Diversifieds head for new era

[miningmx.com] — WHEN Mick Davis joined Xstrata as CEO in October 2001, he could hardly have imagined that within six years he’d have a claim to be regarded as the doyen of the world mining industry.

For with Marius Kloppers named as successor to Chip Goodyear at BHP Billiton, the world’s three top mining and resources groups have all acquired new heads over the past few months.

It’s even more remarkable considering that Davis is basically a financial man who in a way fell into the mining industry by accident, joining Gencor in 1994 after being passed over for the top job – for which many thought him well qualified – at Eskom, where he’d built his career.

He was a key assistant to Brian Gilbertson in devising the Gencor-Billiton merger but left before the formation of BHP Billiton, a deal in which Kloppers, who joined Billiton SA in 1993, was involved.

Cynthia Carroll’s move to Anglo American is, of course, now old news. What has received less attention locally is that last month Rio Tinto plc (perhaps better remembered by old-timers as RTZ) also acquired a new CEO: one Tom Albanese, a mining engineer who’s been with Rio since 1993 and joined the board last year.

He’s not unfamiliar with South Africa, having represented Rio on the board of Palabora Mining for some years.

So Kloppers makes a hat trick.

Given that Gilbertson’s aggressive South Africanism was widely thought to be one of the reasons he fell out with BHP Billiton chairman Don Argus, an ex-BHP Aussie, and quit as CEO after only a few months, it might be tempting to see Kloppers’s appointment as the Boers fighting back. But I fear that’s wishful thinking.

Kloppers was always a Billiton rather than a Gencor man. He moved to Melbourne in 2001 and I understand has closely identified with his new homeland – though, having said that, it’s been reported that his new job will entail moving to London.

Incidentally, he was instrumental in helping BHP Billiton snatch Western Mining from Xstrata’s Davis – who has been referred to as one of Kloppers’s early mentors – in a hotly contested bidding battle in 2005. He’s considered a committed dealmaker, which is also ironic, in the light of Argus’s refusal to allow Gilbertson to launch another big bid – possibly for Rio – being cited as another reason for their falling out.

The replacements at the top of the resources companies are more than a shuffling of deckchairs: there’s also a definite transition to a new generation – a phrase Goodyear used explicitly in announcing Kloppers’s appointment.

Kloppers, at 44, will in fact be one of the youngest heads of an FTSE 100 company. Davis is still only 48; Albanese is 49; and so was Carroll when she was appointed last October, though discretion prevents me from inquiring whether she’s since hit the big five. Goodyear himself, for that matter, is only 49.

But that’s not a trend restricted to the mining sector. According to a British report, over the past five years the average age of an FTSE 100 CE has dropped by nine months to 52. There are more FTSE 100 CEOs in their thirties than in their sixties, though admittedly only by five to four.

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And a Booz Allen survey of CEO turnover published last month found that the average CEO tenure is 7.8 years worldwide but only 5.7 years in Europe, where the average CEO quits at the age of 54.5.

What would a similar survey find in South Africa, I wonder? I suspect that both the length of tenure and average retirement age would be much higher. Even though the pressure of running an FTSE 100 company – especially in the globalised resources sector, necessitating almost incessant travelling – must be immense, there must be a big economic cost in the retirement of able people who could contribute for another 10 to 15 years.

Perhaps the final irony is that the peripatetic Gilbertson is still going strong and launching ambitious new ventures well into his sixties. All strength to his elbow.