BHP’s new chief Andrew Mackenzie formally takes the reigns today, announcing new austerity measures for the global miner which will see increased productivity and less investment.
Speaking yesterday before his first day in the top job, Mackenzie said productivity improvements would be the focus for the company.
"Ultimately, we won't be changing much of it at all. We will probably just be even more clear that our future prosperity is going to be based on a small number of world-class tier-one orebodies," Mackenzie said told The Australian.
"We are likely to invest less, and therefore the principal way we intend to grow the returns from our businesses is by driving productivity."
Mackenzie said there was a new "realism about the challenge to remain competitive" and that gaps in performance needed to be closed.
"We hope that people in this company understand the performance gap that may exist between them and the best and move to cover it,” he said.
"We are only going to win new investments, we are only going to support economic growth, if we can produce things for a lower cost per tonne mined, of per barrel of oil lifted.
"I want BHP to be at the forefront of that. And in my coming term, that is how I will be best able to boost returns to shareholders as opposed to continuing to invest."
Mackenzie has spent time in the first weeks of his appointment in meetings with as many as 3000 BHP workers. He said messages around productivity improvements had been meet with positivity.
"I think the message of improving productivity — doing your job better — and growing Australia through the self-determination of people rather than some bureaucratic fix is a powerful one, and one that resonates very well with them," he said.
"It is important that we get everyone on the one team, the same page.
"If we do well, they do well."
Mackenzie said customers in northern Asia were reliant on Australian resources and expects demand to remain steady.
"They are counting on Australia for a lot of basic resources that they are going to need to grow, economically," he said.
"And to grow economically, particularly in China, they will be able to lift many, many more people out of poverty.
"That seems like a pretty noble end to me, and one that I am very pleased to play a small part in.
"Australians can feel a certain sense of pride in being part of that. And it does give Australia a responsibility and a role in the world that is quite significant relative to the size of its economy or relative to the size of its population."
BHP austerity measures have already come into play with Mackenzie earning about 25 per cent less per year compared to his predecessor Marius Kloppers.
And with the company saying no new capital commitments would be made this financial year, all eyes will be focused on potential future cancellations.
Last year the company dumped the $US30bn expansion of the Olympic Dam copper mine in South Australia, and a $US25bn development of the outer harbour at Port Hedland in the Pilbara.
Mackenzie was not ready to talk facts and figures around the productivity push.
"Detailed financial terms is something that we will talk about steadily," he said.
"Since I have taken the job, I have been quite hard-working in trying to listen to all of our stakeholders. I've spent a lot of time one-on-one with shareholders trying to understand how they want us to manage their money; and with the capital we've got, making it more productive is clearly very high on their agenda."
The name of the game, whether you are a Chinese steel mill or whether you are an Australian iron ore producer, is to make that supply of commodities as efficient as possible.”