BHP鈥檚 chief executive Andrew Mackenzie for activist investor Elliott Management on Tuesday, as he addressed a mining-savvy audience at a Bank of Merrill Lynch conference being held in Barcelona, Spain.
The head of the Melbourne-based firm, which only yesterday announced 聽that will see it聽become simply 鈥淏HP,鈥� assured investors he could lift the value of the company 鈥� the world鈥檚 largest miner 鈥� by up to 50% and almost double its return on capital in the coming years.
Mackenzie outlined BHP鈥檚 plans, which he argues could lift the value of the company by 50% and double its return on capital.
鈥淥ur path is deliberate, with value and returns at the centre of everything we do,鈥� Mackenzie said.
His comments come in direct response to Elliott鈥檚 fresh call for an independent review of the mining giant鈥檚 petroleum business, which the investor released only a few hours before Mackenzie spoke at the conference in which US hedge fund鈥檚 representatives are also attending.
Elliott鈥檚 revised proposal still takes aim at unlocking value and halting underperformance in the stock, but doesn鈥檛 mention . That earlier demand caused widespread criticism, especially from Australian Treasurer Scott Morrison, who openly opposed to the plan:
鈥淚t is unthinkable that any Australian government could allow this original Big Australian to head offshore,鈥� Morrison . 鈥淚 am able to order that such an acquisition not occur if it is contrary to the 颅national interest. BHP Billiton鈥檚 Australian shares are held by hundreds of thousands of Australians directly, and by millions more through superannuation funds and other 颅investments. The company plays an 颅important role in the Australian economy.鈥�
In its new letter to BHP鈥檚 directors, Elliott calls for the company to remain incorporated in Australia and to retain full Sydney and London listings, as well as Australian headquarters and a full Australian tax residence, clearly abandoning an earlier push for unifying BHP鈥檚 dual-listed structure.
In response, Mackenzie said the firm would review the plans and respond, but rejected suggestions BHP was misleading investors and that it wasn鈥檛 open to suggestions.
No simple yes/no answer
BHP鈥檚 top executive also answered questions during a webcast. One of them was whether the company planned to keep its oil and gas assets, to which Mackenzie replied saying he could not give a simple yes or no answer.
鈥淚f there is a natural owner out there who believes more upside can be achieved within this shale business than we do, then we will be more than happy to talk to them,鈥� he said.
According to BHP, its petroleum exploration program is worth more than $20 billion and close to a quarter of this is in low-to-medium risk prospects to be tested in the next two years.
Mackenzie, who in the past worked for oil giant BP, has repeatedly said he doesn鈥檛 think it鈥檚 the right time to sell the US petroleum assets, given oil prices are still relatively low.
Last month, the company put聽its ,聽but said that decision was unrelated to Elliott鈥檚 pressure for an overhaul of the firm.
Shenzi Petroleum development in the deep-water Gulf of Mexico. (Image courtesy of )