Tuesday, October 17, 2017
Graham Kerr

Graham Kerr

South32

GRAHAM Kerr’s first full financial year at South32 has been a redoubtable success. As a company formed through the demerger of BHP Billiton’s non-core assets in 2015, in a period of austerity, there is something of the orphan about the company. Even now, it has an unflashy, living-within-its-means culture. Net debt at formation was $402m, but by its financial year-end in June the firm was net cash by $386m which was increased to over $500m as of the September quarter. What’s more, a maiden dividend was paid while record production was achieved at the manganese and alumina assets in Australia, and at the Cannington zinc facility, and in South Africa. This is very much a company presided over by the accountant’s parsimony. There are some risks in the business. Kerr said he’s confident Eskom will support investment in the firm’s Khutala expansion but that is yet to materialise. Production indiscipline among South African manganese producers is also an irritation for Kerr. He’s also not confident that the Cerro Matoso nickel mine in Colombia is a long-term investment for South32, nor indeed, new coal mines about which investors are increasingly sensitive. But as far as debuts go, South32 has been impressive: conserving cash, and taking a back-to-basics approach to operations. The question is whether when it’s time to grow, Kerr will abandon his natural caution and take the plunge?

LIFE OF GRAHAM

Kerr was CFO of BHP Billiton from 2011 to 2014 and was instrumental in the creation of South32. He had been a BHP Billiton lifer, bar a brief stint at Illuka Resources. The Financial Times described Kerr as “a reasonable Australian rules football player” in his youth. He has a business degree from Edith Cowan University and is a qualified accountant. He grew up in Fremantle.

“We wouldn’t look for new coal investments as it’s not worth it.”