Why gold miner Newcrest’s hard-driving boss Sandeep Biswas had to go

The sudden departure of gold mining giant Newcrest’s CEO Sandeep Biswas has exposed a big problem of the resources sector.

Sandeep Biswas will continue to act as a consultant to Newcrest for three months, but his management role ended on Sunday. Picture: Stuart McEvoy

A new chairman and increasingly fresh board have called time on long-term Newcrest boss Sandeep Biswas, turning what should have been an orderly transition for one of the world’s biggest gold miners into something more chaotic.

The sudden departure of Biswas, who has been chief executive for nine years, has exposed a big problem of the resources sector – the lack of succession planning. It also leaves a shadow over Biswas, who earlier this year outed himself out by acknowledging his abrasive management style had to change.

The board and previous chairman Peter Hay had allowed Biswas to continue on without a succession plan – a failure.

Despite discussions with new chairman Peter Tomsett over recent months, Biswas had no intention of stepping down from the St Kilda Road gold miner, which was telling. Biswas, who was last year paid $US6.3m ($9.38m), will continue to act as a consultant for three months, but his management role ended on Sunday.

Tomsett told a briefing the “board had agreed that now was the time to change and that’s why he decided to retire”.

Biswas’s management style is of another era. The former Rio Tinto executive had the “hard” financial scorecards right, but those who had worked alongside the chief executive had occasionally been subject to his explosive anger. Biswas was rarely challenged in the role, and it became increasingly difficult for the organisation to drive the cultural change needed for a modern miner.

A warning sign for the board was the exit of former human resources boss Lisa Ali, who was placed on a period of leave before fully exiting earlier this year.

Before that there were a string of senior departures, suggesting that Newcrest just couldn’t hold its top talent.

The life of Newcrest’s giant Telfer mine in WA’s Pilbara region will be extended. Picture: Bloomberg

CEO behaviour has come under intense focus in recent years. This includes James Hardie’s former chief executive Jack Truong, who was pushed out of the building materials company. Former Cleanaway boss Vik Bansal was known for his hard-driving management style, and former Orica chief Ian Smith also called out his own abrasive management style. More recently the extravagances of former Bank of Queensland chief executive George Frazis had been an uneasy fit with the conservative regional lender.

The job of CEO has changed. Today it is more than financials and managing investors. The ESG overlay – especially at a mining company – is significant. The rise of digital means the nature of communication has changed. And it also comes down to creating a culture where people want to work, to stay ahead in the battle to secure the best employees.

More than ever, boards need to keep on top of the leadership style of their chief executive.

Biswas started his annual leave on Monday and was in Brisbane packing for an overseas break. This left his recently appointed chairman Peter Tomsett and now acting chief executive Sherry Duhe to explain the sudden exit, with the two emphasising that the turnover was all about moving forward.

Tomsett says the retirement planning process has been ongoing for some months and included conversations with Biswas.

Tomsett says Biswas’ leadership style was “common knowledge” and he had been “very focused” on changing that.

“There were some issues earlier in the year. Sandeep spoke up and apologised for some of that at the time, which I think was the right thing to do. It was genuine,” Tomsett says. “I hope moments like that force many people to hold a mirror to themselves and have a look at that.”

He says a number of programs have been rolled out across the miner over the past few years to ensure Newcrest is an inclusive and respectful workplace. There had been no complaints leading to the discussion around retirement, he added.

“Organisational culture is something that we’ve embedded into the KPIs of our executives and will absolutely be the criteria we’ll be looking for with the appointment of our next chief executive,” he said.

Newcrest is an entirely different business from when Biswas, who was chief executive for nine years, started.

A global internal and external search for a new chief executive is underway, and an appointment is expected to be made next year.

Duhe, a former Woodside chief financial officer, will put herself in the running to take charge of the miner, which operates in five countries and produces more than 2 million ounces of gold a year.

She was among the candidates vying for the top job at Woodside, a role that ultimately went to Meg O’Neill. Duhe quit for Newcrest just as Woodside was seeking to stitch together its mega-merger with BHP’s petroleum assets.

Duhe says there are a lot of positives in Newcrest right now with the “continuous improvement of our culture” and a clear focus on what needs to be done as a team.

“One thing I’ve learned over several decades of working in different companies around the world is that you’re never done with culture,” she says.

OZ Minerals chief executive Andrew Cole will also be on the market after BHP secured an agreement to buy out his copper miner for $9.6bn. The transaction is waiting on investor approval and another round of due diligence.

By many measures Newcrest is an entirely different business from when Biswas started. The miner has access to six top-tier ore bodies around the world and consolidated its position as one of the largest gold producers. It has an increasing exposure to copper, producing 120,000 tonnes last year, and plans to grow this as demand for the metal soars.

It is the biggest gold producer in British Columbia, with exposure to top tier mines. It has an expansion under way for its flagship Telfer mine in Western Australia, which will see an extension to the life of the mega-site. On its balance sheet gearing is sitting at a low 10 per cent, meaning it can withstand a downturn in the gold price if inflation pulls back from the middle of next year.

In a statement Biswas said much had been achieved over the past nine years: “It has been an honour to lead this company and ensure safety and innovation have become ingrained into the very core of how we go about our business every day.”

Originally published as Why gold miner Newcrest’s hard-driving boss Sandeep Biswas had to go