(Corrects paragraph 13 to show Minas Rio purchase before John
* Board chairs must help oversee change, era of easy growth
* Quest for female candidates seen difficult
* Sources name potential candidates
* Shareholder activism multiplies challenges
By Barbara Lewis and Clara Denina
LONDON, April 26 Three of the world's biggest
miners are hunting for new leaders for their boards at a time
when the industry faces questions from investors about its
conventional diversified business operations and strategies for
BHP Billiton , Rio Tinto
and Anglo American, whose chairmen have all announced
their intention to step down, are also generating healthy cash
flows, putting them under pressure to give more money back to
The task to find the right candidates is particularly urgent
for BHP Billiton and Anglo American due to the growing influence
of major investors at both companies who have raised doubts over
their future direction.
U.S. activist investor Elliott - which holds a stake of
about 4 percent in BHP's London-listed shares - has taken
advantage of the planned departure of incumbent Jac Nasser to
launch a campaign to shake up the world's biggest miner.
Elliott's proposals include getting rid of BHP's dual
company structure, spinning off its oil and gas assets and
returning more cash to investors.
BHP has so far dismissed them and many other investors have
also been sceptical, but say the attack highlights the need for
a strong new chair to back up the CEO and unite a disparate
Anglo American's new board leader will also have to deal
with a new share register. Shortly after incumbent chairman John
Parker announced in February that he would step down, Indian
miner Vedanta's chairman Anil Agarwal used an
exchangeable bond to acquire a sizeable chunk of Anglo American
shares and buy influence.
The favourite to lead Rio Tinto's board is Sam Laidlaw,
former CEO of Britain's largest energy supplier Centrica
, whom Rio made a non-executive director in February this
year, four industry sources said, speaking on condition of
BHP has said it is aiming for 50 percent women in its work
force within a decade, but the sources said finding a woman
chair with the availability and experience could for now be
All four sources said Gail Kelly, former chief executive of
Australian bank Westpac, who was an early favourite to replace
Nasser, was no longer being considered but declined to give a
Other names that two of the sources said have been
considered were outgoing Dow Chemical's boss Andrew
Liveris and an existing BHP director, Malcolm Broomhead.
One candidate mooted to be Anglo's new chairman, two of the
industry sources say, is Guy Elliott, a former chief financial
officer of Rio Tinto. None of those mentioned as a potential
candidate was immediately available for comment.
Anglo's chairman Parker's eight-year tenure included dealing
with the fallout from the miner's costly 2007 investment in
Brazil's Minas-Rio iron ore operation, which analysts say will
struggle to justify the capital outlay.
Headhunters said that although three big companies were all
looking for new heads of boards at the same time, the pool of
potential candidates was wide for such a global business.
Kit Bingham, a partner at top executive recruiter Odgers
Berndtson, said there should be no shortage of people keen to
fill the roles, which present challenges, not just from
shareholders but from wider transitions, such as rolling out new
That calls for all a chairman's diplomatic skills in
negotiating with governments concerned about possible job
losses. "Candidates will know there's a change agenda to
deliver. It's a pretty exciting time when the future needs to be
different from the past," Bingham said.
The new board leaders will mark a generational shift for
mining companies that have spent the time since commodities
prices slumped in 2015 and early 2016 cutting costs, selling off
assets and restructuring their businesses to boost cash flow.
Their predecessors had overseen multi-billion dollar
acquisitions at the high point of the commodity cycle, saddling
their balance sheets with massive debts.
Now the search is on for new ways to grow without making the
same mistakes as before.
Bruce Duguid, a director of Hermes EOS, which advises on
more than 260 billion pounds ($332 billion) in client assets,
says any global mining chairman needs a range of skills "to
manage the many pressures on its business model".
"These include the need to reduce costs and maintain strict
capital discipline in the face of unpredictable commodities
demand, management of increasing sustainability challenges as
ore grades decline and overseeing a material improvement in
(gender) diversity at all levels of the organisation," he said.
Hanre Rossouw, portfolio manager at Investec Asset
Management, which owns shares in Anglo American and BHP, said
the mining companies needed people able to help management deal
with the breakup of assets and strategic de-mergers.
"You do need a chair that can think more creatively in terms
of value creation with unbundlings and break-ups always options
to consider," he said, referring to Elliott's proposal to spin
off BHP's oil and gas assets and Anglo's plan last year to sell
or spin out its South African iron ore unit.
Rio Tinto, which is losing chairman Jan du Plessis to
telecoms group BT where he will take up the same role,
needs a replacement who will be able to keep a tight grip on
The world's second-biggest miner after BHP is embroiled in a
corruption scandal that has led to two senior dismissals last
year and a legal challenge from one of those sacked.
Both Rio and BHP scrapped their progressive dividends in
response to the commodity price crash of 2015 and early 2016.
Elliott wants to introduce a formula for delivering more
money to shareholders, which BHP has said it cannot do because
of the cyclical nature of mining. Anglo suspended its dividend
at the end of 2015 and has said it will bring it back around the
end of the year.
Investors will also be keeping watch on the pay packages of
the new recruits. Anglo was hit last year by a shareholder
revolt over CEO Mark Cutifani's pay and has since proposed a
cap, agreed by shareholders this week, on how much executives
can earn from share awards.
($1 = 0.7825 pounds)
(Editing by Lina Saigol and Philippa Fletcher)