP spent $20 billion expanding into US shale assets to tap a projected increase in energy demand. The company was later forced to write down the value of the assets as natural gas prices slumped.
Just a few months into Nasser’s chairmanship in 2010, BHP launched a $39 billion hostile takeover offer of Potash Corporation of Saskatchewan Inc. The bid was ultimately unsuccessful, but potash would later become a potential “fifth pillar” in BHP’s strategy to focus on just four commodities - iron ore, oil and gas, copper and coal.
It was this four-pillar approach to the portfolio that led BHP to its most significant divestment when it spun off South32, a collection of unwanted manganese, coal and alumina assets, last year. The company is now listed in London, Sydney and Johannesburg.
Stock performance
BHP, which has lost about 40 percent of its value during Nasser’s tenure as chairman, hit a 10-year low in January before doubling in London trading this year. While the shares fell more than No. 2 miner Rio Tinto Group since he took the role, they outperformed Anglo American Plc and Vale SA.
Nasser also pushed for greater shareholder returns with the company paying a record dividend in 2015. The company’s total return over the past decade was 101 percent, compared with 69 percent for the UK’s benchmark FTSE 100 Index, he said. This year, BHP was forced to cut its payment for the first time in 15 years and changed its policy of paying out ever increasing dividends to returning a percentage of profits.
Nasser, also on the board of Twenty-First Century Fox, said succession planning is an “ongoing process” and that he’ll keep leading the board. Heidrick & Struggles has previously conducted external searches for BHP board candidates. After the company announced a workforce gender parity target today, Nasser said the board should be open to appointing its first female chair, though he wouldn’t insist on it.
As to what he’ll do next, Nasser said he had no desire to chase a new role of a similar standing.
“I’m almost 70 years old, I’m done,” he told reporters. “I’m done in this more structured role. It’s been terrific and I think we leave the company in a very robust position.”
* With assistance from David Stringer
BLOOMBERG