INSIGHT-Global miners face succession crisis as old guard nears retirement

By Susan Taylor and Nicole Mordant

TORONTO/VANCOUVER, July 20 (Reuters) - As if slumpingcommodity prices and unhappy shareholders were not enough,global mining companies are also facing a looming successioncrisis.

Several mining CEOs have reached or are nearing retirementage and industry executives, recruiters and analysts worry thatthere is not enough people with the right skills and experienceto replace the old guard.

It is the price of a 'lost generation' - those now in their40s who failed to find jobs in the industry during a miningdownturn in the 1990s and early 2000s and have driftedelsewhere.

"There is a shortage of potential CEOs because the industrydoesn't invest in people," said Mark Bristow, the 56-year-oldChief Executive of mid-tier gold miner Randgold Resources.

As a result, companies may need to promote relatively greenmanagement or recruit outsiders, raising the risk of costlystrategic mistakes at a time when the industry can least affordthem.

For example, Kinross Gold replaced CEO Tye Burt, aformer investment banker, in 2012 after its share price crateredand a blockbuster acquisition went sour.

Burt led Kinross to a $7.1 billion purchase of Red BackMining in 2010, a deal that contributed to more than $6 billionin writedowns and provoked deep investor discontent.

Mining companies typically focus on building projects whenthey plot the future, not career paths, said Douglas Groh,portfolio manager at Tocqueville Asset Management.

"The industry is not good at succession planning. It is morein the moment," said Groh, whose fund is a major gold sectorinvestor.

The boom-bust nature of the industry makes recruiting andgrooming the workforce particularly challenging.

"The mining cycle tends to be the same length as auniversity cycle," said Mark Selby, CEO of developer RoyalNickel. "People go into a program because it's hot andby the time they graduate, it's not."

Industry data shows a 15-year hiring slump in mining thatmirrors a similar generation gap in the oil and gas industry. (http://reut.rs/1HuJETi.)

"Some companies will not survive because they don't haveenough competence to operate as a standalone company," saidBristow.

The talent pinch extends beyond the C-suite, said RyanMontpellier, executive director of Canada's Mining IndustryHuman Resources Council.

"It's hard to find seasoned engineers with 15-20 yearsexperience," he said.

HEADING FOR THE EXIT

At the world's 10 biggest public mining companies, four ofthe top executives are over 60, and their median age is over 59compared with 56 for CEOs of the top 10 S&P500 companies. (http://reut.rs/1M8ZQQD)

Several mining CEOs are well into their 60s and seen ontheir way out. (http://reut.rs/1LjyDsI)

"They've made money, they're in a bad market - they'veprobably been through one before - and they may not want to bein one again," said Clive Johnson, CEO of small Canadian goldminer B2Gold.

Freeport-McMoRan's CEO, Richard Adkerson, is 68, RioTinto's chief, Sam Walsh, is 65, First Quantum's Philip Pascall is 67, and New Gold CEO Robert Gallagheris 64. They have not detailed their retirement plans,though, andsome who have done so have no designated successors yet.

Centerra Gold said in March that CEO Ian Atkinson,65, would retire by year end, but is still searching forsuccessors.

Harmony Gold Mining shares fell 6 percent onThursday after the company said 62-year-old CEO Graham Briggswould retire and that it was seeking a replacement.

To be sure, some miners have mapped out succession plans.

In a "signal to the market", Primero Mining CEOJoseph Conway, 57, gave up his President title earlier thisyear. And Silver Standard Resources named Paul Benson,52, as its new CEO effective August 1, with the retirement ofJohn Smith, 58.

EATING SEED CORN

With many commodities skipping along multi-year lows, miningcompanies have been forced to delay projects, cut staff andslash costs. That means the next generation of CEOs will needoperating expertise more than deal-making or financial acumen tohone efficiencies and sell non-core assets, experts say.

"It's a very limited supply of experienced people who knowthe industry and who have the capability of getting it out ofthe very difficult place it is in today," said John Byrne,managing partner at global recruiter Boyden World Corp.

Some companies, however, such as debt-laden Barrick Gold, believe that hiring an outsider is just the medicinethey need.

Barrick founder Peter Munk told skeptical investors in 2013that new Executive Chairman John Thornton's experience as abanker and international academic could attract capital and opendoors to governments.

It's too soon to tell whether that strategy will pay off forthe world's biggest gold miner.

Many mining executives say outsiders struggle to grasp theunique challenges of mining, noting that it can take decades todetermine if a new mine will be profitable.

They add that lawyers and accountants without a miningbackground are overly concerned with pleasing stock analysts.

Others argue that the mining industry's poor performanceshows it needs a fresh perspective.

"We have an industry where our core skill is eating our ownseed corn. We don't bother to plant the corn, we eat it," saidBenjamin Cox, the CEO of junior miner Aston Bay Holdings. "I'm a second generation mining executive; I wonder ifthere will be a third." (With additional reporting by Silvia Antonioli in London;Editing by Tomasz Janowski)

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