BHP’s Peter Beaven says True North can calm nerves in tough times

BHP Billiton’s Peter Beaven has one of the tougher chief financial officer briefs in Australia.

BHP Billiton’s Peter Beaven has one of the tougher chief financial officer briefs in Australia.

With the mining boom long gone, he has to manage a rapid reduction in costs against the need to allocate capital for future investments, all while satisfying the voracious demands of dividend-hungry investors.

In a new series from The Australian — called Performance with Purpose — Alan Kohler, Robert Gottliebsen and Stephen Bartholomeusz will explore what values motivate some of the nation’s most successful business minds. Recently, they sat down with Beaven to find out how values help him negotiate life at the top of the big Australian.

Beaven: I would say the most important thing is that you have to have, particularly in times of volatility, is a True North, so that you can see through all the various competing pieces of advice and market signals and so on and that’s the long-term shareholder value.

If you keep looking to that, that means that everything that you do today has to be viewed with that lens of if you were looking back in 10 years’ time; would you regret this decision or not, on balance? If you can keep doing that and translating yourself into the future and looking back and seeing that bigger picture, then I think that you tend to be able to avoid making, hopefully, in a volatile world, bad decisions.

Bartholomeusz: So do you think in future when people look back at the period from 2008 through to 2012, they’ll say BHP made some good decisions or some bad decisions in terms of shareholder value?

Beaven: Stephen, I would say that, like most companies, I don’t think we could say we got everything right, but I would say that we got a lot of things right. I think the courage to continue to invest through the cycle, particularly. It’s easy to look back and say, ‘2008, well, of course it was a short-term thing’. It didn’t feel like that at the time, if you recall, but we carried on. I think that the other decisions that we made around that time, getting into shale, it’s not playing out as we had intended at that time; we thought we were going to go very fast through this thing and produce it in to a very strong price, but on the other hand, I think we’ve got still a very good resource there.

We’re optimistic about the future for oil and gas and so we will produce into that stronger market. It’s delayed, but we’re not regretting that. And then the $65 billion over the last 10 years given back to shareholders, that’s hardly a regret; I think that’s something to be very proud of.

When you add up the total cash returns of the next four biggest mining companies together, the totality of their returns is barely more than what we have returned. It’s something to be pretty proud of and we’ve got the company that we have today, because we continue to invest and we’ve got the balance sheet we have today. I think we did an OK job.