BHP looks to next round of productivity gains

BHP CEO Andrew Mackenzie says the company is urging its employees to think big to achieve the next level of value creation.
BHP looks to next round of productivity gains BHP looks to next round of productivity gains BHP looks to next round of productivity gains BHP looks to next round of productivity gains BHP looks to next round of productivity gains

BHP chairman Ken MacKenzie addressing the company's 2017 AGM.

Kristie Batten

New chairman Ken MacKenzie opened his first Australian annual general meeting in Melbourne this morning, reiterating his message from the London AGM last month – that the CEO had his full support.

He noted that under Mackenzie, unit costs had dropped by 40% and there had been over US$12 billion of annualised productivity gains embedded.

Mackenzie took the floor and reiterated BHP’s relentless “quest for value”.

“I have often been challenged by investors on whether safety and productivity themselves should be a strategic driver for BHP – and my answer is, absolutely yes,” he said.

“With the gains of the last five years secured, there is much more to be won. I now have my sights set on the next level of value creation through improved safety and productivity over the coming years.”

Mackenzie said technology and innovation would play a big part of the next round of gains.

“In our Maintenance Centre of Excellence, we have centralised our global truck data and can leverage that knowledge to better predict when parts need to be replaced to reduce downtime,” he said.

“In Australia alone, this has reduced projected costs by 20% across the remaining life of the fleet.”

Mackenzie said the company’s “bold plans” required more than just a CEO to talk about it.

“It needs a strong workforce to innovate, to think big, and to safely, efficiently and capably deliver,” he said.

“I am confident our people can do it, because they have proven time and again that they are up to the challenge.”

BHP is aiming to achieve gender balance by 2025 and Mackenzie reported that female participation was at over 20%, up 2.9% since the target was announced this time last year.

“We have made more progress towards gender balance in the last financial year than we have in the past decade,” he said.

“I think it sends a strong message to all companies that gender balance is achievable, it is beneficial and it is an absolute imperative for workplaces in the 21st century.”

Most of the early shareholder questions at the AGM were about environmental issues, the Samarco dam disaster, and portfolio management.

Mackenzie said there was no turning back on the planned sale of the US shale assets.

“We’re very determined to divest these assets. We have a strong sense of urgency,” he said.

A trade sale is the most likely avenue of divestment, and Mackenzie said he hoped the sale could be concluded within two years.


Shares in the company were down by 0.7% to A$27.51.