Mark Cutifani, Vale Base Metals — Leadership, Innovation, and the Future of Mining (#62)

“Understanding your resource, your mining methods, and your efficiency—those are the three things that determine the success of a mining operation. Most companies don’t get those right.”
— Mark Cutifani

Mark Cutifani has spent over 40 years in the mining industry, rising from a cadet in a coal mine to one of the most respected leaders in global mining.

As the former CEO of Anglo American and now Chairman of Vale Base Metals, Mark has seen it all.

In this candid conversation, we dive into his journey, from his early days in Wollongong to his leadership at some of the world’s largest mining companies.

In this episode, Mark and I discuss:

• His early life, including his unconventional motivation for joining the mining industry.

• The key leadership lessons he has learned throughout his career.

• How he doubled productivity and cut costs by 45% at Anglo American.

• The importance of understanding your assets and how mining strategies can be redefined to maximize value.

• The under-appreciated role of mining today, from its impact on urbanization and agriculture to its role in the energy transition.

• His insights on the future of the mining industry and how companies can position themselves to thrive in a more competitive and nationalistic world.

Please enjoy!

Listen to the episode on Apple Podcasts, Spotify, YouTube, SoundCloud, or on your favourite podcast platform.

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The transcript of this episode is included below.

Note: Transcripts may contain a few typos.

Transcript:

[00:00:00] Jamie: Okay. Mark, thank you very much for sitting down with me today.

[00:00:04] Mark: Thanks, Jamie. Great to be here.

[00:00:06] Jamie: So we’re going to get into your view of the mining industry today, your kind of long and illustrious career. But I was thinking about how I wanted to start this interview and I recently read something that I thought might be an interesting place to pick off. So do you know what the most common career goal or like aspirational career is of a high school student today is?

[00:00:35] Mark: It’s probably not mine uh, would be my best guess. And so I’d be, I’d love to hear what it is today.

[00:00:44] Jamie: Okay, so in like the 1950s to the 60s, it was an astronaut, which fair enough, who doesn’t want to be an astronaut? But today it is social media influencer, is the number one career goal. Of like a 17, 18 year old and when I was reading your bio, as I understand it at 17 or 18 year old years old, you left high school and went and worked at a coal mine.

[00:01:14] Mark: Yes, I did.

[00:01:15] Jamie: And it’s hard to imagine the average 18 year old today getting excited about that option, but it, it sounds like you were, and I’d love to understand what was going through your head at that time and how that all came about. I know you’re from a coal mining town originally, but what kind of led to that?

[00:01:36] Mark: Well, you’re going to laugh. Uh, oh, congratulations, by the way, in choosing a career that everybody wants to be by the sound in terms of social media. So well done.

[00:01:46] Jamie: Well, I’m also, I’m, I’m also a mining engineer. So I, I have a bit of, I have a bit of both in me, I suppose.

[00:01:54] Mark: Well, I was asked that question recently. Another thing I was doing, um, and people were quite shocked by the answer, and I said that the three things that motivated me to join the mining industry were, one, girlfriend, two, being able to stay in Wollongong and continue to surf, And three, being able to earn money to pay my way through university, because my father being an immigrant from Italy, had a very traditional view about the sort of career choices I should make, being either a doctor or a lawyer.

I certainly wasn’t going to be a doctor. I’d applied and got into university to be a lawyer, but that would have meant I would have had to have gone to Sydney. And the family couldn’t help pay my way, I’d have to pay my own way. And I had a friend who was working in one of the local coal mines and said, Well, gee, we’ve got a cadet position going.

He said the trouble is, there’s about 150 applicants. I said, well, just throw my name down because if I could get that, I could go to Wollongong University, do mining. I’d be there for at least six years. I’d be earning a wage and I could support myself. So, the reality, I was lucky enough to get it, obviously.

But the motivation to join the industry. We’re certainly not as altruistic as I would like to tell the story, that’s the truth.

[00:03:23] Jamie: Okay, so we’ve got women, pop, women, surfing, and money, basically. Those are the

[00:03:29] Mark: Well, I’d like to say a woman. A woman, sorry, yes. It’s more about the girlfriend, but again at 18, I mean, what do you know about career choices and the opportunities?

What struck me? And this is the probably more interesting part. I thought, well, I could start in December and I had three months before I had to pick up the law degree and start up in Sydney. So I figured that if I really didn’t like the choice I’d made, I could change my mind. And 47 years later, I still think I made the right choice.

[00:04:04] Jamie: Yeah, you’re not going back to law school any time soon?

[00:04:07] Mark: No, not at all.

[00:04:09] Jamie: So what does a, you know, what does an 18 year old do at a coal mine when, as a cadet? What do, I mean, cadet, I don’t, I wouldn’t think is a role that exists at many coal mines today. What does that look like?

[00:04:21] Mark: Well, firstly what they do is they in the cadet role, you get experience in every department in the mine, and the plan is you do it over four years, then you go and do university full time, and you’re doing it part time university, and then you go and do two years full time to finish your degree up. In my case I got to do the early start and about three years in, I said to them I’d like to go and work as a miner, but also I don’t want to leave and do two years full time. I’d prefer to keep working and still do the two year full time university, but work on night shift. So I was able to finish the degree in the same amount of time, but I kept working all the way through. One, because I’d become a bit of an entrepreneur and I was investing in a few things as a young guy. I knew a new condo and things like that. And so I grew used to having money to spend. So, the good side of the employment is I saw every department. I worked in finance. So I worked in all of the departments and I was the guy. That if they couldn’t find anybody that would have to do a difficult job, I was the one who put my hand up and said, yeah, I’ll do a crack at it. And so the great thing about that is that I got a wonderfully diverse team. Exposure to all facets of mining which really triggered the thinking you could literally pick any career and there would be something available for you in mining. And that’s the great thing about the industry. It’s so diverse and so many opportunities.

[00:05:59] Jamie: You know, you mentioned that you kind of had that three months before school started to figure out if this was a world you wanted to live in. What Was there a moment in that three months where you were like, okay, this is for me. I love mining. Or did it happen more gradually after that? Or was there this kind of watershed moment where you’re like, this is quite special?

[00:06:21] Mark: No, probably for the first time that I really had a chance to think about career options, because I took the time to ask people. about what were the career options. It was really interesting. One of my relatives said, oh, well, your aspiration must be to be a mine manager. And I said, well, no, not really. I said, the mine manager at our mine is 30 years old. And I said, there’s a bigger career beyond that. They said, well, what’s beyond the mine manager. And we talked about the regional manager, we talked about ultimately the global head of Rio Tinto, or CLA at that time, out of Melbourne and it was something that you didn’t appreciate until you’re in the business and you ask lots of questions. And then when you looked at all the career options, I said, you know what, this is going to be quite interesting and what struck me. In the conversation was a technical background with, uh, if you, you add finance to it. And I ended up doing I did three years of an MBA and then got offered the biggest gold general manager role in the industry in Kalgoorlie. And I didn’t finish the last year, but I got the background I wanted. So there were so many options. So in that three months, I did my homework. And that’s when I thought, you know, this is a good choice. I had an option of going to BHP in personnel as well.

[00:07:47] Jamie: Like HR effectively.

[00:07:49] Mark: Yeah. In HR. And I actually looked at HR and I looked at the technical side and I said, you know what, a technical grounding in an industrial profession probably gives you a lot more openings further down the track.

And the way I describe, when somebody says to me, you’re one of the few mining guys that’s actually the CEO, I said, the one advantage I have is I know what I’m looking at in terms of a mine. And it is an advantage. But I mean, the skill sets were quite a much broader today. But in, in those times, the ability to understand what you’re looking at, the resource potential is something that I think has differentiated me. Through 47 years in the industry,

[00:08:36] Jamie: You know, it’s really interesting to me personally that you say that because I said, I’m a mining engineer as well. And I always knew I wanted to go into business. My father’s an electrical engineer. And when I was looking at university programs, I very clearly remember a conversation I had with him where we talked about, like, You can always learn business, but if you have that technical grounding of an industry, it just gives you so much more opportunity within that space. And somewhat similar to you. I mean, I had, I didn’t have a particular fascination with holes in the ground when I was 18, but I, I wanted a job where I could travel. I wanted to be able to work outside and not be in office. I wanted to, you know, make some money and mining kind of stuck. Stuck a lot of those boxes for someone that grew up in a pretty small town and hadn’t been many places. So it’s, it’s interesting to see the parallels there.

[00:09:27] Mark: Yeah. What I hadn’t appreciated in mining, and I only reflected on this after I finished my program. It’s a very broad course. So you do electrical, you do mechanical, you do civil, you do all the engineering disciplines because they’re all part of what you do. Whereas in many of the engineering disciplines, they’re much more specific. And I always say the smart guys, men and women are the electrical engineers or the chemical engineers. And we as the mining guys, we sort of tend to Be at the tail end, but it’s a much broader discipline. Yeah. That also goes more into management and again I found that to be quite useful in later years in terms of the broader management. Yeah. But I’ve inquisitive that, that think makes a difference. If you’re inquisitive you tend to sort of hunt things down, try and understand what makes them work.

[00:10:25] Jamie: I’m laughing because I remembering a professor I had in university who was a mining engineer and he worked in South Africa for years sort of big open pit mines. And he said, ah, you know, the mining engineers are the only ones that understand everything. He’s like, the rest of them are just rivet counters is what he said. which I don’t think it’s fair, which I don’t necessarily think is fair, but

[00:10:48] Mark: I think that’s right. I know there’s one thing that I do remember. We had a Chinese head of mechanical engineering and mechanics in particular. And being one of the mining engineers in a much broader class, we weren’t good for homework. And we tended to have many other activities that we put a higher priority on. And He said, okay, the exam this time around will be open book. And everybody’s going, oh, that makes it easy. Anyway, I remember but the open book was you’re allowed one page of notes. So I put my my key formulas on that one page, but the exam was not like anything we’d ever seen. And what you had to do was interpret what the question was and apply your formulas appropriately. And there were only three of us that passed the exam and I got 90 percent and because I had the formulas, I understood the logic and was able to, you know, it was a quick sort of application to me. And I remember him saying to me, he’s, you’re brighter than you look. So that’s still what I.

[00:12:14] Jamie: High praise.

[00:12:17] Mark: But, it was interesting if, if you’re in understand it, so it’s a matter of understanding what’s right and understanding the actual course and the logic of stuff is really important. And that’s what I’ve always done is dug into the theory to try and understand the topic. And that generally stood me in reasonably good stead.

[00:12:41] Jamie: And it sounds like, you know, even very early on in the industry, you had, well, you understood the potential for what a career in mining could lead someone and you had pretty big aspirations. It sounds like to take a leadership role at a major company.

[00:13:00] Mark: So I was always motivated to, I remember the career coaching conversation I had at CRA. Is this it? What, where do you want to burn? I said, I’m not sure yet, but the one thing I do know is I don’t want to be in a role and think this is it.

[00:13:17] Jamie: Yeah.

[00:13:18] Mark: Um, And I said, you know, I, I can see I’d like to be an under manager or I’d like to be a mine manager, look at Ray and Bruce, 30 years of age, and they’re in those roles and they can look forward. Think about what they might be doing next. I said I don’t know if I could be the CEO of CRA or Rio or something like that, but I just don’t want to get to a place and think, you know, for the rest of my life, this is where I’m going to be. And I’m 66 and I’m still in the same place. I don’t want to think this is it. And I keep working and I won’t retire.

[00:13:55] Jamie: Was there anyone early on that sort of took an interest in you or sort of acted as a mentor that helped you kind of.

[00:14:11] Mark: Um, I’ve been lucky. I’ve had lots of wonderful, wonderful people that have helped me on the way through. I remember a guy called Rod Rustin, who was the general manager at Westlake at the time. Had some real challenges. Uh, and, uh, And, uh, he taught me about planning and, and he got it down to understand where you want the business to be and your job as the chief design engineer is to invent ways to get there.

And I thought that was a wonderful way of sort of saying, be creative. Let’s, let’s define what best is, and you show us how to get there. And for a rural kid learning about planning and those sorts of things, and you’re, you’re being basically told. Go and out how we get there. Mm-Hmm. , that was a great opportunity and the feedback you got from the rest of the team was fantastic.

One other guy that I remember very well when I was about 32, 33 running the super pit in Kalgoorlie, which was the, myself and Tony O’Neal were, uh, I was the general manager and he was the mine manager. We developed, um, a whole new concept in Kalgoorlie, which really changed gold mining in Australia in many ways in the West Australia.

And I remember, um, the Chief Operating Officer of a home state in the US, uh, was, uh, sort of a self appointed mentor, and he’d bring me a book every three months when he visited the site, and I had to read the book, and the books were The Worldly Philosophers, Um, the covenant, which is the story of South Africa and the irony there is I ended up working in South Africa for six years, uh, and all these books about personal development and non mining stuff.

[00:15:55] Jamie: Yeah.

[00:15:55] Mark: And he said, my job is to create a full person that, that could lead the company one day. And, and he took a personal interest and he was tough. He was demanding, but also, supportive and, um, with someone that I could run ideas past without worrying that he might be critical because it was a dumb idea. Um, and I’ve had a few guys like that in my career, and so I’ve been very lucky.

[00:16:22] Jamie: What, what was the first leadership role you really took in the industry? When did you go from sort of engineer, uh, sort of, or, or, cadet initially, into taking a role where you were leading other people, making decisions, having a lot of responsibility?

[00:16:37] Mark: So the first, So there were, there were supervisory roles, and I was a mine manager, a mine superintendent at one stage, but I, I guess the, the first management role was to manage Copland, uh, so the mine where I started. I was in the management, uh, the, the manager’s role. I was probably about 27 at the time. And, um, the intention was to close the operation and there were two operations, Coal Cliff and Dark’s Forest, so they were connected. And my boss said to me, don’t touch anything. We want to close the place in 12 months. And they’ve been trying to close the place for a number of years. But in Australia at the time, it was very difficult to close stuff, the unions were very strong, uh, and politically the company was a bit nervous about shutting it. Lee Clifford actually was the, the head of the coal division. And, um, uh, we developed a plan. Rob Ruston was involved, the guy I mentioned earlier. And we developed a plan where we could actually halve our costs. And, uh, in the conversations with the team, uh, I was trying to, I was thinking about how do you, how do you, um, articulate the severity of where we are as a business, if we don’t do something different, we’re gone to, um, that, that in many ways. Uh, these were all the senior guys in the business and, and roles were bid by seniority, the amount of time you’re in the business. So the part of the business I was running were all the senior union guys. So they’re all 55 years and older. And they quite frankly, weren’t too worried. If it had to be a closure because they’d walk out with redundancy. So I then said to them that I’d been told I wasn’t allowed to touch anything. And I said that we’re known as F Troop. Now F Troop, uh, for those that can remember way back then was a TV show about the worst army team in the U S cavalry, uh, Ken Berry, Forrest Tucker, and for those my age, I’ll remember the show. So it was the worst of the army. Now a crop. And I said, that was our reputation. And that was extremely insulting to everybody. But I said, we’ve got an opportunity to show that we’re A Troop. And in the next two and a half years, safety, no accidents. We doubled productivity and we halved our costs. Very similar to the Anglo story in many ways.

[00:19:19] Jamie: Yeah,

[00:19:21] Mark: it was about a group of people who were galvanized. Behind the concept, nothing to do with money. It was all about showing that they were people that could deliver something special. And so it was us together as a small team, creating something very different. So I sort of created us against the world. But they were the ones who designed the change. And so for me, it was a great learning experience because I try to work out how to motivate people. And a group that were about to retire, they didn’t have anything else to motivate aside from that personal motivation and self pride and pride in themselves and pride in what they could do together. And, um, um, they were wonderful. And in the end, it wasn’t my success. It was their success. They did a wonderful job, but it was a great learning experience.

[00:20:12] Jamie: I’m really, Personally interested in how, how you achieve that, right? Because you’re 27 years old. These guys are twice your age. They’re approaching retirement. They’ve got a, you know, a good soft landing on the other end of that. There, it sounds like they’re being mildly disparaged, but disparaged by the company. So how do, what do you, How do you actually implement change, that change of culture and attitude? Is this, are you standing up and giving speeches? Are you sitting down one on one with these people? Are you working with key leaders and helping to propagate it through the, the, you know, the, through the F troop or, or whatever? How, how does the actually implemented those, those changes?

[00:20:55] Mark: All above. And, um, what, what Rod Rustin did in his role in the business? He defined what we had to achieve, just, you need to achieve this cost number, um, and given that labor is 50 percent of your cost, you can only do it with half the people. And by the way, you have to double your production at the same time. And so, uh, sorry, it was half the people and we had to improve our production by about 25%. So you had half the people, you had to improve 25 percent. So I started with that, and I said, the alternative is there is no operation. The most guy said, well, who cares? And I said, well, don’t forget there are young men coming through that if we don’t survive, they don’t have something to come to. So at this point, it’s not simply about us, it’s about who follows. And creating employment for potentially their own kids. So how do you bring the imperative back to them? It was a conversation. So one, it was honest. It was an honest conversation about how we were perceived. And by the way, you said they were mildly disparaged? No, they were openly disparaged and they knew it. I was the first guy to actually say After it now, after it was a bit of a makeup, but they knew they were being disparaged.

[00:22:21] Jamie: And was that warranted at the time? Had they underperformed to a degree that warranted the disparagement or was there more to it than that?

[00:22:30] Mark: Um, partly, but also a function of, uh, they didn’t think they were being respected as they should have been. So I think it was both ways. But at the end. It’s the leader that has to be the one that is accountable for making a change. So my first conversation was, I know we haven’t done all the things we should have done as a company. I know we haven’t provided consistency of approach or strategic direction, but here’s where we are and here are the challenges we confront. And from my perspective, I can listen better, be more responsive to what’s important to you. But at the same time, I can’t deliver everything. And so it was a really open conversation about who we were. Now, the advantage I had is I grew up as a young guy with that, with some of those people. So they knew me and I’d been through as a minor and I’d worked underground. They knew, knew I had my degree and this was my first management job. And I told them, I said, I’m basically told not to touch anything because things could go on the way they are. They’ll be able to demonstrate to the government that we should be closed. I said, none of us should want that as an outcome, even if it’s not for us, it’s who follows. And it was that conversation, not as, not as a sort of on the pedestal, it was a conversation in the bathroom, what we used to call the change rooms. We had them all around and we had this conversation about the good, the bad and the ugly, felt both ways. What did we need to change? And I said, look, there are three things we have to do. The question is how I’ve got a view, but if it’s just my view, it’s not going to work. We need to have a view. And over the next two to three weeks, we workshop with everybody different ways and means of designing an intervention that would work. And it was significant. And that was great.

[00:24:41] Jamie: And what was the final outcome here? Presumably that mine did not get shut down and improved performance.

[00:24:46] Mark: It went for another ten years. Went for another 10 years. We got another 10. Now, it’s getting towards the end of the life of the resource, but there was still at least another 10 years that we could get, and they gave it their best and we exceeded all the outcomes that we targeted, and they got another 10 years life the operation. Now, most of those guys retired. But again, think more than anything each guy retired proud of what had been achieved because they weren’t disparaged. People knew what they’d done.

[00:25:18] Jamie: Is there anything about that outcome that surprised you at the time? Were you shocked at how well it went? Were you, was that what you expected? Has it, did it change your view on managing people, managing these businesses?

[00:25:35] Mark: Um, it was, once you’re in the conversation, the changes occurred quicker than I’d anticipate. Um, and the real part of that, I think, is they had something to prove. And again, it was a bit of a, a bit of a risk telling everybody that everybody sees this as F Troop um, because you’ve got nowhere to go if, if that goes badly. But I said to them, I said, look, we’ve got nothing to lose. Thanks. I said, I know most of you personally, I know who you are, and I know that you know how to run this place better than I do, and I’m asking for your help, and let’s see if we can create a bit of a future here for who may follow. And two person, they stood up. There were a few, there’s always a cynic and yeah, but it’ll be the same. No, we’ll, we’ll do all this and they’ll still fire us in 12 months time. And, there are a few tests too, cause we changed some of the industrial practices, using contractors, doing things that they would never agree on. And once we got to that performance level, and it was about the end of the two years, they started to test. Our resolve on sticking to some of the work practice changes, because they said, we know you’re making money now. And so we had a couple of squirmishes, uh, in testing our resolve and, but we stood our ground and we worked it out together, so, yeah. It was a great experience and ultimately ended up being the reason I ended up going to Kalgoorlie because I had someone come in to audit the work we’d done on maintenance and other things. And at the end of it, he said, look, I’m going over to run, the gold mines for Alan Bond and, the new stuff that they’ve just bought. And we need some different thinking. And, he said, we’d like you to consider the role, as a general manager of the KMA Goldmine. So it was the start of the super thing, but it was the Coakleaf experience that he said, what you’ve done with the team is very different and they’re a tough old team. And he said, he said, I’ve never seen a group of guys so committed to achieving something. So, it’s funny how the things you do turn, turn out.

[00:27:59] Jamie: And you alluded to this at the beginning of this, this topic, that this is not dissimilar from what you experienced at Anglo some years later, Anglo American.

[00:28:10] Mark: Yeah, because when, when I started at Anglo, uh, look, firstly, Anglo has been a wonderful company for a long period of time.

[00:28:19] Jamie: I think it’s 107 years old. Do I have that right? Something about that? Yeah.

[00:28:23] Mark: Yeah. Centenary was, uh, 2017. And , the world had become a much more aggressive, much modernized, so you had the rise of CRA, uh, around the iron ore assets in Australia, which is Rio. And Rio came back in and took up a big position because CRA had had started to outstrip its major competitors and it, it did a lot of things very different on the organization side. Which, which I think made a real difference. BHP, was stepping out, becoming more global. Xstrata, Mick had done a wonderful job bringing Xstrata out of the Billiton, you know, the, the mix. And then BHP, Billiton came together, and Anglo got left behind. And, with that, uh, there was restructuring. Cynthia was appointed, uh, I think around 2000. 2006 2007. She started to introduce some changes. They didn’t go all that well, although she made some serious changes, particularly in safety and other areas that I thought were company changing. But in 2013, we were missing our targets. We’d fallen well behind our major competitors. And I think our market cap was about 25, 26 billion. And, and we’re a company that in my view should have been double that at least. And so when I started Anglo, what I did find is we depleted our technical teams across the board. So as, as the group tried to manage its cost structures down, it looked at costs and not value. So it was cutting. The key areas that ultimately contribute long term value and drive productivities. And so we had to reset, we had to do something very different with the assets people. So as a starting point, it needed a. A major makeover, and um, in the period 13 14, we did a lot of restructuring of the business to set it up.

[00:30:33] Jamie: So, I have some statistics here that I have taken from the internet, so we’ll see if they’re correct. Tell me, you can’t believe everything you read on the internet, so tell me if I’ve got these right. But, from your time Starting at Anglo, it says safety improved considerably, 93 percent reduction in fatalities, occupational health improved considerably, 90 percent drop in new cases, environmental incidents down 97%, production increased by 12%, productivity more than doubled, unit costs improved by 45%, EBITDA, Increased by 40%. Did those all kind of ring true to you?

[00:31:20] Mark: Yeah, the doubling of productivity and the real cost reductions were in the range 40 to 45, I guess the most important statistic for me. From April 13 to my last day, we had delivered an average 22 percent return to shareholders. So if you invested a dollar on the first day and, and looked at it on the last day, it was worth 5. That was over nine years. So, that first two or three years were tough. Well, we did, we, we went from 68 assets down to 37 assets. But the 37 assets we kept all improved by more than 40 percent. In the period in that same period. So instead of losing 45 percent of your production, because you’ve reduced your asset base, we actually increased production over that period. That’s how we doubled productivity. Cause we went from 160, 000 people to 95, 000 people producing the same amount.

[00:32:26] Jamie: So I’m just thinking about how to address this. So you, you, you come into this role, this is one of the oldest mining companies in the world, an absolute behemoth, you know, I’ve worked for major contractors, I’ve never worked for major mining companies, but I presume the bureaucracy at that point must have been, you know, Very complex. Where do you, you know, you get parachuted in as CEO, where do you even begin to start thinking about turning the ship and solving these problems? How do you even identify and prioritize the problems? Like, what is your, what is your first, you know, you know, you think of a president, right? The first hundred days of his, uh, in office, what does he do? What’s your first hundred days as CEO of Anglo American look like?

[00:33:13] Mark: We did the first hundred days. We literally did. Oh, did you? Okay. So, so nothing new. And we call, we did a 100 day review. And in mining, if I just say most companies, and I mean most companies, don’t understand the resources they have in the ground and the potential to deliver better productivity or lower operating costs. They just, they don’t, they don’t pay attention to the nature of the resource, how big it could be, and we’re going through the same process at Vale. So that’s first point. Do we understand what we’re standing on? Second thing. is, are our mining methods. And there’s, there’s almost an infinite amount of mining strategies you can apply depending on what you’re trying to achieve. And three, Are we efficient in doing what we’ve decided to do? And so I focus on those three areas and you get put a team together. We call a salt and pepper team, a few external players that have been around for many years with internal people who understand why we’ve done certain stuff. We did an asset review. And the asset review took about six months, but we had enough in that first hundred days. And I talked to every person, every, the top 150 people one on one to our conversations right across the organization. So there was enough information to say, we’ve got to do something very difficult with our resources. Our mining strategies in key areas need to be rebuilt. And our efficiencies are probably half what they need to be. And then the asset review, which finished about three or four months later, confirm exactly where those points were. And it also identified that about 45 percent of the assets were never going to really add material value. So the question was, do you sell or maybe even shut those assets and redirect the capital that’s invested in them into other parts of the portfolio where you can get a three or four times return. And so it became around, it became focused on the assets that could really make a difference, change the mining, the understanding of the resource and the mining strategy, and then introduce industrial logic like a Ford or a petroleum plant in terms of efficiencies. And so it was a three part restructuring of the business over the next couple of years. And, and that drove productivity, operating cost reductions. Also because you’re focusing on planning the way you’re doing things, you’re also getting at safety environment. You also, I think we’re also the first group to really identify the importance of sustainability and social partnerships with communities. That was the other big issue because we were in emerging markets more so than a Rio or A BHP, we had to work with our communities in a very different way than, uh, what they had available to them with the big assets. And so it was a very different type of approach.

[00:36:36] Jamie: When you’re, you know, it’s interesting you say that sort of industrial logic approach. When, when I listened to you say this, it makes me think of I read Jack Welsh’s book. I think it was winning when I was in high school. And he talks about, you know, anything that, uh, General Electric, GE, couldn’t be a number one or number two in the world in, they shut down or sold off in their portfolio. And they really prioritized a more core. Set of assets and, and corporations. And it sounds like you sort of took a similar approach that, that these mines that you didn’t, or am I misunderstanding that?

[00:37:12] Mark: So, um, yes and no. First point, understand the assets you have and the potential they have. And most companies don’t understand the best the asset can put. So I go back to my co op live experience.

[00:37:32] Jamie: Yep.

[00:37:33] Mark: I had to reverse, you reversed, we reversed engineered the business. So my challenge to the asset team is reverse engineer every one of these businesses to be in the bottom half of the cost curve. And those that can’t be, we then got to question whether they’ve got a role in the portfolio. Because if you’re not in the bottom half of the cost curve, because of the volatility of commodity prices, there are going to be times when you don’t make cash. Right. You’ll make short term decisions to protect cash and you’ll destroy the underlying ability of the asset to deliver as good as it could be. So we made some, gave them some rules of thumb in terms of the way to look at the assets. And that’s how we then said 45 percent of the assets and that only represented about 20 percent of the production. So it sounds worse than it is.

[00:38:26] Jamie: So 45 percent of the assets only represented 20 percent of the production.

[00:38:31] Mark: Correct.

[00:38:31] Jamie: And presumably that’s the most expensive production as well too.

[00:38:35] Mark: Yes. Yes. And someone said, oh, Cutifani is shrinking the business. No, Cutifani wasn’t shrinking the business. Cutifani was going to increase the production, but do it far more efficiently. So the important thing was we actually increased our production by 12%. Uh, 14 percent by 2019 actually, but we did it at a 30 percent in nominal terms, lower price. So we doubled our margins. So we doubled the money we made. So our share price, and when I started the share price was trading 13 to 17, we ended up getting up to 40, over 40 plus dividends and everything else. But the key was take a bit of Jack Welch. Take a bit of, uh, when Alcoa was doing in control and capable and running its processes very efficiently. So it took a bit of the Alcoa stuff, took a bit of the best of what I could see in the industry, but then went out and said, and we have a guy that helps us, uh, Tony, I know, Does the mining work that I, that we worked on, he was brilliant on the mining side. The guy called Mick McAleer came out of the steel industry and was very systems orientated control systems, planning, acid integrity work. He was the best I’d seen there. And a guy called Tony Filmer, who used to run the technical group at CRA before they decided they didn’t need technology, we snapped him up and he helped with Tony O’Neill and Mick transformed the way we thought about our business. Cause the other thing was we didn’t have the big Pilbara assets, iron ore. We didn’t have Kharajas, we didn’t have Bowen Basin in coal. We didn’t have these big copper assets. We had deep difficult mines in platinum. We had small iron ore in Cumba. We had some copper assets, so we had to turn those assets into world class operations, which required a whole different approach to the way we were running the business.

[00:40:36] Jamie: And, and something I’d like to note here, what, what are the years you did this, mark? When did you start it? Was it 2013? Do I have that right?

[00:40:45] Mark: 2013.

[00:40:45] Jamie: Yeah.

[00:40:46] Mark: In 2013…

[00:40:48] Jamie: So, I mean, you had a pretty shitty market behind you most of that time too. Like,

[00:40:54] Mark: Well, ’15 was the worst.

[00:40:55] Jamie: You weren’t, you weren’t hiding behind a massive bull market that could, you could hide all the, the inefficiencies in.

[00:41:02] Mark: Well, I, I, I got a, I, I we’re all human. I recently, somebody said, oh, Mark had a, what, what’d they call me? A Fairweather, CEO. And I said, well, wait a minute. In 2015, prices were their lowest. If you looked at the basket process, the lowest they’ve been in 50 years. And I said, I had to cut 70,000 jobs, show me where that qualifies as being fair weather. We had to do the most significant restructure in the industry in 50 years. To get to the outcome, somebody said to me that when we were doing that, people were actually very respectful because we took the time to explain the problems to people and we engage them. And so even though we had to do some really tough stuff and we made mistakes. People understood the problem because we’d explained it and we involved them, uh, as we did the restructuring. So ’15 was our lowest ebb, if you like, and you’re not quite sure if the industry, if it’s going to work because China, you didn’t know if China was, um, going into a recession. So at the end of ’15, we weren’t quite sure whether it was the right call. And I had to make an even deeper cut and said, look, I may have to cut even more assets To get the debt down, but in ’15, we took 15 percent out of our costs in 12 months. So in ’16, we started to come back up. De Beers had a good, uh, first quarter in 16. People saw that our net debt was actually over a billion better than we thought it would be because we cut so much in the cost. And we started to get momentum in ’16. So, uh, ’14, ’15, we’re pretty tough.

[00:42:51] Jamie: Cause you went from 160,000 people to 90,000, I think is that those numbers ring true. And so how do you communicate that across an organization, right? When you’re, you’re cutting huge swaths of people, how do you in a sort of global organization, really reliant on people to be successful? How do you maintain that? Spirit Corps and, and, and momentum while still having to jettison a lot, a lot of jobs, unfortunately.

[00:43:21] Mark: First thing is the team was key. We confronted together the need to make change and, and the team was fully engaged on the need to make change. And then as the prices drop, people knew we had a problem. So iron ore went from $120 a ton to $40 a ton, so nobody needed to tell the Kumba team. That we’re in deep trouble. And our Kumba cost was $77 a ton. And we said, guys, we’ve got to get them under $40. And so our restructuring, uh, we changed the mining strategy. Tony O’Neill worked with Norman Mbazima and Tony recommended a whole change in the way we operated the mine. So remember that comment I made about resource and the mining strategy. Tony said, we’ve got to turn this mine around 90 degrees. Now, when you say change the whole mining strategy, it takes two years to implement that change. And we went from $77 a tonne break even. To $35 a time in the space of two years. So we had to explain it. Norman had to announce significant cuts in people against that context. But when you explain it and they see the prices, they get it. And it’s a difficult conversation, but it’s an honest and open conversation where people understand the industry. And so it’s, it’s really about being open. Now I made one terrible mistake, which, you know, you, you, you think in hindsight. When we define the 37 assets that would remain, I used in a, in an off the cuff remark, I used call the word “core”, which meant those assets that weren’t in the 37 were non-core. Well, can you imagine thinking that you are now non-core you’re working in a business that’s non-core. So you sort of want to pull the words back and stuff them back into your mouth. And so I said, look, I’ve made a mistake. That’s not the right way to talk about it, but I am talking about where we will focus our capital and people need to wear it. And I said, the most important thing is, you know, in a business where you’re going, and in many cases, you we divested, so we didn’t close them. And as I said, in domestic divestments, if we decided not to put more capital in, you’re better off selling to the asset to someone who’s going to give it a crack. And so those types of conversations, I think help make it, make it more constructive. But every word in those situations, you’ve got to be very careful to make sure it’s the right messaging. And as I said, you learn a few things and that was the, the one really important mistake that I’ve taken with me. And as, as a few of the Australian wags did, I’m non-core. So it ended up being one of those conversations that we had a bit of fun with, but, um, it was really important. You’ve got to get the people thing right. And I’ve always talked about people in the business. But as I said, we either create a business where 90,000 people got jobs or there’s none. And I said, the none’s not going to happen. We’re going to do what we have to do to make sure this business survives.

[00:46:42] Jamie: You’ve said something a few minutes ago that stuck in my mind, which is that most CEOs or management teams do not understand the assets they have. I you know, in my more limited experience than you, I would say that actually that really rings true to me. What, what makes you say that? And why do you think that is? You know, why do leaders in these companies not understand the projects they have?

[00:47:11] Mark: Let’s see. Um, I make that comment of us as professionals as a broad statement on the professional side. Plus you’ve got a lot of people who are running businesses that don’t have that experience. But if your professional team doesn’t understand the full scope of the resource and the optionality you have inside the resource, then in all likelihood, you’re not going to have the right mining methods in our industry, understanding the resource. And you would know the process we go through to model these things, but even mining strategies, you’ve got an infinite number of ways to extract the resource. And people tend to go with what they know, whereas I think maybe 5 percent of the engineers in the world, mining guys, look for new ways to do things, and I tell the story in the super pit back in Kalgoorlie in 1988, I met a guy who was talking about a mining strategy for the super pit that no one had ever seen before. And therefore they all said he was a lunatic and the geo said, he’s going to dilute the ore body. And this is Tony O’Neill and the mining guy said, well, that won’t work. And I came in out of coal, and Tony took me through the mining strategy he had in his mind. He came out of the big iron ore mines in the Pilbara. So the big iron ore mines used this big gear to mine these big ore bodies. We had small, narrow vein gold ore bodies. But we have lots of them. And they’ve been mined by underground methods. So we were mining around big holes in the ground. So it’s dangerous, or high risk, two, technically difficult, and it had all these levels of complexity. And Tony’s strategy to deal with all that was quite unique. And we had one conversation, I said, he’s got it. He’s actually got the right idea. So we then spent the next six weeks building a model, a financial model and an operating model to help people understand the concept. It took us probably another six months to get the group aligned on it. And then when we executed, it’s been a great success and it’s still operating today. And it’s one of the great successes, I think, in mining, in mining history in the last 50 or 60 years. And it was, you know, two 30 year olds that said, you know, we’re going to do something really different. Tony was the guy that got it or, or was the one who proposed it. And I helped him market that whole approach to the whole organization, and we put it into financial terms. So I was able to get the accountants on board, but that is rare in the industry. And we’ve done that a number of times. And Anglo, the Anglo conversation, you know, let’s drop 45 percent of the assets and increase our production. In the first conversation, people thought we were nuts. And we said, well, wait a minute, let’s look at Kumba. Let’s look at Mogalakwena, which is the big platinum mine, which was a platinum mine that people hadn’t really conceived how good it could be. And we went through asset by asset, changing people’s understanding. So it’s experience and it’s that inquisitive, what could be different type approach. So generally we sort of follow what’s been done. We don’t question how do we do it, you know, in a very different way. And that’s what I think we’ve brought to the industry.

[00:51:01] Jamie: It’s, it’s a really interesting conversation because I, I’m just thinking about it now, how many major or mid tier miners are propped up by one or two really high quality assets and then they drag along a bunch of mid tier, or sorry, a bunch of mediocre assets that make little or no money, right? And so much of the value of the business is contained in a, in a relatively small number of the assets owned by some of these companies. I mean, I’m sure we can all think of examples, but it’s, it does seem there’s a, somewhat of an unwillingness to, uh, cut the dead weight or to, or to have that thinking.

[00:51:35] Mark: So look, the major players have got good people because one of the good things about being a major is you’ve got a balance sheet, you’ve got cash flow. And therefore good people are attracted to those types of businesses because you can see a career and I won’t name anyone, but you know, they’re in iron ore or they’re in coal or they’re in copper and, and the ability to attract the best people is one of the ways you keep ahead of the industry. But what it does also run the risk of is you sub optimize. The ore body allows you to not be as efficient as you probably should be. And, and I’ve sort of moved between, the smaller group and the top end because I find that in that mid cluster, There’s so much more opportunity and so many assets that have been sub optimized and so much more potential that, that’s been a really interesting space to work. Yes. I’ve worked with Anglo and ran, ran the, ran one of the majors. Because at that time, Anglo was the most complex Anglo and Glencore are the two most complex major businesses because of the nature of the assets and the fact they’ve gone down trading, commercial approaches, and Anglo are did a lot of work under Peter Whitcutt in creating very different commercial model, which was very successful. So the big assets in my view, risk that, uh, less than inventive, innovative approach, uh, but in the end, it catches up with you. But in Anglo, one thing I had to say about Anglo, the reason we went the innovation approach is we didn’t have the same assets, so we had to, so in a very simple way. The nature of our assets meant that our structural cost base used to increase about seven or 8 percent a year because we were going deeper, quicker with the nature of the ore body, but if you’ve got iron ore or coal, you’re not going as deep as quick. So your structural cost base doesn’t move as quick. So we needed to move twice as fast to Rio, BHP. and Vale just to keep up. And in actual fact, we outpaced them for about seven years in our cost reduction strategy. So we moved quicker. We moved from the 49th percentile cost position to the 29th percentile. So we outpaced the three big operations on cost reduction because of the innovation that we introduced and the way we reconfigured assets. So reconfiguration plus new innovation. That was the key to Anglo’s outperformance, in my view, over that, the last seven years.

[00:54:24] Jamie: Would you have any advice for the CEO of a smaller single asset or mid tier company that, you know, doesn’t have the balance sheet of an Anglo or a BHP to necessarily hire the, you know, large teams of the most experienced people, but does want to understand their assets better and optimize them? How would you approach that if you were in that position today?

[00:54:47] Mark: Yeah, I think single asset companies, uh, and by the way, that’s a fascinating place to be, and it’s interesting and, and there’s some wonderful work being done by single asset leaders. The key is geology and understanding the potential of the resource. And the earlier you can work out the potential, then the smarter you can be with your capital in getting early cash flow. And understanding that you won’t, um, I’m trying to think of the right word. You won’t, destroy value longer term. So the key in a small company is get cashflow running as quick as you can, and then use your cashflow to then increase the size and scope of the business on the basis that you can actually self fund that growth. So you need to understand the ore body and its potential. I once did an exercise where, uh, I can talk about it now, cause it’s sort of all past history when Inco. When we did the, uh, we were joining Phelps Dodge, and we’re looking at creating this big copper company in the nickel wars many years back and, and I was, uh, leading the valuation of Phelps Dodge. And I remember presenting to the board, here’s the valuation of Phelps Dodge, and here’s the Tenke asset in the DRC. And I said, I’m valuing it somewhere between five, zero and $5 billion. And I sort of looked at me and said, what I said, I’m valuing it somewhere between five and 5 billion. And they said, well, that’s not all that helpful. I said, well, let me explain. If we were to develop it and it was sitting in the backyard in Canada, It’s a $5 billion net present value business, but it’s in the DRC. So my recommendation is we go in with a much smaller footprint. We use smaller amount of capital, mine the high grade, develop a cash flow, and then incrementally. What we call bootstrap it up to its potential. So I said, if you said, what’s the value, I’d call it a billion with the potential to get a $5 billion payoff if you’re comfortable in managing the politics. And so that bootstrapping strategy is the right type of strategy for small companies to think about when they’re developing a single asset. You can’t do a Rio or a BHP or an Anglo. You’ve got to think very differently. So you’ve got to be flexible. Okay. And that’s the key. And you see a lot of that night, I always love to see Jim Rutherford. He used to be on the Anglo board. He’s he’s the chair of Centamin. He sort of understands that dichotomy and, whilst he’s a financially trained guy, he’s been around long enough to see how those approaches can be applied. He’s doing a great job at Centamin. I think. So it’s great to watch that sort of thing playout. But, but understand your own body and what your options are.

[00:58:01] Jamie: How different is it working for a diversified miner or leading a diversified miner like an Anglo that’s, you know, got projects all over the world, but it’s also got them across a variety of commodities than a company that’s, uh, you know, a single commodity company, whether it’s, you know, a Freeport with a focus on copper or an Inco, which focus at nickel at the time. How does that change your perspective of a leader in the things you need to consider, right? Because you also need to think of your weighting across different commodities and where you want exposure and, you know, to a degree you’re, you’re being asked to predict the future, right? Because, you know, it takes years, sometimes decades to build a mine and you don’t want to build it in the wrong commodity in the wrong place that no one’s going to want in 15 years from now. How do you, how do you approach that challenge versus we’re a copper miner, we mine copper and that’s what it is.

[00:58:53] Mark: So if I’m in a single commodity, so let me start there, whether it’s gold, nickel, wherever it may be, what’s my position on the cost curve? And if I’m in a single commodity, I will want to be lower in the cost curve because my exposure to a single commodity and free cash flow is different. So you’ve got to be in the bottom half of the cost curve, but I want to be closer to the, the first quartile, say bottom of the second quartile. Because I’ve got more degrees of freedom as the price. So keep your debt low and know what you’ll do and what you’ll stop when times get tough, so what’s critical and has to be done, make sure it gets done, particularly when you’re going to afford it, but get it done and then have a package of, uh, expenditures that you can defer for a period when times are tougher and understand how to. How to manage your discretionary costs through the cycle. In a diversified, you’ve got a bit more degrees of freedom. But I still think you need the discipline by each commodity to manage that cashflow with the same logic, but you’ve got a bit more scope as a diversified to allow something to continue to invest if it’s long term accretive and the rest of the portfolio is doing pretty well. So you’ve got a lot more flexibility, and you’ve got. A lot more resource to call on to deal with a particular problem in a diversifier. So, the individual logic that you want your commodity leaders to follow is no different to being single commodity, but that you give them more freedom to put longer term investments in place and hold them in place longer. I also think the diversifieds have got the ability to, look more into, you know, Fundamental innovation as a, so at an Anglo, the way we set up our cost reduction program, which was very successful. Um, and while some would argue some of the longer term stuff wasn’t as economic in the short term, but by its very nature, that’s quite deliberate. So we would have continuous improvement at the operating side. So a general manager dealing with all sorts of issues on a daily basis, we would expect to see them improve the business three to 5%, maybe 10 percent for a really good GM or an asset that’s not doing well on an annual basis. So you’re looking for continuous efficiency improvement. And that’s why your operating model is important. The second lot is the discipline hand. So you’ve got really senior mining engineer at the center saying, you know what? The best electric shovel in the world delivers 40 million tons a year. This is what literally happened at Anglo. Well, 45 million was the best electric shovels are in the, um, coal basin in the US and Peabody’s got the best one. We said, well, why haven’t we got the best assets? So at Dawson and those operations, we said we wanted to be at 50 million tons. So you’re driving best practice through that knowledge of the industry and then they’re helping the guys implement change. And the third level, long term innovation. Not long term innovation from mining, but long term innovation from other industries. Radical ideas that will change the industry. So we had our cost improvement of productivity and programs in three levels and major diversifieds have got that capacity. And for Anglo, that was a key. I think differentiator, particularly the middle package and Donovan and the guys throwing across the fence new technologies for the guys to think about to improve our operations and, the bigger you are, the more, more latitude you’ve got in that area.

[01:03:03] Jamie: And where did you harvest ideas from? Were you looking to energy, to, you know, manufacturing? Where, where did you find the best or some of the most relevant ideas coming out of?

[01:03:13] Mark: So the operating model and the asset integrity work, we got out of the steel industry through Mick McAleer. So our operating model, where our experiences was, we could improve the efficiency of an operating site by 30 to 50%. So it was the discipline of planning and scheduling work. So if you looked across the mining industry, only about 30 percent of the work that is carried out is properly planned. And the difference between properly planned work.

[01:03:40] Jamie: That’s shocking. That’s a shocking.

[01:03:42] Mark: It is shocking, but it’s the reality. And that’s up to many audits, uh, before we introduced the operating model.

It’s not planned at the right level to do that. So it’s that logic about planning and executing work. The, the, uh, as I said, the, Uh, energy sector, uh, energy efficiency. Energy represents 20 to 30 percent of that cost. So how do you improve the efficiency of equipment? And in our eco two man program. We cut our energy consumption by about 25%. And with new technologies like course particle recovery, we can reduce our energy consumption by around 20 to 30%. This is what we’re looking at at Vale. We, we reduce our water consumption by 50 percent and we reduce, and we improve our operating throughputs by around 20%. So there are technologies that we get from processing, energy sector, uh, water in terms of understanding how to recover more water so that our water consumption. So all those industries we do what we call open forums. We said, okay, we want to reduce our water consumption by 50 percent. So we’d have all these people brought in for three days working the problem. The one criteria was we weren’t allowed to have more than 30 percent of the people in those four from external organizations that came from mining. We wanted them to be excellent. And the ideas that they brought to the table helped change how we looked at the problems in our industry.

[01:05:20] Jamie: Interesting. And, and when you’re leading one of these diversified miners, how do you, how do you make decisions on how you want to grow those businesses? Right? So at one point you’ve optimized your current assets. Things are going well, you’ve increased, you know, production, you’ve increased profits. How do you go about thinking about growing these businesses? Are you just looking for, okay, these are, you know, the best assets we can find out there that we can get the most out of agnostic of commodity or do you take a view on copper or uranium or what have you and you say okay we need to find exposure to that commodity how do how does that work

[01:06:05] Mark: i think the way We thought about it was what markets do you think will grow? And I don’t know who coined it, but we use the term future facing commodities. So we could say the demand for copper being key to the energy transition. So copper, nickel, lithium. But when we looked at, you know, those three commodities, we sort of said, well, copper, we’ve got a starting point, but we think development of Quellaveco, that’s a great place because copper’s in broad demand for a number of applications. So we thought that was a good bet. And that’s turned out to be a good bet. Uh, nickel. A little bit tougher because Indonesia is such a big player. They’re going to dominate supply maybe for five years, but long term nickels are the place to be. But you’re probably going to have to be patient to about 2028-29, where you’re really going to start to see increasing prices, but it’s a good place to be, and that’s why the Vale position was interesting for me. Lithium, right place to be from a demand point of view. But the world’s full of lithium. There’s lots of lithium everywhere. And so, thinking about, okay, is that a good place to be now? Or am I better off letting people develop lots of stuff? People are going to lose money. And at some point when the demand is starting to look like it’s going to run ahead of the ability of the industry to supply, there will be some assets you can pick up that will do pretty well. So your strategy in those areas is different depending on your view on demand and supply dynamics.

[01:07:53] Jamie: You’re the, the chair of a Vale Base Metals today. Obviously you led Anglo for a long time, Anglo American. What in your mind? What are the things going on in the world today that are driving decision making on where you want to be investing? Or, and you can speak for Vale, or you can speak generally across the industry, where these sort of major miners are looking to deploy capital today. What are the, what are the factors that are, they see as an opportunity and perhaps as a risk that they’re concerned about or trying to avoid?

[01:08:28] Mark: So if you’ve got a great iron ore asset, even at $70 a ton, whatever the number may be, it’s still a good place to be, but you’re going to have to be tight on your costs and your ability to throw lots of capital at those businesses becoming a lot tougher because you’ve got Guinea and other areas that will, will impact the supply side, but it’s still a good place to be. The world’s going to need steel. In fact, the most important metal for the energy transition is steel.

[01:09:02] Jamie: Yeah.

[01:09:02] Mark: Cause of the infrastructure. So, so there’s a big tick there. Copper, broad demand base, even if you see some substitution, if you’ve got a good copper deposit, you’re in a good place to be, um, again, It’s thinking about where you can leverage the best margins and returns. And so your capital allocation decisions are really important. And, and sometimes, you know, miners make decisions that people are critical of because they say, well, wait a minute, you’ve, I’ll give you a good example where we criticized for Woodsmith, the investment in Woodsmith, which is the Anglo polyhalide deposit. And, in us talking about that. In the end, you don’t know exactly when the market will be there, but it’s a unique product. You can mine it, and it doesn’t have to go through a lot of processing. Carbon footprint is 85 percent below other competitors, and it’s a multi salt product. Which is quite unique. Now it’s going to take time. So the question becomes, how do you put your foot on something like that and nurture it until it times, until it’s time comes? And so I still think it’s a great asset. The question is when? And that’s the, that’s a big challenge for miners because you know, you, you, you’re thinking about short term and yeah, where does a major investment, if you look at the money that BHP’s put into it’s phosphate deposits. So it’s, it’s deposits in Canada. It’s put a lot of money in there and it’s taken a long time, but in the end, that will be a, uh, a set of assets that will pay off long term. So how do you get that balance right? And you know, you’re going to get it. You’re going to, you know, as a lady, you’re going to cop some flack for somebody that thinks about the dividend in the next quarter. But if you’re going to create one of these houses. That builds off the critical mass that’s been established, then you’ve got to make some of those decisions, but then how you manage it through the process is actually,

[01:11:20] Jamie: It’s, it’s a really interesting time, right? Because we’ve all, I feel like the mining industry, I mean, I’ll, I’ll espouse my personal theory here and you can tell me where I’m wrong. So I feel like the mining industry is in a bit of identity crisis or a state of crisis right now. We see. The junior mid tier industry is extremely starved for capital right now. The exploration companies are dying on the vine right now. There’s no money that is looking to go into them, certainly in Canada, to a lesser degree in Australia. On the other hand, we constantly hear espoused, uh, you know, the energy transition, urbanization, this massive coming demand driver for metals. And, you know, we’ve, I’ve heard the term. You know, we need to mine more copper over the next, whatever it is, 25 years. And we have an all of human history today that, that comes down the pike a lot. And yet we’ve barely seen copper price move in any major way over the last several years. And we, you know, we’re seeing gold price hit all time highs, but gold miners just perform marginally. And so there’s a lot of conflicting signals right now. And I also, and I’m going to put a little tangent here. I also don’t see there are a tremendous amount of major discoveries being made or, or new mines being found. So how does the industry address this coming demand wave in theory, which has, you know, been just around the corner for the last decade or so versus the reality of a very complicated market right now. Is it just the six? Is it? Is it M&A right now within the industry and a consolidation? I mean, we saw BHP take a run at Anglo earlier this year as a potential acquisition. Are we going to see a consolidation of the major miners? Are we going to see someone start writing checks into exploration again to try to find these next tier one deposits? How do you, I realize I’m asking an incredibly complex question, but like, how do you envision this playing out? And I have some pet theories, but I’d love to hear yours.

[01:13:32] Mark: First thing, you know, as leaders in the industry, we have to go look in the mirror and admit what a lousy job we’ve done promoting our role in society. And people know I’ve been on, I’ve been harping on this for 20 years. And, um, some people say, well, you’re involved in. You’re doing too much of it. And I said, well, yeah, we have to do it. Everybody has to do their bit. Um, that may not doing it isn’t an excuse or me doing it because no one else is doing it. Yeah, we got to change the dialogue. We aren’t helping people understand how important we are today. When somebody, I say, look, I’m not, and I said, well, what do you do? Like, I actually say now I work for the industry that has the most significant, significantly positive environmental footprint on the face of the planet. Can you guess what industry I’m involved in? No one has guessed it yet that it’s mining and it’s not the obvious answer and, uh, the last time I said that they said, well, how do you get that to be net positive? And I said, well, if you just think about agriculture and without fertilizers and mechanized gear, which all come from mining products, instead of 40 percent of the planet, we’d make 50 to 60 percent of the planet to feed 8 billion people. We make agriculture or allow agriculture to be done in a much smaller footprint. So that’s a human footprint. Urban environments. If I look out your back window, I see all these high rise buildings. And infrastructure is all being concentrated. So the populations are concentrated. So our urban footprint is 15%, not 30%. Without mining, we couldn’t do it. So when I look at, we take up 0. 3 percent of the Earth’s surface. 0. 3%. And we say we reduce the human footprint by 30%. We are the key and nobody knows. And when I talk about mining products and what they’re useful, which is everything, because you don’t create matter. We still, whilst we still theoretically understand how we might do it with energy. It’s not something we do every day. So mining is relevant to society is not very well explained as a consequence from discovery to development, it now takes us 20 years where it used to take six or seven years. So we’ve got to help people understand how important mining is and so that the conversations on access to land. Have to be on the understanding that we need mining to support 8 billion people on the planet. Now, the question is, and I’m not suggesting unfettered access. But turning 20 years back into six or seven years is the only way we’re going to be able to deal with the energy transition. We’re the only way we’re going to be able to deal with a lack of water to support the globe and everything everybody wants to do. And a whole range of other things are not possible without mining. So the question is. Mining plus circular economy. So it’s not simply about money. It’s about how money can actually help create a circular economy. Cause many of the products that are used in buildings, we’ve got processes and technologies that can actually allow those technologies or those materials to be reused. So we’re the key to the future as well. And I think we’ve got to think differently and tell our story differently.

[01:17:18] Jamie: What do you think is the catalyst to make people or to enable people to kind of wake up and sort of appreciating the impact of mining? I mean, it’s, I agree with you that the industry needs to frame and champion this better, but certainly there’s a a lot of people that I think would refuse to acknowledge that based on somewhat ideological environmental positions. And what I often fear is that the only path to people acknowledging the importance of mining and to a similar degree, energy and fossil fuels is some sort of catastrophic failure of the system, right? Where there isn’t enough copper or the lights don’t turn on one day or there’s food shortages because, you know, something like 40 percent of people are fed off synthetic fertilizers or some version of that. That’s what I’m somewhat concerned about.

[01:18:10] Mark: We’re in that world now. We are in that world now, whether we like it or not. Whether it’s climate change, and I’m not going to debate, you know, the body of scientific evidence supports it. Um, and it’s not all man made, I know that. But we’re contributing to it. And we’re contributing materially to the problem and we can make a difference. So climate change, water will be, will be rapidly following climate changes, another, uh, environmental catastrophe and might be food. Um, you know, I, I’m involved with the power of nutrition as people know, and those issues are coming at us at a rate of knots and helping people understand how we find solutions and how we improve the speed to those solutions requires us as leaders to do a better job communicating to not the, well, it must be the public, but to get to key stakeholders. Sure. When somebody said, we did stuff at the Vatican, trying to engage with a broad range of, religious groups, not simply Catholic, but Catholics, the full Christian groupings, Jewish, Muslim, Hindu. And we said that explaining how important mining was to the world was something people didn’t understand. And in fact, the indigenous groups got it better than we got it in the cities because they used the earth in different ways. The Greeks understood it 2,000 years ago. So it’s, it’s getting the key players, the multilaterals, the United Nations. Let’s talk to Mr. Gutierrez and explain why mining is so important to his energy transition imperative. We need to engage those groups much more effectively. Rohitesh Dhawan, the ICMM has been a great champion for these conversations in the last three or four years, but he needs every one of the leaders in that group to talk more than he does. And to be champions, and they’re not, and we all need to be champions of the debate, and get those conversations engaged. And the one thing, and I’ve used this many times, when we got to the Anglican Church, And the Archbishop of Canterbury was involved in the work we did with the church groups. After five years, he came out with a press statement and said, Look, we’ve, we’ve looked at the Bible for the last five years. We can’t find any, any passage that argues against mining. Therefore, from our point of view, we can support mining as long as it’s done responsibly. Now, people say, oh, well, that’s a bit, that’s a bit of a giggle. I said, no, it’s not. I said, when you, and Christine Lagarde asked me, and she was at the Vatican on an ethical business conference as I was there, and she said, why did you start this mining stuff with the Vatican? I said, Christine, it’s 1. 6 billion people, a bit bigger than China. If I can get the church talking about how important mining is, and at least have local communities engage with our industry and be supportive if they do things properly, that’s a game changer for literally everyone. It changes the world. And I said, so it’s not a bad place to start, but we’ve also got to do the multilaterals. We’ve got to work with governments. We’ve got to work with all the key players that make those decisions. And we have to explain to communities why it’s so important maybe to develop this part of the town to actually support the rest of the, the countryside, the support to be successful. And so we have to do a much better job on the ground with our communities. Cause in the end, if you can get your local community relationships, right, you’ll be successful as a miner. So

[01:22:05] Jamie: Mhmm.

[01:22:06] Mark: To go from here to here and be able to cover all of those conversations. And we’re not good at it as miners.

[01:22:14] Jamie: Just thinking about what you’re saying and how, how do you envision sort of key stakeholder relationships changing in the mining industry over the coming years? Let me frame where that question’s coming from, in addition to what you’re saying. Because I think it’s a very interesting element, sort of bringing the Catholic Church or the Anglican Church on board and thinking about the constituencies that they influence and educate. But I look at, you know, we have a war going on in Europe right now. We have a war in the Middle East right now. In Canada, we have the China, we have the Canadian government blocking Chinese acquisitions of assets that are in South America, uh, but owned by Canadian companies. So the whole political landscape that mining operates in is, is changing pretty drastically, I would say over the last couple of years. Five or six years, right? We’re going from a very open border, uh, world to a much more nationalistic world, it appears to me. And that has so many implications for supply chains and whatnot. How do you envision, you know, you’re working for Vale obviously, but the whole industry addressing these challenges and sort of predicting what’s coming down the pipe. Is it. Is it closer relationships with certain governments? Is it? I don’t know. I don’t have an answer. But how do you start thinking about these problems and preparing for what might be a very different future?

[01:23:48] Mark: Well, one thing that, when Brexit was occurring, I was asked the question, what do you think of Brexit? And I said, look, I’m against anything that puts a barrier in terms of trade between nations. Today, whether we understand it or not, health of our global citizens is better than it’s ever been life expectancy. And we’ve got all sorts of issues across the block. And we could all do a lot better in helping those that, that are struggling. But trade is the key and comparative advantage. Anything that constrains trade, wars, they’re all difficult and will create, pockets of poverty that, that, we can see already emerging. Immigration, mobilization of people moving to other areas, wars, all those sorts of things are all issues. That work against trade, which is the key to lifting everybody out of poverty and, and, and, and improving everyone’s life.

And we’ve all got a responsibility in one way, shape, or another, and that’s a personal view. And it is a very personal view to try and make a difference. And, I think that, Our ability, um, critical minerals is a good example and critical minerals is an opportunity for the mining industry to talk about what it does and how it makes a difference. It’s also key where it can become an opportunity for cooperation not competition. Now there will be competition and there’s a obvious debate around the Chinese and domination in rare earths. Thank you. There’s the US repositioning itself in Africa, uh, looking to access critical minerals. Every country’s in the same place. These minerals are now strategic. And what I’ve said is it’s okay to be competitive, but let’s not be destructive in stopping each other from doing things. Let’s be competitive and understand how we can be constructive and not close off options, which then means people are pushed towards. You know, instead of trading, we’re firing bullets.

[01:26:02] Jamie: Yeah.

[01:26:02] Mark: So that conversation about, resources and access to resources, I think is critical. And we’re in an industry where, I’d like to see trade unfettered, almost unfettered. It has to be. Uh, we have to protect human rights and, and, and, uh, value chains being appropriately managed, but, uh, trade’s the key, and that’s my greatest fear, and I think the stakeholders, as you asked, what’s the stakeholder question, that’s why the multilaterals, uh, Faith based organizations can be more powerful than almost any because when I, when I look at faith based organizations, I don’t see religion. I see values, I see culture, and being respectful of people’s values and beliefs means that we can dialogue and find common ground. And when you talk it to a theologian, and I’m not religious, it’s just an observation on values and beliefs, that if we can at least get those dialogues running across borders. Also through the multilaterals and through other institutions and organizations, even organized labor and other groups that are concerned with human rights. It changes the nature of the dialogue, and I understand the politics, and I’m not a, I’m not a right wing loony or a left wing loony, I’m around the center depending on the circumstances, but I believe that the dialogue that sits across politics is absolutely key to maintain balance in the way we relate to each other and talk to each other, and again, it might be idealistic, but we’ve got to get out there as leaders and you and try and talk a sensible conversation as opposed to a polarizing political conversation. I think that’s clear to them.

[01:28:01] Jamie: Yeah. Yeah. It’s interesting. And do you think that the Western miners and the Western mining investment infrastructure, shall we say, is going to be able to, I mean, I don’t think it, I don’t think it has been as competitive as it once was against a Chinese investment who have really secured many of the assets globally, you know, these sort of state back entities, some of the sovereign wealth funds, obviously pouring a tremendous amount of money into into this industry, you know, I look at these, these sort of state players and I see, you know, they’re locking down assets with less concern about those assets being profitable and more concerned about them simply being feedstock into the other industries that they’re building. And are the, are the Western miners going to be able to remain competitive against that? You know, when an Anglo or a Vale needs to be a profitable company under its own right, can they compete against the Chinese, uh, state backed entity that just needs the iron ore, or a copper or lithium or what have you.

[01:29:11] Mark: First thing, um, I’m a, an absolute believer in the power of innovation and, and reward for innovation. So I’m open market. I’m an entrepreneur. I’m, I, I want to see innovation. I want to encourage innovation in every way we can. I do see problems where governments, um, overly interfere, they always influence, but where they interfere and create market disconnects that don’t allow the markets to work reasonably efficiently. And by the way, all markets need regulation and appropriate management on the basis of fairness across society because if you get that wrong, then you’ve got all sorts of other issues. So there’s a balance. What I’ve said in my dialogue with American leaders who are sort of saying, well, we’ve got to get critical minerals and we’re not going to take it from them. We’re not going to take it from them. We’re going to take it from these guys. I think. Their concern is that they can’t get certain materials, therefore they’re going to have to lock away supply. That is an entirely logical and appropriate response to, let’s say, the Chinese dominating certain markets. But I think there’s a different dialogue, and it’s a bit like the old song, The Russians love their children too. There’s a conversation. That the US and China have, I would love to see where they work out. Let’s, let’s find a compromise here, and I can only hope that in the US and in China, there’s a willingness to dialogue because the alternatives are unpalatable, and in some parts of the world, we’re seeing the alternatives play out now. And we want to see that come back. We need dialogue. So, it’s what is it jaw, jaw not war, war. And I think those sorts of issues are becoming more and more important in the world today. And in the end, we are so reliant on the leadership of China, the US and other key players that, in my view, as business leaders, if we can provide, or if we can model the behavior we would like to see, Then at least it shows that it can be done, that companies can be profitable as Anglo was the most profitable company over that period that we were involved in with the innovation and, and, and looking at how we did things differently. There are things that we can do to help each other. By the way, I would never be as arrogant to suggest that we were the example. I’m saying Microsoft, those technology companies have been so successful. What can we learn on the positive side? And at the end of the day, why wouldn’t you encourage other countries to have successful businesses? But there are a set of rules that we do need to try and align on as leaders. And I think we’ve lost that dialogue to some degree. And we need it. And as miners, because we’re across all jurisdictions, we’ve got a better dialogue amongst our industry leaders. And I think politicians have got on a country by country basis. It would be good if we could help maybe bring some of those conversations together.

[01:32:45] Jamie: It’s true. Mining really does give you a unique viewpoint of so many places in the world that the average, the average business leader doesn’t get either. Do you think, you know, you mentioned, you know, the Microsofts or whomever these sort of big, hyper successful tech companies. Do you think there’s a world where. They start to think, okay, maybe we need to start thinking about locking down our own supply chains. Maybe we’d need to be buying the tier one nickel mines or copper mines or or what have you. We need to build chips. We I mean, because if you think about throughout my career, I think probably most of your career. The mining industry has kind of become more decentralized, right? There’s been more companies. There’s been more breakup, whereas in previous, yeah, but in previous generations, you had mines owned by General Electric, by major energy companies. You had mines as components of other companies. And I wonder if we’re entering a consolidation phase where, you know, the only one who has cheap enough capital to go really be competitive and buying these things are the Teslas or the Microsoft or the Apples of the world that can go out and compete.

[01:33:52] Mark: It’s happening now. It’s happening now. Um, I, I had a conversation with Jeff Beamell in 2011.

[01:33:59] Jamie: CEO of General Electric.

[01:34:01] Mark: Yeah. We built a processing plant, a water processing plant in South Africa, and he was supplying some of the technology. And he asked me the question, he said, if, in my conversation at General Electric. What should I talk to my team about in terms of threats in respect of minerals? And I said, I said, in 10 to 20 years time, your biggest issue will be that you won’t be able to get the materials you need to make the products you produce. And he said, what do you mean by that? And I said, well, when I used my seven years, it used to take seven years, at that stage it used to take 15 years, now it’s 20 years. So I said, we just do the maths and the curves and yes, you’ll improve your efficiencies, but you’re going to run out of key materials. Now I call them special materials or materials you need to make your product. That world is now, so auto manufacturers and a whole range of other players who need very specific technologies and materials are locking their supply away as we speak. It’s happening now. Countries are saying, you know what, we’re going to have to reposition in Africa, and I won’t say who, but they’re all looking at how do they take a position in Africa, get access to copper, nickel, rare earths, a whole range of, it’s happening now. So it’s not a, this is not, 20 or 30 years away, this is in the world we’re in today.

[01:35:25] Jamie: Okay. You know, Mark, we, we’ve been at this for about an hour and a half now. This is one of my longer podcasts and I literally have pages of questions I could keep going through, but I want to, you know, start wrapping things up and be respectful of your time. Um, Is there anything happening in the mine industry right now that you’re either very excited about or maybe concerned about that people are not aware of that people that should be on people’s radar that isn’t.

[01:35:49] Mark: So I’m always excited about our industry because I think we could do so much better. I think we do so many things so well and I think Rohetish and the guys at the ICMM have been doing some really good work and really messaging quite well. I think it’s important as leaders we amplify that message. So I don’t think we’re doing our job in supporting enough, that’s first point. Second point, I think our own self awareness is increasing quite rapidly, particularly through critical minerals and trying to work out how we improve our messaging because critical minerals is an opportunity in many ways for us to talk about the industry. So how do we do that in a constructive way? So I think I’m excited that the messaging that we were driving 15 years ago, and was really difficult, is becoming easier because of critical minerals. The trouble is, the reason critical minerals are critical is because we’ve got climate change, we’ve got water, we’ve got these, so those issues worry me. And I think that we can do so much more to support those. And I think that the message is getting out that we could be a lot more assertive, a lot more vocal, a lot more assertive, and a lot more constructive in helping people understand how we can do things without, uh, destroying the planet. In fact, it’s the opposite of how we help preserve and create a more sustainable planet. So I think the understanding of those issues, the technologies that are available for us to improve the way we do our work. The improved safety performance are all things that, that I think, um, are going in the right direction, but need to go quicker. So, I’m excited about those sorts of things, those opportunities, and I’m excited about what I see in young people. I remember as an 18 year old, we talked about it earlier, you know, Wollongong, surf, girlfriend, earning my way through, you know, work and, or paying my way through university. They were the big issues at, at that time. It, it wasn’t about saving the planet or making a difference with the development of the internet, the awareness of young people in terms of the fragility of the planet.

[01:38:06] Jamie: Mm-hmm. ,

[01:38:07] Mark: the importance of making a difference. We’ve got a young generation that I think will change, as they should, the nature of the planet, and the dialogues that are possible with their awareness and their understanding of how fragile things are, I think is a great hope for the future, and so I’m ever the optimist, I’ve got seven kids and eight grandkids and anything I can do to help them have a different set of conversations and be leaders in a different, in, in how we have different conversations across the globe is, is my great hope for the future.

[01:38:44] Jamie: Okay. Thank you. All right. So I’ve got a couple of rapid fire questions before we close it off. There’s supposed to be, we’ll see how they go. We’ll see how we do. So number one, if you could buy, so all your money, all your wealth stripped away from you, you’ve got 10 million. You can buy a royalty or stream on one commodity. What do you do? What do you buy it on?

[01:39:11] Mark: Copper.

[01:39:11] Jamie: Copper. Okay. If you were 30 years old, starting a company today that was a service business to the mining industry, what would you be focused on?

[01:39:23] Mark: Resource and mining strategies.

[01:39:25] Jamie: Resource and mining strategies.

[01:39:26] Mark: We’re absolutely short that role and the last great thinker in my view in the industry was Oscar Stefan. We miss him terribly.

[01:39:37] Jamie: And this is effectively resource estimates and then wrapping the economics around that building up my plan.

[01:39:43] Mark: It’s such a big issue to the industry and it’s a skill we’re losing.

[01:39:47] Jamie: If you could have dinner with any historical figure, who would it be?

[01:39:55] Mark: Now, I’ve been asked this question, and I gave a, uh, uh, there’s so many different ways you could come at this one. Um, I guess you’d have to say Jesus Christ, um, Genghis Khan, Adolf Hitler. One, maybe you could change the course of history. Or two, you could learn something. Or three. You can have a very different perspective on the world. There’s a list there of people that have made such a difference, good and bad.

[01:40:27] Jamie: Yeah. So what would you have to eat? You’d eat olives, fermented mare’s milk, and schnitzel, I guess. That’d be quite the dinner.

[01:40:36] Mark: If it were certain characters, you’d probably suggest Arsenic, and me going down with him might be good for the world, but with others, you know, There might be pearls of wisdom, but, um, somebody that’s made a difference, and by the way, it could be Mother Teresa, uh, and listening to their perspectives, good or bad, is always a learning experience and instructive, good and bad. Um, there’s such a long list of people that I could, Humphrey Bogart, coolest guy that ever lived.

[01:41:12] Jamie: Okay. Last question. Any books you’d recommend? You mentioned you had a mentor that, you know, gave you a book every three months. Anything that really stood out? Anything you’ve recommended consistently to people you are working with? Or…

[01:41:23] Mark: Yeah, Viclav Smal. Viclav Smal. The, The Way the World Really Works.

[01:41:29] Jamie: Yeah, I have read that book. It’s great. Yeah.

[01:41:32] Mark: Yeah. It’s an eye opener for people and it’s one of the things that I think should be on the course for all kids. Uh, because I think it would change their perspective. And as I say, if you can get the kids before they’re 11 years old, you can actually have an influence on what career decisions they make, which I learned last week.

[01:41:49] Jamie: Okay. Mark, thank you very much for your time today. Any final words, final thoughts, anything people should be thinking about and you want to leave our listeners with

[01:41:58] Mark: Jamie, thank you for the opportunity. Thank you for what you do in talking about our industry and the things we do. Uh, it’s very important for us to get our message out. We don’t do it terribly well. And so we appreciate gentlemen like yourself trying to get the message out and help people understand what we do. And thanks for the opportunity.

[01:42:19] Jamie: Very much appreciated. Very happy to have you on here. You’re the first CEO of a, of a really major international mining company we’ve had, and it’s something I’ve wanted to do for a long time. So thank you for taking the time today.

[01:42:31] Mark: Thanks Jamie. And all the best.