Mike Henry, CEO of Australian mining company BHP, stands beside a photograph of the company’s Jansen potash project, located in Saskatchewan, on Oct. 17, 2023.Fred Lum/The Globe and Mail
Mike Henry’s long career at BHP BHPLF, the world’s biggest mining company, did not rock the resources world. In his various roles – he has been CEO since 2020 – he was competent, capable and cautious, according to former employees and executives at rival companies, making him more evolutionary than revolutionary.
Today, Mr. Henry seems to be breaking form to unleash a potential revolution at BHP. A leak last week forced the company to reveal a takeover proposal for rival Anglo American NGLOY that implied a value of US$39-billion. Anglo promptly rejected the bid, which can now be declared hostile, as undervalued, opportunistic and complicated.
Anglo’s thriving copper mines in Peru and Chile were the main attractions. Copper is routinely described as the “critical” metal for a low-carbon and, ultimately, net-zero future. Without copper, electric vehicles, solar panels, wind turbines, power grids and data centres for artificial intelligence would be exceedingly difficult or impossible to build. “Copper supply is under stress,” Barrick Gold ABX-T CEO Mark Bristow, whose company covets copper projects, told The Globe and Mail on Thursday.
BHP wants to double up on its copper assets; if it wins Anglo, it will emerge as the No. 1 producer of the metal, up from No. 3. Mr. Henry will not get his prize easily. Competitors thought to be sizing up Anglo in whole or in part include mining’s mightiest names, among them Glencore, which shares ownership of Chile’s enormous Collahuasi copper mine with Anglo; Rio Tinto RTPPF; Barrick Gold, which might be interested in any Anglo copper pieces that break off; and state-backed Chinese and Indian heavyweights that don’t want to see Western companies lock up a commodity that has been called the “new oil.”
Mr. Henry, 58, was born in Abbotsford, B.C., and studied chemistry at the University of British Columbia. Executives who know him describe him as serious, detail-oriented, objective, phlegmatic, conservative, decisive and able to absorb and interpret vast amounts of data quickly. Those traits are all big advantages for running a company with a market value of more than US$140-billion and significant operations in Australia, the United States, Canada, Peru, Chile and Brazil. BHP has leadership positions in copper, metallurgical coal, nickel and iron ore and will add farm nutrients when its $14-billion potash mine in Saskatchewan begins production by 2027.
He joined BHP in 2001, at an Australian coal joint venture with Mitsubishi, after holding jobs in Canada, Australia and Japan (he has Japanese heritage through his mother, who was an emergency services nurse, and he speaks the language fluently). About a decade ago, as head of commodities marketing, he helped then-CEO Marius Kloppers overhaul the iron ore market by convincing iron ore producers and steelmakers to end the managed price system – effectively an informal cartel – that had set the price for decades. It was replaced by a spot price that initially earned the industry a fortune as prices rose on the back of soaring Chinese demand, then lost the industry fortunes as prices fell, allowing China to exploit the subsequent iron ore glut.
From 2016 to 2020, Mr. Henry was president of BHP’s vast mineral operations in Australia, putting him in contention for the top job. Since becoming CEO, he has made some fairly significant moves. The biggies were ending the London-Sydney dual share listing in favour of Sydney, a move that simplified BHP’s ability to use its shares as an acquisition currency; unloading BHP’s hefty oil and gas business; committing to the Canadian potash project; and, last year, buying Australia’s copper-heavy OZ Minerals for US$6.4-billion.
None of those events could be considered transformational. But all along Mr. Henry was considering a deal that would make BHP the global king of copper. A hint came in 2021 when he told The Globe in an e-mail that “the world will require a lot more copper, nickel and steel (which requires iron ore and metallurgical coal) to make the energy transition happen.”
He would not comment for this article.
BHP had ample iron ore and nickel; it needed more copper. It has since emerged that BHP considered bidding for Anglo a few years ago but backed off because of Anglo’s complicated and diverse structure. It included control of the De Beers diamond company and stakes in two listed South African subsidiaries, Anglo Platinum (Amplats) and Kumba Iron Ore, which he did not want.
Since then, Mr. Henry, who is the son of a prison guard, has become bolder in both his personal and professional life. He took up parachuting, learned how to drive a motorcycle and plays guitar. He separated from his wife, whom he met in Japan when he was a young English teacher, and is now involved with Tracy Robinson, the CEO of Canadian National Railway – he had to disclose the relationship to the BHP board because CNR is building a railway to the potash mine.
And he launched a bid for Anglo, one of the Big Five global miners along with Glencore, Rio Tinto, Vale and BHP. Anglo’s market value this week surged to about US$44-billion, about a third of BHP’s, but big enough to move BHP’s asset needle.
The bid was both opportunistic and audacious.
Opportunistic because a series of cost overruns, notably at Anglo’s capital-hungry Woodsmith polyhalite fertilizer mine in England, and iron ore and copper production shortfalls had hammered Anglo shares. By early 2024, they had dipped to a multiyear low of £17 on the London Stock Exchange (the price this week was almost £27).
The downward trajectory evidently proved a compelling value-hunting opportunity for hedge funds such as Paul Singer’s Elliott Investment Management, which revealed last week that it had built a 2.5-per-cent stake in Anglo, and for Mr. Henry.
And it was audacious because Mr. Henry had launched a complicated bid for a complicated company. BHP’s offer was conditional on Anglo demerging its holdings in Amplats and Kumba. In other words, BHP’s takeover premium, which the company put at 31 per cent, applied only to the assets, dominated by copper, that excluded the two demerged companies (De Beers and other assets, such as Anglo’s manganese and South African nickel and iron ore operations, would be subject to a “strategic review”).
The structure and value of Mr. Henry’s proposal underwhelmed Anglo’s directors and investors. Its main accomplishment was putting Anglo into play. A bidding war has yet to emerge, but it could. Mr. Bristow thinks BHP’s sheer size and first-mover status give it an advantage. “BHP is the ultimate 5,000-pound gorilla in the mining industry,” he said. “So taking on them as a competitor – you have to choose your fights here.”
Investors have driven BHP shares down about 5 per cent since the company revealed its takeover proposal, while Anglo shares have gone in the opposite direction, a signal that investors think BHP will have to pay up big time to win its prize, simplify its bid with an offer for the whole company, not just parts of it, or add a cash component – it’s an all-share offer at the moment.
Investors fear that BHP’s insistence on the demerger of Amplats and Kumba, were they to proceed, would crater the shares of both subsidiaries as their post-demerger trading liquidity rises and their strategic and political guardian – Anglo – is eliminated.
Mr. Henry’s other problem is political risk. South Africa’s government, whose Public Investment Corporation owns 7 per cent of Anglo, has no love for BHP’s plans to force Anglo to ditch Amplats and Kumba before it launches a formal bid, which it must do by May 22. “Nobody here views this deal favourably,” James Lorimer, South Africa’s shadow minister for mining and natural resources, told the Financial Times last week. “Anglo American’s business here was once the jewel in the crown for South Africa’s economy. Under this deal, it could be sold off for parts from someone else’s company.”
BHP’s apparent failure to schmooze Pretoria ahead of revealing the takeover proposal comes as a surprise – political naiveté once cost it a hefty takeover that could have redefined the company. In 2010, when Mr. Kloppers was CEO and Mr. Henry a key lieutenant, BHP was forced to scrap its US$39-billion bid for Potash Corp. of Saskatchewan (now Nutrien) after the province’s then-Premier, Brad Wall, raged against the foreign takeover. The federal government backed Mr. Wall and nixed the hostile takeover attempt.
BHP appears not to have learned its lesson from the Potash Corp. debacle – that governments are crucial stakeholders too. Perhaps in an effort to rectify the oversight, Mr. Henry was in South Africa on Thursday on a charm offensive directed at government ministers.
Will Mr. Henry make his mark at BHP? It’s too early to tell. If his bid fails and Anglo goes to a rival or is dismantled, he may go down in history as a BHP caretaker boss, not a transformational one. Judging by his apparent new appetite for risk – though not buccaneering behaviour – he seems keen to avoid that legacy. Anglo is his to lose.
Eric Reguly