Banker Ross McEwan will shape BHP for decades to come as incoming chairman

The former NAB chief executive has one major job ahead as he takes on Australia’s most powerful board role.

Former NAB boss Ross McEwan, left, will take charge from Ken MacKenzie, right, as the new chairman of BHP. Picture: Arsineh Houspian

Incoming BHP chairman Ross McEwan will determine the long-term future of the mining giant, given the hardened banker will be the one who makes the call on the successor to chief executive Mike Henry.

McEwan, who most recently drove National Australia Bank through its long overdue recovery, takes charge as the next chair of BHP from the end of next month.

He replaces Ken MacKenzie, who had been widely expected to retire this year, holding himself to his own corporate governance standard of an informal nine-year cap on director terms at the mining giant. MacKenzie joined BHP’s board in 2016, becoming chair a year later.

McEwan, who stepped down from NAB early last year after almost five years at the helm and spent six years running London-based RBS before that, takes on the most powerful board role in Australia, and indeed one of the most influential miners in the world.

The changeover in BHP chief executive is expected to take place within the next two years, with Henry’s top executives already being tested as internal successors.

BHP faces major spending demands in coming years. Picture: BHP

This will give the new chairman time to build a partnership with Henry and give the market a chance to digest change at the top. Henry was appointed at the start of 2020, and BHP’s past three chief executives have held the role for between five and six-and-a-half years.

MacKenzie drove BHP’s obsession with capital allocation, setting the ground rules for return hurdles for investment back into the business and acquisitions.

This was a fundamental change for a miner that spent much of its modern history focused on directing much of its spare cash back into the business without a meaningful measure of return, meaning investors often came out second.

This paved the way for Henry to walk away from the capital intensive oil and gas assets which were sold to Woodside in a landmark deal nearly three years ago. It also saw the collapse of the mining giant’s cumbersome dual listed structure, a hangover from its merger with Billiton. This led to its primary listing returning to Australia and allowing BHP to use its shares rather than cash, through a string of mid-sized buyouts.

Like MacKenzie, a strategic thinker who came from a background in manufacturing, McEwan is not a miner.

However, the no-nonsense banking boss will bring the strengths of focus, breaking down processes to their most simple, and an ability to cut through complexity at the sprawling global giant. At NAB, he drove through cultural change, breaking it from its accident-prone ways.

As a banker, he has also spent a career thinking about capital allocation.

“Why would you put money into things that just aren’t going to get you a return?” McEwan was known to regularly tell his executives. He was known for discipline in work, regularly scheduling top meetings on Friday afternoons to keep his executives on their toes.

BHP chief executive Mike Henry. Picture: Luke Marsden

A New Zealand national, McEwan joined the BHP board last April and since then has undertaken a marathon tour of the miner’s global operations. He’s already spent some time with Henry, and is understood to have a very high regard for the chief executive as a global leader. McEwan has also been impressed with Henry’s executive team. McEwan has previously worked with BHP’s chief financial officer and leadership contender Vandita Pant. She was in the RBS finance team when he was CEO of the UK bank.

Just recently, McEwan was in remote Canada taking in BHP’s next big bet, a $US15bn investment building out the Jansen potash mine.

While he’s been impressed with the quality of BHP’s operations, he knows the miner faces headwinds in the near term, with demands on capital spending rising fast. There will be cash going out until the end of the decade around potash and building out newly acquired copper mines as well as extending the life of the maturing Escondida copper mine in Chile. However, any returns from these operations will be years away. It comes just as the prospect of a US-led trade war cools demand for key commodities like iron ore and copper, putting near term pressure on the miner.

Elsewhere, McEwan will steer BHP through its big prospective US investment, where it is operator of the giant Resolution copper deposit in Arizona it owns jointly with Rio Tinto. Donald Trump’s new administration will want the miner to move as fast as possible on building the giant copper mine, although it still faces resistance from some local Indian tribes, which will take more time to work through. Resolution also needs significant technical work before the giant deposit can be brought to market. Combined, bringing Jansen, Resolution and sanctioning new multibillion-dollar copper developments near the border of Chile and Argentina will shape BHP for decades to come.

Then there’s the remaining question of whether BHP makes a renewed run at Anglo American after last year’s shelved mega-mining deal.

A transition in the BHP boardroom and the prospect of a global trade war all points to the big Australian fast-cooling on a renewed run at the London-listed miner.

Like all new chairs, the challenge for McEwan will be to step back and keep an eye on the bigger playing field. While he will need to be across the detail, his executives are now the ones driving the operations. It’s going to be the job of McEwan the banker, to get the best from his team and eventually, a new CEO.

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Originally published as Banker Ross McEwan will shape BHP for decades to come as incoming chairman