In a wide-ranging interview, Mark Pownall explores the career of Tianqi Lithium general manager Phil Thick and discusses the state of the battery metals industry.
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In a wide-ranging interview, Mark Pownall explores the career of Tianqi Lithium general manager Phil Thick and discusses the state of the battery metals industry.
In a wide-ranging video interview, HBF managing director John Van Der Wielen has sat down with Mark Pownall to discuss the group’s future growth strategy, along with his diverse career and regulatory challenges facing the finance sector.
Perth Stadium chief executive Mike McKenna expects a crowd of 50,000 at the venue’s first football game, which will feature the AFLW Fremantle Dockers, guests at a Business News Success & Leadership breakfast heard this morning.
See the video here: https://youtu.be/kwiTZk5ohM8
“We are hoping that’s going to be an event that draws a crowd that sets a massive benchmark for women’s sports in Australia in terms of attendance,” Mr McKenna said.
“AFL was talking about 30 (thousand); we’re going to be planning for a lot more than that.”
Mr McKenna brings to his role as chief executive experience with both the Essendon Football Club and Cricket Australia, having overseen Essendon move from the MCG to the now Etihad Stadium and having contributed to the birth of the Big Bash Twenty20.
“Once upon a time my perception of marketing football was a sausage sizzle and cake stands,” Mr McKenna said.
After spending a few years with Essendon, his knowledge became far more sophisticated.
Mr McKenna said the men’s and women’s Big Bash were some of his proudest achievements, with the latter paving the way for women’s AFL and setting a benchmark for women’s professional sport salaries.
On the homestretch towards opening day for his next big challenge, Mr McKenna said the development for the Perth Stadium was on budget, on time, and also well-prepared, with an event calendar that had been booking up into 2019.
“If we open as planned (on January 21) and have the One-Day International match against England, that’ll be a great start,” Mr McKenna said.
Further into the agenda will be a visit by English Premier League champions Chelsea, which will play Perth Glory in mid-2018.
“And that’ll attract not just Chelsea fans around Australia, we also expect a large contingent from Asia to travel down,’’ Mr McKenna said.
“That’s people in hotel rooms, bums on seats, people in restaurants and on tours.
“We’ve then by 2019 already contracted the second of the State of Origin matches, the biggest sports events on television in Australia with two states who go absolutely nuts for it.”
He said the state government had allocated $40 million towards events spending and that it was his job, along with his team, to acquire events.
“Our job is to bring people from interstate and overseas and get them to spend their hard-earned here in Perth and hopefully travel further in WA and invest,” Mr McKenna said.
He said the parkland surrounding the stadium would also provide an opportunity for a range of community events.
One of the major attractions already making ticket sales was Ed Sheeran, Mr McKenna said.
He said although Ed Sheeran performed all over the globe and elsewhere in Australia, overseas and interstate visitors were travelling to Perth for the concert.
Mr McKenna said Perth Stadium had sold out both of the two Ed Sheeran concerts, including 5,500 tickets sold to interstate and international buyers.
“That’s worth about $12 million in direct expenditure into WA,” he said.
“If we can bring more of those things here that attract people, we can drive greater economic value and provide a return on investment.
“(Another) part of our business is meetings and special events.
“We have a 1,200-seat dining room, which will be fully fitted out with blackout curtains, drop-down screens, everything you need for a major conference.
“The key feature of that is floor-to-ceiling, wall-to-wall glass overlooking the river and the city of Perth and East Perth.”
On non-match days, Mr McKenna said, the views at the stadium would be a drawcard for people to eat at its restaurants and show their interstate or international friends or colleagues the unique views of Perth.
A feature of Perth Stadium will be that all food offerings will be provided by the stadium itself, as opposed to outsourced vendors.
“We’re spending probably about $20 million on supply contracts over time and probably in the next five years we’ll spend about $150 million; a lot of that will be food and beverage,” Mr McKenna said.
“At the moment our team is spending a lot of its time in procurement.’’
He said extra weighting would be applied to local suppliers to boost local business.
“We’ve got about $10.8 million of fit-out material, everything from 15,000 spoons to an ambulance cart, to a whole range of things we need to put into the stadium to make sure it’s ready to go.”
A lengthy leadership transition provided Richard Goyder with the ideal preparation for his role as Wesfarmers’ boss in 2005, the outgoing managing director told today’s Business News Success & Leadership breakfast. (Watch the full video of the Success & Leadership breakfast here: https://youtu.be/WSGsbbq3YLM )
And he’s currently passing the value of that 15-month leadership transition to his successor, Rob Scott, over a similar time frame before heading out the door later this year.
Mr Scott, who heads Wesfarmers’ industrials division, was announced as the conglomerate’s next leader in February of this year, but won’t step into the role until November.
Mr Goyder said a seamless transition was very important for Wesfarmers.
“He’s (Mr Scott) got this great time where he’s not the decision maker, although I’m engaging him in every decision we make, he’s not under the microscope, and he can talk to people inside the company, outside the company and start building towards when he takes over,” Mr Goyder told the Success & Leadership event.
“When I took over from (former managing director) Michael Chaney, we had 15 months.
“People told me that was crazy, but actually it was the best preparation to take over as chief executive.
“I think he’ll (Mr Scott) be as prepared as you can, be but it’s still a bit of a sticker shock.
“It’s really important that the company doesn’t lose momentum in this time.”
As former Bunnings chief executive John Gillam and finance director Terry Bowen had both moved on, it was the right time to change leadership, Mr Goyder said.
Mr Goyder was optimistic about the company’s major recent move, expanding Bunnings into the UK through the acquisition of Homebase, with work undertaken to bring store managers and others from the new business to Australia to understand how it operates.
“Bunnings has been a chief executive’s dream, (and) I think Bunnings has got a long way to go yet,” Mr Goyder said.
Even Brexit didn’t dampen his enthusiasm.
“The home improvement sector is pretty resilient,” he said.
“When people stop travel, discretionary spending, they go to Bunnings and they buy home improvement stuff so they can spend their weekend at home doing things.”
After leaving the top job at Western Australia’s biggest listed company, Mr Goyder is taking on several new roles.
In February, he was announced as Mr Chaney’s successor in another role – that of chairman of energy producer Woodside Petroleum, and he was selected as chairman of the Australian Football League, too.
One of his moves at the AFL will be to reduce the number of board meetings from around 12 annually to eight, in a bid to free up time for the management team.
More broadly, he backed managing director Gillon McLachlan’s vision for the game, and he hoped that the sport could be entrenched as the most popular across Australia.
Part of that was ensuring the success of the women’s competition.
“The AFL is in a special place because of our place in the community,” Mr Goyder said.
“Particularly in country areas, but also in suburban areas, football clubs are one of the glues that are holding the community together.
“It’s incredibly important that football thrives, and that’ll happen if we’re inclusive, if men, women, boys and girls all want to be involved.”
BHP Billiton has responded to its mammoth interim loss and the prospect of a prolonged downturn by slashing its dividend and adopting a new management structure that leaves Western Australia without a representative in the company’s leadership group.
The global mining giant has been hit hard by the collapse in oil, coal and iron ore prices, posting an underlying attributable profit of just $US412 million in the six months to December – down from $US4.9 billion in the previous corresponding period.
Our news editor, Mark Beyer, was interviewed by 9 News Perth the other night on BHP's huge loss...check out what he had to say if you missed it.Posted by Business News on Wednesday, 24 February 2016
After adding in one-off write-downs, primarily at the US petroleum business and its Samarco iron ore mine in Brazil, the net result was a loss of $US5.7 billion.
Chief executive Andrew Mackenzie has introduced a new management structure he says will make the company more agile and its structure much simpler.
The casualties include Jimmy Wilson, who is currently the Perth-based president of the group’s global iron ore business, and Tim Cutt, who is president petroleum.
Their roles have been abolished under the new structure, which has two big winners.
Mike Henry, who currently runs the global coal business, will be in charge of all mining operations in Australia, and will be based in BHP’s Melbourne head office.
Daniel Malchuk, who currently runs the copper business, will oversee BHP’s mining operations in the Americas, and will continue to be based in Santiago, Chile.
The company’s most senior WA executive will be Edgar Basto, who has been appointed asset president WA iron ore, with effect from March 1.
Mr Basto, originally from Colombia, has been with BHP since 1989, most recently as vice-president, production mines in WA iron ore.
He will be one of six asset presidents – including Perth-based Eddy Haegel, who will continue to run Nickel West – who will report to Mr Henry.
These changes mean iron ore, which is BHP’s largest and most profitable commodity business, will be run from Melbourne.
Iron ore generated revenue of $US5.3 billion in the half year to December – or one-third of the company’s global total.
It also contributed nearly half the group’s underlying EBITDA.
WA accounted for the great bulk of BHP’s iron ore production in the past, and with the closure of the Samarco mine in Brazil, that proportion will only increase.
BHP said its WA iron ore business had cut unit costs to $US15 per tonne and indicated costs would stay at that level for the rest of the financial year.
That suggests iron ore will continue to be a solid cash generator for BHP, even if prices weaken from their current level above $US50/t.
Meanwhile, BHP has slashed its shareholder dividend and abandoned its progressive payout policy.
The move had been expected after the resources giant was forced to take a $US7.2 billion write-down against its US oil and gas assets in December and as rivals Rio Tinto, Glencore and Vale all slashed their own payouts in recent weeks.
BHP cut interim dividend to 16 US cents per share, from 62 US cents a year ago, and like rival Rio Tinto said it was dropping its long-standing policy of holding or increasing dividends at every result.
It will now ensure a minimum 50 per cent payout of underlying profit at every reporting period.
"We have not made these changes lightly. They are a determined response to changing markets that will also help us take advantage of the significant opportunities ahead," chairman Jac Nasser said.
In January, Standard & Poor's cut BHP's credit rating by a notch and warned of further cuts, raising the stakes for the company.
"The extent of the dividend cut was certainly larger than expected," Morningstar analyst Matthew Hodge said.
"It seems like they have really changed their philosophy over dividends and market outlook, but where they are now is pretty sensible."
BHP said its focus on eking out efficiencies would continue, but it will reduce capital expenditure by another $US3.5 billion in the next 18 months.
Mr Mackenzie said the prospects in commodities markets were poor.
"We expect this period of lower prices and higher volatility will be prolonged," Mr Mackenzie told reporters.
"But the markets will come back into balance in the medium term, probably starting with gas and oil, and then copper."
BHP outlined a $US1.12 billion provision against its joint venture Samarco business in Brazil - its first indication of the financial impact of the deadly dam disaster.
The company has fully written down its investment in Samarco, but Mr Mackenzie said it was too early to estimate the full financial impact. Analysts have previously indicated the accident may cost the miner up to $US3.5 billion in fines and damages.
A focus on sustainability and environmentally friendly fishing is proving a boon for WA seafood producers.
It has just gone 4am, and while most Perth residents are sleeping, Jim Mendolia has his nets out just a few hundred metres off Fremantle Fishing Boat Harbour, catching sardines.
Rather than ending up in a can, however, most of the sardines the veteran fisherman hauls in will make their way on to a plate at one of the state’s top restaurants.
It’s a big turnaround from when Fremantle Sardines was first established.
Back in 1988, sardines were regarded as mulies, or baitfish, and weren’t considered to be good eating fish.
Today, the sardine has become something of a delicacy, no small thanks to the efforts of Mr Mendolia, whose family moved from Sicily to Fremantle to fish for lobster.
To dispel the notion that a sardine was just a baitfish, Mr Mendolia launched the Fremantle Sardine Festival, giving away thousands of sardine fillets to eager punters.
“Meanwhile, a lot of food writers started writing about me, and then all the chefs were contacting us,” Mr Mendolia told Business News.
“Sardines became vogue and they are very popular now. Once they tried them that was it, they loved them.
“Now a lot of restaurants throughout Australia have them on their menus.”
Demand for the sardines is so high Mr Mendolia said he couldn’t keep up, with the size of his Fremantle processing facility limiting him to a yearly output of less than 200 tonnes, well under his 380t annual quota.
Mr Mendolia is evaluating the prospects of establishing a new facility to ensure he can not only meet demand, but open up new markets as the sardine’s popularity grows.
Further south, Damien Bell is one of 11 fishermen to hold a commercial fishing licence for the Mandurah estuary.
Mr Bell, who is also president of the Mandurah Licensed Fishing Association, catches blue swimmer crab and mullet every day during the week, taking his boat out into the estuary at 5am.
The estuary is closed to commercial fishermen on weekends, allowing recreational fishers to get a slice of the action.
Most of the fishermen operating in the estuary are long-term players, some with family ties stretching back to when settlement first occurred in WA.
While blue swimmer crab is seen as a delicacy, Mr Bell said he faced a similar challenge to Mr Mendolia in convincing the public that the sea mullet was a lot more versatile than just being a baitfish.
“This fishery used to fish for the rock lobster fishery and catch a lot of bait,” Mr Bell said.
“What we’ve done, is we’ve taken the sea mullet and we’ve swapped it from a bait product and we’ve turned it into an edible product, and it’s becoming more popular by the year.”
Mr Bell said all of the crabs and mullet he caught were distributed in the local market, either to restaurants or seafood retailers across the metropolitan area, down south to Bunbury and up to Geraldton.
The local focus is a key plank of Mr Bell’s marketing strategy – everything he catches is fresh, local and sustainable.
“The products that I caught this morning, and I finished at 8am, are already in those retail outlets and are being sold,” Mr Bell said.
“This is the iconic thing about our fishery and it is absolute gold that the Perth consumer has us fishermen on their doorstep, fishing for them daily and delivering to them daily.
“When my crabs hit Kailis at Leederville the guys don’t like it sometimes because they’ve been bitten by the crabs when they’re putting them out on display – that’s how fresh our crabs can be.
“They’re still able to bite the poor old fishmonger as he’s putting them out on display.”
Fresh is also best for Southern Trading Australia, a deep-sea crab and abalone fishery that operates out of Fremantle.
The fishery exports around 40 per cent of its catch of crystal crab, king crab and champagne crab to China, where buyers will pay a premium for the WA-sourced crustaceans.
Southern Trading Australia managing director Glen Bosman said the company had developed strict processes to ensure its crabs were delivered live to international markets.
“The processes in place from a crab perspective in delivering consistently high-quality, live product gives the buyer and consumer a lot more confidence in the end result that’s going to come from it,” Mr Bosman said.
“If you have a look at crystal crab coming out of the US or wherever, you may have 30 per cent mortality because of the distances and the way it’s caught and the quality involved.
“It’s a similar product, but materially different in prices because of that quality issue.”
Another Fremantle operation producing a premium product for world markets is Fremantle Octopus, which started around 15 years ago.
As with the sea mullet and the sardine, prominent chefs are backing octopus caught off the WA coast, with Neil Perry, Peter Manifis and Rick Stein among those helping open new markets in the US, Europe and South-East Asia.
“We’re very fortunate that we have a very good eating species,” Fremantle Octopus general manager Arno Verboon said.
“That’s luck, but after that the luck stops; so how we catch it and handle it and process it, and all those sorts of things, we’re very specific.”
That focus on ensuring what is caught is handled well is another common theme across WA fisheries.
In 2012, the state government allocated $14.5 million to help WA fisheries attain Marine Stewardship Council certification, an initiative backed by the World Wildlife Fund to ensure sustainable fishing practices.
WA’s rock lobster fishery was the first in the world to be certified under MSC, while Austral Fisheries, Shark Bay and Exmouth Gulf prawn fisheries have also attained the tick.
Peel-Harvey Blue swimmer crab and mullet fishery, Fremantle Octopus, and Southern Trading are all in the process of obtaining the certification.
Western Australian Fishing Industry Council chief executive John Harrison said the certification gave the fisheries a distinct edge over their competitors.
“It gives the consumer confidence that the product that they are purchasing comes from a sustainable source,” Mr Harrison told Business News.
“We are a low-production country as far as quantity is concerned. But where we do have an advantage is the quality of what we produce is world class.”
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The recent commissioning of a $120 million research vessel, the RV Investigator, could be a game changer for scientists and the mining sector.
The RV Investigator can venture out to sea on 58-day trips, or 10,000 miles, twice as long as its predecessor the Southern Surveyor.
According to one of Australia’s leading igneous petrologists (experts in the study of rocks), exploration of underwater volcanic structures holds the key to unlocking the mysteries of the world’s mineral deposits, including long-established strongholds and new offshore mining prospects that have previously been deemed economically unviable.
Australian National University professor Richard Arculus, who is co-chief scientist on board the RV Investigator, which left Fremantle Ports earlier this month for the remote sub-Antarctic Heard and McDonald islands, told Business News discoveries of underwater volcanic activity were growing.
Hot springs driven by underwater volcanic activity are one of two main reasons our oceans are salty (runoff from rivers is the other).
They are also a major contributor to mineral rich systems around the world, a fact that has prompted two North American companies to explore for nearby high-grade copper, gold, zinc and other minerals found more than 1.5 kilometres under the ocean surface.
Professor Arculus, who is not involved with TSX-listed Nautilus Minerals, which is exploring the Manus basin offshore Papua New Guinea, or US-based Neptune Minerals, which has a Sydney office and holds offshore tenements in seven countries in the Western Pacific, said the advent of robotic technologies offered unique opportunities.
“It’s kind of economic ... because the deposits they’re mining are so much richer, so much more concentrated (in) copper and gold than the mine on land, that’s the trade-off,” he said.
Professor Arculus and the international scientific community’s interest in underwater volcanoes was driven primarily by wanting to understand how they contributed to current day formations on land, such as Broken Hill in NSW, which was formed 1 billion years ago.
“The first one of these underwater hot springs that was discovered was in 1979 off the Galapagos Islands, so we’re talking about 35 years we’ve known about them,” Professor Arculus said.
“We’ve got no idea about a lot of this. It’s a whole area of the way the earth works that we have very little idea about.”
The RV Investigator provides scientists with the opportunity to discover underwater volcanoes on a more regular basis, including in the East Indian Ocean, where international surveyor Fugro’s search for the downed flight MH370 has located numerous volcanoes while covering 80,000 square kilometres of a planned 120,000sqm priority search area.
Professor Arculus said it was extremely rare to see an underwater volcano erupting live and continued exploration was key to better understand them and the natural world.
To that end, he is leading the expedition to the Heard and McDonald islands, 4,000km south-west of Perth and 2,000km north of Australia’s base in Antarctica, with his search to be guided in part by seals.
CSIRO scientists who tagged elephant seals that have been active in the Kerguelen Plateau near Heard Island found about half a dozen clusters where the seals are reporting sources of hot water.
“It’s almost like they’re going down 1,000 metres and having a little bit of a sauna,” he said.
Along with evidence of young volcanic rocks being dredged up by deep-sea fishermen in the area, Professor Arculus is confident the RV Investigator will make new discoveries in the area.
“There’s an international community interested in all this. There’s a large number of ships. American, Japanese, New Zealand, Korean, German, French, English all looking at this sort of activity globally. It’s kind of a frontier,” he said.
As one of WA’s most influential directors, when Michael Chaney talks, the business community listens.
Business leaders must keep their focus on shareholder returns and avoid empire building, Wesfarmers chairman Michael Chaney told last week’s Business News Success & Leadership breakfast.
Mr Chaney, who recently stepped into the role of chairman at Wesfarmers and has served as chairman of Woodside Petroleum since 2007, is currently heading the boards of three of the top 20 ASX companies.
It is a rare feat, but one Mr Chaney won’t maintain for long, as he will soon step down as chairman of National Australia Bank.
Mr Chaney said one of the best aspects of Wesfarmers, where he served as chief executive officer until 2005, was that it was focused on shareholders
That was not as common as one might expect, he said.
“One of the most important things is culture,” Mr Chaney told the breakfast forum.
“If you have the right culture at a company you’ll end up being much more successful than if you have a poor culture.
“I think (the right culture) is a clear understanding of where you’re going, very little politics, people marching to the beat of their own drum.”
While a good culture had room for prioritising issues such as safety and good corporate citizenship, this was in stark contrast to businesses focused on empire building, especially when it came to mergers and acquisitions.
“The alternative is often … you see a board paper that says ‘these are the reasons we should do this, we’ll go from number four to number three, we’ll be more important, basically’,” Mr Chaney said.
“And you get to the financials and there’s a small section that says ‘it’s not that compelling financially but it’s really important strategically’.
“You wouldn’t see that at Wesfarmers.”
Mr Chaney said it was something he felt really strongly about.
“People establish companies in order to get a good return,” he said.
Succession and balance
Mr Chaney told the forum it was common for people who were interested in boards to misunderstand how long the process to achieve their objectives might take.
Replacements for board positions at Woodside, as an example, were often identified more than a year in advance based on the skills necessary for the role.
“The same thing happens at Nab, we’re looking years out,” Mr Chaney said.
He reiterated his support for improving gender balance on boards, in line with the Australian Institute of Company Directors’ targeted 30 per cent program, which is seeking to achieve 30 per cent female representation on boards.
“I’ve been a strong supporter of it,” Mr Chaney said.
“Nab will have 30 per cent next month, Wesfarmers already has … Woodside will have.
“My mission is to have 50 per cent women at Woodside by the time I retire in 2017.”
He said the biggest challenge was to get women into senior management to build the skills for board positions.
Companies needed seasoned people on boards who were capable of governing and guiding the chief executive, and that required experience, he said.
At not-for-profit institutions, such as the University of Western Australia, where he serves as chancellor, it is more difficult to determine a goal.
The key point, however, is to still have a strategic objective and ensure that all stakeholders, such as student and staff representatives, have at heart a commitment to the university and not their electorates.
On economic matters, Mr Chaney disagreed with Reserve Bank of Australia governor Glenn Stevens’ view that big companies had not reduced ‘hurdle rates’ for investment decisions as interest rates have fallen.
He said the rates, which determined whether a company would proceed with a project, had fallen about by about 5 percentage points in the past five years, a position in line with comments by his predecessor as Wesfarmers chair, Bob Every.
“The governor and the deputy governor of the Reserve Bank have made statements about companies setting hurdle rates too high, not reflecting low interest rates, and not being willing to invest,” Mr Chaney said.
“I’ve said to (them) I just don’t agree with that at all.
“Companies use the capital asset pricing model, to work out their weighted average cost of capital.
“You’ve got the cost of debt, which has come right down, and you’ve got the cost of equity, which is the cost of debt plus an equity risk premium.
“And you look at the portion of each that you want to carry and you do a blend of those and say ‘this is our weighted average cost of capital’.
“I’d rather not say what companies are using, because it’s a competitive issue, but where it used to be about 15 per cent it is about 10 per cent after tax now, and actually lower in some cases.”
However, RBA data from June suggested that about two thirds of firms did not update hurdle rates as frequently as their weighted cost of capital calculations.
On industrial relations, Mr Chaney advocated for a return to individual agreements, noting their successful implementation at Rio Tinto.
“I think we need to have much more flexibility in the system nationally,” he said.
Such arrangements would provide a boost to productivity, as workers were encouraged to work in collaboration with businesses to find improvements, Mr Chaney said.
He acknowledged that a federally managed system, although making it easier for businesses to have consistency across the country, had some problems, and Australia was now stuck with changes by Labor.
In terms of local economic activity, Mr Chaney was careful not to comment on the future movements of oil prices or other indices, except to say that projects should be chosen when they could withstand a variety of prices.
“None of us can predict the oil price,” he said.
“When we look at projections for Browse, which goes over 40 years, the only thing we know about these projections is that they’re wrong.
“We just don’t know which direction they’re wrong in, or by how much.
“Make sure that, if the really bad downside occurs, you don’t go broke … sometimes you can hedge.”
Mr Chaney said Curragh coal mine, where the coal price had performed well above projections after the company had bought the asset, was an example of the upside potential.
“You don’t have to make too many mistakes like that to be a hero.”
Mr Chaney also gave the audience insight into how he compartmentalised his life, with woodworking being a favourite pastime, conducted in a special studio at his home.
He said he had found it was the ideal hobby because it provided a different outlet, and he could walk away from a job at any time, resuming where he left off when the next opportunity arose.
The non-executive director said he had made a speciality of building tables and had promised to build one for each of his nieces and nephews, a commitment that was quite daunting given the considerable size of his family.
But not all his work was for family.
He had agreed to build an altar for a local church and was very satisfied with the result, having completed it close to a deadline revolving around it being consecrated.
However, a last-minute clerical inspection revealed that a number of crosses had not been carved into the top of the altar.
“This was after I’d French polished it,” Mr Chaney said.
He had to engage in some emergency diary changes in order to get the job done in time.