BHP to return $10bn as it searches for new CEO

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BHP Billiton's chief executive Chip Goodyear is to step down this year, the mining giant said yesterday, as it announced plans to return $10bn (£5bn) to shareholders. The world's biggest mining company reported another jump in profits, driven by record commodity prices, and BHP said that it sees the commodities boom continuing.

The early favourites to succeed Mr Goodyear, 49, who has been chief executive for four years, are board members Marius Kloppers, who runs the non-ferrous metals business, and Chris Lynch, who heads the carbon steel materials division. Other senior managers at BHP also in contention include the chief financial officer, Alex Vanselow, and the head of the energy business, Michael Yeager. The company stressed that it had "strong" internal candidates, but said it would also consider outsiders.

Mr Goodyear, a youthful-looking American, said that he did not have another job to go to, but he had tended to stay at companies for no more than nine years - the period he has been at BHP.

Mr Goodyear's earning at BHP - he collected $6.5m for the last financial year alone - mean that he is unlikely to have to hurry into another job. He will leave BHP by the end of the year, once a successor is in place.

"I have decided it is an appropriate time for the organisation to transition to the next generation of leadership. The decision to retire was always going to be a difficult one, but change and regeneration are part of corporate life, just as they are part of life," he said.

Mr Goodyear, who was formerly the chief financial officer before stepping up to the top job in January 2003, is credited with steadying company following the merger in 2001 of Australia's BHP with London-listed Billiton, The group subsequently took a dual listing. The London shares yesterday closing up up 6 per cent at 1,040p.

He got the chief executive position after Brian Gilbertson quit just six months into the job, citing "irreconcilable differences" with the board. Mr Goodyear is also praised for not getting carried away with the deal frenzy that has gripped the mining sector in recent years - the only sizeable acquisition under his leadership was the $7.2bn buy of nickel and uranium producer WMC, which is now regarded as a good strategic purchase.

Anglo American, the world's second biggest mining group, and Rio Tinto, the number three player, are both also about to come under new chief executives.

BHP's $10bn new buyback programme is much bigger than the $3bn anticipated by investors and is on top of the $1.7bn already earmarked for buybacks. The company still has a project pipeline that will require investment of $17.5bn, and it insisted that the return of cash would not prevent future acquisitions.

Mr Goodyear said: "Our first priority is to reinvest in the business. So we have been doing that. We have been doing that in a material way. Projects have to be ready in order to take that investment opportunity... But when we do find excess cash, we do not see it as value-added for shareholders to simply build up cash on the balance sheet."

BHP reporting a 37 per cent rise in earnings before interest and tax (Ebit) to $9.1bn for the six months to 31 December 2006, the seventh straight half-year record profit for the company. The result was powered in particular by gains in its copper and nickel businesses. The rate of increase in costs eased.

Mr Goodyear remained characteristically bullish about the outlook for the global economy and commodities. He said that most commodities remained in supply deficit and the impact of the US slowdown would be less than generally assumed.

"China is set to continue as the main driver of demand, but more mature markets may also lend support, especially Europe and Japan... We do not anticipate a return of prices to longer-run averages over the medium term," he said.