The End for CEOs of Three Mining Majors

CEOs of mining majors BHP Billiton Plc, Rio Tinto Plc and Anglo American Plc are among the mining CEOs who have resigned or retired as a result of failed deals, rising costs and decreasing commodity prices.

 

First to announce her departure was Cynthia Carroll of Anglo American, announcing her resignation on 26 October 2012. Her resignation will come into effect from the end of March 2013, just over a month after Anglo American announced a $4.6 billion write down for 2012. Carroll will be replaced by Mark Cutifani of AngloGold Ashanti Limited bringing to an end her 6 years as CEO of Anglo American. Carroll was CEO at the time when the company purchased Minas Rio in Brazil which has become renowned as being the most expensive iron mine on the planet.

 

Tom Albanese of Rio Tinto met a much more abrupt exit on 17 January 2013 when the company announced that he would be replaced by Iron Ore chief executive Sam Walsh with immediate effect. His resignation came after the company recognised a $14 billion non-cash impairment charge, $3 billion relating to Rio Tinto Coal Mozambique, as well as reductions in the carrying values of Rio Tinto�s aluminium assets in the range of US$10-11 billion. Both of these deals were concluded during Albanese’s tenure as CEO, although the aluminium deal was well advanced when Albanese took up the role in 2007.

 

Most recently BHP Billiton CEO Marius Kloppers announced his resignation from the company after a 43% drop in profit was reported for the second half of 2012. The announcement of Kloppers departure was made on 20 February 2013 and he will be replaced by Andrew Mackenzie with effect from 10 May 2013. Kloppers was the driving force behind the company’s failed attempt to acquire Canada’s Potash Corp for $40 billion in 2010. The company was forced to drop the acquisition after it was opposed by the Canadian government.

 

It has become apparent that bad deals and poor acquisitions are a precursor to CEO changes with mining companies having to write down approximately $50 billion because of expansion plans gone wrong.

 

This means that after years of companies over extending themselves, big, transformative deals are likely to be a thing of the past as company focus moves to increasing liquidity, shutting down weaker operations and to concentrate on generating capital for projects with more potential. As is the case with Anglo American Platinum Limited, companies will also be more likely to propose divestitures as a solution to cash flow problems.

 

The new school of 2013 CEOs has an air of tried-and-tested about them with an average age of 57 years and many years of experience, compared to the average age of 48 years of the outgoing CEOs when they took up their roles in 2007.