Apr 21, 2013 - Arvi Parbo, Estonia, Tallin    No Comments

Arvi Parbo

Arvi Parbo, an Australian business executive, was a postwar immigrant who progressed through the ranks of mining company to become its chief executive. He was concurrently chairman of three of Australia’s largest companies. Arvi was made a Knight Bachelor for services to industry in 1978.

He was born near Tallin, Estonia, in February 1926. Along with thousands of his countrymen, he fled from his homeland a head of the Russian occupation in 1944, ending up in refugee camp in Germany. In 1946 he began to study mining engineering at the Clausthal Mining Academy, but through his vacation work in local mines he realized that the opportunities for mining engineers in Germany were limited. Rather than change careers, Parbo decided in 1948 that he would emigrate to Australia because, in addition to having a mining industry, it was offering relatively speedy immigration to wartime refugees.

Education in Australia
Parbo arrived in Australia in November 1949. He began working in a quarry near Adelaide, but quickly arranged employment in a factory nearer to the University of Adelaide where in 1951 he began part-time study towards a Bachelor of Engineering degree. His studies in Germany gained him exemption from some of the courses which other students were required to complete. Unlike the other students, however, Parbo had to master the language of his new country while studying and working. In 1953 he married Saima Soots, a fellow Estonian whom he had met in Germany. The first of their three children was born while Parbo was studying. Although a scholarship allowed him to eventually become a full-time, Parbo had to work part-time to supplement his scholarship. He completed his studies in March 1956, graduating with first class honors.

Shortly after graduating, Parbo joined Western Mining Corporation, a small but dynamic gold-mining company. His first position was underground surveyor at Bullfinch, which was Western Mining’s operating base in the Yilgarn region of Western Australia. In 1958 he was appointed underground manager of a new mine in the Yilgarn region.

The Manager
In 1960 Parbo was appointed technical assistant to Western Mining’s managing director under the company’s policy of giving men who showed “particular promise” a year’s experience in general management at the head office. Parbo had been with the company for only four years when he was singled out as showing particular promise, and he remained at the head office for four years rather than the usual one year. His time there proved to be a critical period in which the diversification strategy Western Mining had initiated in the early 1950s began to bear fruit.

After establishing the viability of a bauxite deposit in the Darling Ranges of Western Australia, Western Mining began to investigate the possibility of establishing an integrated bauxite mining and processing operation with the Aluminum Company of America (ALCOA). Parbo worked with the ALCOA representatives on a feasibility study of the project, and he accompanied Western Mining’s managing director when he went to the United States to negotiate with ALCOA. As a result of these negotiations, ALCOA of Australia was formed to establish an integrated bauxite mining and processing operation. Western Mining took a 20 percent (subsequently increased to 44 percent) shareholding in ALCOA of Australia.

Parbo was transferred back to Western Australia as deputy general superintendent in 1964. Two years later the company discovered nickel at Kambalda in that state. By drawing on the expertise of Parbo and other personnel based in Western Australia, Western Mining established a fully operational nickel mine and primary processing plant within 18 months of discovering the deposit. The speedy development of the deposit allowed the company to capitalize on the strong demand for nickel in the late 1960s.

The Chief Executive
The day after the Kambalda mine was commissioned, Parbo was transferred back to Melbourne to become general manager. The next step was chief executive, although the chairman and board of Western Mining may have planned a longer apprenticeship for Parbo than fate provided. In 1971 the company’s managing director retired due to ill health and Parbo was appointed managing director at the age of 45. In 1974 the chairman retired and Parbo became both chairman and managing director of Western Mining. Three years later he also became chairman of ALCOA of Australia. In 1986 he relinquished the position of managing director of Western Mining but remained chairman of the company and chairman of ALCOA of Australia.

Western Mining was an extremely successful company. Despite of exhaustion of some of its gold mines and the erratic fortunes of gold mining, it grew to become the second largest of the specialized mining companies in Australia. It is difficult to identify the role Parbo played in this growth, but the best starting point is to identify the reasons for the company’s success. The main reasons are good management of its operations and aggressive and wide-ranging exploration for new mineral deposits, coupled with judicious purchases of other mining companies. Good operational management clearly reflects the quality of the management team rather than the quality of the chief executive, although a corporate structure that had a clear lines of responsibility and accountability was also important. By 1974 Parbo concluded that the company’s diversification program had begun to blur the lines of responsibility. To rectify the problem, Western Mining adopted a multi-divisional organizational structure. As Parbo explained at the time, the new structure allowed the nickel, gold, fuel, and energy, and exploration divisions to operate as separate businesses, each with its own manager who had responsibility for the performance of the diivision.

In the area of corporate strategy, Parbo modestly pointed out that Sir Lindesay Clark initiated the aggressive exploration policy which proved so important to the company. Yet Parbo ensured that the policy was sustained even when times were tough. Nickel took over from gold as the company’s major mineral by the early 1970s, yet the nickel market became oversupplied by 1971. In 1974 the company’s problems were compounded by an international recession which affected the market for all its minerals. Western Mining’s exploration activities employed 330 people at the time, and the company could have offered some comfort to shareholders by cutting back on exploration. However, as Parbo said in November 1974, “When you are exploring today you are thinking about conditions in 10 year’s time,” (National Times, November 11, 1974). The company’s continued search for new mineral deposits throughout the recession yielded a handsome return with the discovery of the large copper, gold, and uranium deposit at Olympic Dam in South Australia, as well as smaller deposits elsewhere. Development of the Olympic Dam deposit began in 1983 with Western Mining as a 51 percent shareholder in the venture.

By the mid 1990s, under Parbo’s direction, Western Mining was setting new records in the production of nickel, aluminum, copper, and gold.

Honors
Perhaps the best indicator of Parbo’s contribution to Western Mining is the respect he gained from his peers. He held numerous official positions in engineering, mining, and trade associations and was president of Australasian Institute of Mining and Metallurgy. With a background in mining engineering, this may not be surprising. However, Parbo was also acknowledged by the broader business world. He was elected the inaugural president of the Business Council of Australia, an organization formed in 1983 to represent the interests of Australia’s larger companies. He was also awarded the Ian Storey Medal by the Australian Institute of Management in 1984 and the Melbourne University Graduate School of Management Award in 1985. Perhaps the greatest accolade came in 1989 when Parbo was appointed chairman of Australia’s largest company, the diversified mining and steel-making group, BHP.

Parbo also won numerous honors outside his field, including five honorary Doctor of Science degrees, a place on the Board of Advisors for the Constitutional Centennary Foundation, membership on the Advisory Council for the Tasman Institute Ltd. and on the Future Needs Reference Group. He became president of the Academy of Technological Sciences and Engineering, a Fellow of The Royal Society of Victoria, co-chair of the Korea Market Session of the National Trade and Investment Outlook Conference of 1996, ex-officio member of the Prime Minister’s Science and Engineering Council, and a participant in the Constitutional Conference of 1991, among other honors.

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