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Nov. 13, 2019, 7:16 p.m. EST

Mining giant BHP names Mike Henry its next CEO

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By Robb M. Stewart

MELBOURNE, Australia--BHP Group Ltd. (BHP.AU) named Mike Henry as its new chief executive, opting for his experience running the most profitable operation of the global miner after a tumultuous period of big swings in commodity prices and exiting legacy assets.

Andrew Mackenzie, who has led the company for more than six years, will retire at the end of the year and his successor will take on the role of CEO from Jan. 1, the world's largest-listed mining company said Thursday.

Mr. Henry, a veteran BHP executive who has run the Australian minerals division for more than three years, succeeds Mr. Mackenzie at a time when major resources companies are being pressed by investors to map out a clearer strategy for growth. The Australian minerals division includes most of BHP's iron-ore operations and the Olympic Dam uranium-copper mine.

Under Mr. Mackenzie's leadership, BHP sold assets ranging from U.S. shale gas deposits to South African coal mines and jettisoned a long-held pledge to increase its annual dividend. The result is a slimmed-down company, but one more reliant on swings in prices of just a handful of commodities such as iron ore and crude oil for profit growth.

Mr. Henry, a Canadian, will face some tricky decisions early in his tenure. They include the future of BHP's thermal coal assets as climate-change concerns shape decisions by many institutional investors. BHP's oil business also is facing competition from the rising popularity of electric vehicles, while the company aims to decide by February 2021 whether to push ahead with a big potash mine in Canada, which would add a new commodity leveraged to demand for fertilizer.

Then there is the Samarco operation in Brazil that it owns with Vale SA (VALE), and which has been offline since a tailings dam burst fatally in 2015.

"Mike Henry's deep operational and commercial experience, developed in a global career spanning the Americas, Europe, Asia and Australia, is the perfect mix for our next CEO," said Chairman Ken MacKenzie, who has led the board for just over two years.

Mr. Henry's career at BHP includes running the company's commodity marketing business, and he has experience of supply negotiations with China, the world's top buyer of iron ore and metallurgical coal. He also was an advocate for better use of technology at mines as a way to improve profits through greater efficiency. Mr. MacKenzie said he was confident in Mr. Henry's discipline and focus to deliver higher performance and returns for the company.

The range of experience had led many investors to speculate that Mr. Henry was a front-runner to be the next chief executive. Mr. Henry was also one of the few executives to keep a senior role when Mr. Mackenzie took the helm in May 2013 and overhauled the management team.

Mr. Henry will take over BHP at a time when its financial performance is healthier than for some time. BHP reported a net profit of US$8.31 billion for the 12 months through June-the best result in five years--on the back of strong iron-ore prices. It also declared a record dividend payout to shareholders.

BHP's recovery partly reflects the steps taken by Mr. Mackenzie, which included delays to some major projects and a tight focus on cutting costs. Big deals mostly weren't considered, while BHP carved out several mining operations that it no longer wanted into a new company, known as South32 Ltd., that was then listed in Australia, South Africa and London.

Mr. Mackenzie, a Scottish-born geologist, also led the company through the sale of onshore U.S. shale gas assets that were purchased by his predecessor for roughly US$20 billion. They were sold for US$10.8 billion in a deal agreed to last year.

The outgoing CEO said the company was in a good position, with a simple portfolio, strong balance sheet and options for growth. He added choosing the right time for retirement wasn't an easy decision.

"Fresh leadership will deliver an acceleration in the enormous potential for value and returns that will come from BHP's next wave of transformation," Mr. Mackenzie said.

Write to Robb M. Stewart at robb.stewart@wsj.com

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