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Andrew Mackenzie, BHP Chief Executive Officer, at the Melbourne Mining Club 100th Luncheon

Andrew Mackenzie, BHP Chief Executive Officer

Melbourne Mining Club 100th luncheon speech

5 December, 2017


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I acknowledge the Wurundjeri people of the Kulin Nation. I pay my respects to their Elders past and present and I look forward to our shared future. I am honoured to speak at the 100th luncheon of the Melbourne Mining Club. Melbourne is still at the centre of mining and has just hosted a successful International Mining and Resources Conference that goes from strength to strength (IMARC). Next year I will welcome all the big mining CEOs to IMARC so we can hold our twice-annual International Council of Mining and Metals (ICMM) at the heart of world mining here in Melbourne.

In August 2001, it was Sir Arvi Parbo a giant of our industry and former Chairman of BHP who spoke at the inaugural luncheon of the Melbourne Mining Club. It’s a speech from another time. In the aftermath of the collapse of the dot-com bubble China was a fledgling economy. And we had yet to experience the last mining boom. He said: “Looking back over the last fifty years I have come to the conclusion that my ability to predict the future is minimal and that virtually nothing is impossible.”

I agree with Sir Arvi because to predict the future is difficult. But I also disagree with him because we have to predict the future to run our business. The mines we operate have lifespans that stretch for decades, if not centuries. We make long-term investments in exploration, production and people based on our view of the long-term future. The future will not wait for us - we have to pull it towards us. And if, as Sir Arvi says, nothing is impossible then everything is possible. So we have to be open-minded and flexible because transformational economic, social, technological and environmental change are upon us. We must rise to those challenges and meet their possibilities head on.

In order to succeed we must think in multi-generational terms, remain disciplined in the pursuit of our goals, bring a sense of entrepreneurism, and foster a culture of inquiry, ideas and innovation. We will do this best for the world if we combine the best of East and West.

The dynamism and longer-term thinking of the China and Eastern model combined with the diversity and debate of the Western model. As Mao said: “Let a thousand flowers bloom.” The West can also learn from the Asian tradition that honours those who devote their careers to public service and good administration - a quality I fear that has been lost in many Western societies, which has eroded trust in political leadership and in the profession of public administration itself.

All Governments must, however, resist the quest for unnecessary power over individuals and companies that would stifle our self-development and rob us of the freedom to do what we do best on our own. The security and prosperity of economies, communities and countries demands that East and West work together freely and innovatively, with respect for all who contribute to shared progress. We have to mesh the best of our cultures together to drive globalisation forward.

Right now there is a perception in the West that too few have benefited from globalisation and too many have been left behind. This has distracted the West and created opportunities for China and the East. The ambition of China’s Belt and Road initiative is astounding! I hold that its success will be greatest if the collaboration and goodwill that China seeks from other countries is offered openly. In the conviction that all who participate stand to benefit most when they are part of the international system.

To match China’s economic aspirations for its people and benefit more from it, Western society and Western companies have to change. Business must not just wishfully count on the universal values of democracy, human rights and open trade. We have to champion them and live them, along with beliefs in fairness, inclusion and cultural diversity. I am convinced these values can also drive progress and prosperity in the years ahead in parts of the world yet to fully share in the benefits of global growth like so many nations in Africa and in the Middle East.

The benefits of a combination of the best of East and West are not confined to countries like China, India, Australia and the United States. They are global in nature. In order to achieve these gains multinational businesses must build a stronger platform for multi-generational performance and delivery. Not least for the sake of young people.

Too many people in the West take a too-short-term approach and fail to look to the long-term future. This is especially dangerous for resources with their decade-plus cycles. We must shift policy for education and life-long learning research and development and for long-term investment so as to address the concerns of those who feel left behind, lift people out of poverty and create employment opportunities for the future and a skilled workforce to match.

In the West, many in the bedrock of society feel that it’s the actions of large multinational businesses that have caused them to be left behind. I dispute this! To correct it we have to regain our social licence, re-connect with our communities and focus even more on safety, culture, environment, productivity and integrity.

We must:

  • Develop and operate world-class manufacturing systems and processes, with zero fatalities and far less injuries;
  • Achieve substantial shifts in inclusive leadership and workforce diversity;
  • And double down on productivity so we can maximise value and returns and distribute the wealth we generate more fairly.

Back in 2001, Sir Arvi had much to say about technology. He refuted the claim that advances in technology had rendered the minerals industry unimportant and redundant. Instead he held that technology had created new industries and helped resources companies become more effective and efficient. Sir Arvi was right then and is right now.

However, business must address the legitimate anxiety about the next waves of economic dislocation, technology and relentless automation. The mining sector should show leadership and upskill its workforce for a fundamental change in the jobs mix, recruit the brightest minds from different sectors, develop more opportunities for young people and rural economies, and paint an optimistic and convincing picture of a future where augmented reality, artificial intelligence and automation will touch every occupation.

Technology lays the foundations for world-class manufacturing systems. These are the systems that cause people to work smarter and be more connected, that create more employment that shield our people from dangerous situations and make them safer and healthier. Technology and innovation will also attract the next phase of capital investment in mining from which the next waves of safety and productivity will flow.

As you may be aware our Think Big campaign is about a multi-generational approach to business and innovation - about a commitment to ideas, growth and prosperity. We believe that the surest way to earn the right to grow for the long term is to commit to a new generation of gains in safety, sustainability and productivity. When we succeed the communities in which we operate should also succeed. They should benefit when we forge connections with them, when we make ethical and transparent business decisions, and when we minimise our environmental impact.

To remain competitive and realise the possibilities of the future our industry must adapt to change. BHP is well equipped and ready! We invest wisely and with strong capital discipline in the right commodities. We invest in our people. And we invest in technology. While we don’t have all of the answers, we lean in to the future not away from it.

We have positioned our portfolio, organisational structure and systems so we benefit from the flight to quality that the world now demands. The recent National Communist Party Congress in China targeted safety, efficiency and sustainability. That is why we shaped our portfolio to be simpler, smaller and focused on just a few major basins to deliver all our high quality products. That is why we have achieved great success with productivity and why we’ve laid the groundwork for improvements for years to come through initiatives such as our Maintenance Centre for Excellence, which uses predictive global decision-making to pre-empt faults and reduce downtime and costs.

We invest in cultural change. We require a strong workforce to innovate, to Think Big, to safely, efficiently and capably deliver results. We know through research that our cultural change will make and has made us safer, more productive and more inclined to adhere to work plans.

Our people have become more inclusive and diverse. We will achieve our aspirational goal of gender balance by 2025. Women now make up more than 20 per cent of our workforce. We’ve made more progress towards gender balance in the last financial year than in the past decade. 

We invest in education. We’ve identified a shortfall in the number of future workers that have expressed an interest in science and engineering. So we tackle the skills gap in STEM - science, technology, engineering and maths. The BHP Billiton Foundation has committed more than A$55 million over five years to Australian STEM programs. The rationale is simple. To ignite interest in the field, to lift academic achievement, to make sure mining has the skilled workforce to succeed.

We invest in innovation. We have initiatives to integrate and automate operations to improve safety, unlock resources and create growth options. For instance, the BHP Precision Mining project which explores opportunities to maximise copper output and extend the life of our Escondida mine in Chile. We have trialled advanced sensor technologies throughout the extraction process to quickly and accurately analyse the quality of in-ground copper ores and so improve the quality and grade delivered to processing plants. When we replicate innovations like this, and like our Maintenance Centre of Excellence, across our entire operations the opportunities for long-term value creation are enormous!

Sir Arvi said the future of the Australian minerals industry hinged on the answers to four questions:

  • Will there be a continuing world demand for our products?
  • Does Australia have the mineral endowment to supply a part of this demand?
  • Will it be possible for the industry to explore for minerals and, if successful, bring the discoveries into production?
  • Will the Australian minerals producers be competitive in world markets?

Sixteen years on I can confidently say YES to all those questions.

Over the last decade our investment in infrastructure from port to rail and wash plants to crushers has positioned BHP and the country for generations to come. And in the coming decade our investment in STEM, culture and technology will help us navigate a future filled with a wealth of possibilities. However, the future of demand, endowment, exploration and world competitiveness depends on whether corporations can redirect debate back to policies, which let us compete on the world stage and let us serve the world fairly, openly and free of hypocrisy.

The outlook for the next sixteen years will be uncertain unless business steps up to regain trust and to argue the case for reform in vital areas such as education, research and development and investment.

Sir Arvi spoke of reputation and perception and said that the very best technical performance did not guarantee success if public opinion and public policy were unfavourable. We must make the case that responsible resources companies make a positive contribution. We must work harder than ever to earn trust and to increase our social licence. That responsibility is ours alone.

Thank you.