Report on the 22 October 2015 London AGM of BHP Billiton plc by Richard Solly, Co-ordinator, London Mining Network
As shareholders arrived at the BHP Billiton AGM, they were offered free coal by a ragged looking mining executive on a desert island, stranded like the company’s fossil fuel assets will be.
Inside, both company Chairman Jac Nasser and Chief Executive Andrew Mackenzie majored on climate change this year. Maybe they are feeling got-at over it. They are certainly well qualified to speak about it: after all, they are helping to create quite a lot of it.
Both spoke at length in their opening remarks about all that the company is doing to combat climate change – while simultaneously increasing its production of coal, oil and gas. Their speeches will doubtless be posted on the company’s website, as after previous AGMs, so I shall not reproduce them here.
Once the meeting was opened to questions, a representative of the Local Authority Pension Fund Forum welcomed the publication of BHP Billiton’s Climate Change Portfolio Analysis (on 29 September) but pointed out that the company remained a member of two organisations, the Mineral Council of Australia and the Business Council of Australia, that lobby for coal use and against constructive action on climate change. Would it withdraw from them as Shell had done from similar industry organisations?
No, it won’t, said Jac Nasser. As Australia’s largest company, BHP Billiton ought to participate in these industry organisations. There are differing views within them and BHP Billiton respects that and does not have the right to impose its own views on other companies. The associations do not speak for BHP Billiton: only BHP Billiton speaks for BHP Billiton. The company’s views are made clear in its reports. But it believes it can make a difference by arguing its point of view within the industry associations rather than by pulling out of them.
A representative of CCLA Investment Management similarly welcomed the company’s Climate Change Portfolio Analysis and similar recent reports by the International Council on Mining and Minerals and other organisations. Key stakeholders should work together. What more could BHP Billiton do to bring low carbon technologies to a commercially viable scale?
Jac Nasser replied that the company’s climate change report was getting great accolades. He said that energy demand was increasing and that there would be a continuing role for fossil fuels, so in addition to developing alternative energy sources we need to reduce emissions from fossil fuels. We need to deploy technical solutions far more quickly than traditional commercial time frames. Carbon capture and storage (CCS) is vital because it enables us to continue using fossil fuels while mitigating emissions. Battery storage is also very important and BHP Billiton will lend support to development of new batteries. We also need to develop technologies to reduce fugitive methane emissions. More can be done by working with others – hence BHP Billiton’s work with SaskPower at the Boundary Dam CCS project in Saskatchewan in Canada. BHP Billiton will share experiences with others to drive down the costs of subsequent projects. Technology is part of the company’s strategy on climate risk management and there will be regular updates on what it is doing.
He did not speak about the probability that there are simply insufficient geological formations in the world to sequester the carbon dioxide being produced through the burning of fossil fuels, rendering CCS development an expensive and dangerous red herring, encouraging the continuing use of fossil fuels when we need to phase them out as quickly as possible.
Two private shareholders asked about the dividend. One wanted quarterly, rather than half-yearly payments. Jac Nasser responded that quarterly payments presupposed quarterly reporting, which could stimulate short-term thinking. (If the frequency of reporting is what lies behind the time-scale of corporate thinking, I wonder whether it might be better for companies to report every century or so – or perhaps every seven generations.) The other shareholder asked whether the dividend was covered by profits or by borrowing. Jac Nasser said that in the year covered by the company’s report, it was not covered by borrowing, that as for the current year he could not speculate but that the Board would never risk the balance sheet.
Andy Whitmore of London Mining Network asked about the company’s Olympic Dam copper and uranium mine in South Australia. He said that the South Australian Government had commissioned a Nuclear Fuel Cycle Royal Commission earlier this year to review activities across the whole nuclear fuel cycle from exploration to waste disposal. Andy asked whether the company was concerned about how the Royal Commission’s findings may impact on operations at Olympic Dam. He also asked whether the company would take the opportunity provided by the Commission to rule out hosting any future national or international radioactive waste at the site, other than those wastes produced as a result of mining operations at Olympic Dam.
Andrew Mackenzie replied that the company is participating in the Commission and will continue the debate about what is best for South Australia. The benefits to South Australia come as much from copper as from uranium, he said. The company has not fully considered the question of hosting waste at the site other than waste produced on the site.
Presumably the ‘benefits’ to South Australia are the temporary financial benefits generated by mining. It would be odd to think of the hundreds of thousands of years of deadly nuclear waste (and the problems associated with copper mining waste as well) being a ‘benefit’. The generations that come after us, after the tax revenues have run out, may well not consider them particularly beneficial, anyway.
Danilo Urrea of CENSAT Agua Viva (Friends of the Earth Colombia) and Friends of the Earth International said that CENSAT had been accompanying the communities in La Guajira in the north of Colombia, where the El Cerrejón mine operates. He continued:
“Throughout these years we have witnessed the irresponsible behaviour of the Colombian state in the face of conflicts related to coal mining, generated by the Cerrejón mine. We have also witnessed systematic, repeated and irreparable damages that your company has generated, and the inadequate way in which Cerrejón has responded to these impacts.
“We are also aware of the abuses of corporate power which can be seen in the following ways:
Negotiations which have resulted in the subjugation of communities
Processes of community division
Not respecting signed agreements
A pretence of corporate social responsibility
Privatisation of Water
“These elements have generated the dispossession of ethnic communities from their territory.
“These situations lead us to believe that shareholders of the Cerrejón should profoundly consider what is currently happening with their company in Colombia.
“And so we want to ask:
What are the monitoring and investigative mechanisms in place that analyse claims presented by communities in Colombia?
Is there a commission, independent of the company, that investigates these claims or is one going to be created?
Can you respond publicly, in this meeting, to the claims made?
Is there a possibility of you visitng the communities to learn about the reality of mining in Colombia beyond the partial reports generated by the company?
“Colombia is currently working towards a historical peace agreement and the actions of the Cerrejón mine do not contribute to the peace and justice in Colombia.”
Jac Nasser replied, rather patronisingly, that he knew these issues were important to Danilo (self-evidently, otherwise Danilo would not have bothered travelling from Colombia). This rather implies that the issues raised were not important to Jac Nasser, or to the company. Perhaps they are not. If they were, they might have been dealt with properly by now, after some thirteen years of our attending BHP Billiton AGMs.
Jac Nasser continued: “Our discussions in the past with various representatives from Colombia have been very helpful and we always listen to your concerns, take the issues you have raised seriously. It is important that we sit down with you to see what you have to back up the allegations, as often there are different views of the same issue. When issues are identified, we will pursue the matter. Cerrejón is a very important part of the Colombian economy and the La Guajira community. It is critical that Cerrejón is operated in a transparent and responsible manner and makes a difference in the community. As a shareholder we believe that effectively managing these issues is key to good business. Since you raised many issues, I would like to meet you after the AGM with representatives of the management team, and hear more specifics of these areas and hear what you think needs to be done to improve the community situation.”
Danilo said that he welcomed the opportunity to meet privately but would like to invite Jac Nasser to make a public comment to the AGM about developing mechanisms to monitor the impacts of shareholders’ investments on the communities.
No such public comment was forthcoming.
Samuel Arregoces, from the community of Tabaco, displaced by the mining operations of the Cerrejón mine, then spoke. He said:
“Every year our friends come from La Guajira to this AGM and every year you take on a series of commitments, but in our territory everything remains the same.
“Your operations generate displacement, they dispossess us of our territory, and they result in a loss of our culture and of our cultural identity. It generates internal community divisions such as is the case with the internal divisions caused to the organisations of my community of Tabaco.
“Signed agreements are not respected:
“In the case of Tabaco, an agreement was signed in 2008, but to this date, those agreements have not been respected.
“In the case of the families of Roche, a failure by the company to respect a signed agreement serves as a way to threaten communities with the eviction that communities like mine faced.
“In the case of Tamaquitos 2, which was visited by the CEO of Glencore this year [Glencore part-owns the Cerrejón mine, along with BHP Billiton and Anglo American], the commitments made by the Cerrejón mine have not been complied with. This community has a message for you:
“If the commitments agreed to are not respected, they will take back the original territory that was taken from them!
“Therefore, I have two questions:
When will the Cerrejón management begin to respect and uphold the commitments which they agree to?
We ask that third party monitoring takes place to evaluate the denunciations of the communities to look for possible solutions based in the lived experiences and realities of the communities of La Guajira.”
Andrew Mackenzie replied that he appreciated Samuel’s concerns and shared his frustrations, but that many of the agreements and commitments made were not dependent only on the company but on the municipality and the mayor. BHP Billiton requires that the mine continue to enjoy majority support across the community as a whole. There have been many difficulties in the area. Some areas to which people have been relocated were agreed with the community in question, but the community has then withdrawn consent. Part of the commitment has to come from the elected mayor. Work must be done to achieve some degree of consensus. BHP Billiton will continue trying to find agreement between different parts of the communities, Cerrejón Coal and the mayor. BHP Billiton shares Samuel’s frustration, but many parts of the community support the further development of the mine and the jobs that it brings.
Regarding water, Andrew Mackenzie said that there was a proposal to divert a major river but the company had listened to the community and a decision had been made not to divert it. The company can remain committed to this because it is not dependent on other parties. Cerrejón Coal is very sensitive to the water shortage around the mine and has drilled boreholes for use of the communities.
Regarding independent monitoring, BHP Billiton is, in a sense, an independent monitor, as it does not operate Cerrejón but BHP Billiton representatives frequently visit and participate actively to move the management of Cerrejon in the direction which Samuel had suggested. Dean Dalla Valle [the company’s Chief Commercial Officer] had visited recently and would be happy to meet after the AGM.
Samuel said that the community knows there are difficulties but the issue is that the municipality says it has not been provided with land for the community of Tabaco to move to.
Andrew Mackenzie said that Samuel had raised new issues which the company needs to take into account.
Samuel said that he would like to draw attention to one further issue, the diversion of the Arroyo Bruno (the main tributary of the Rio Rancheria) which feeds many communities in the area.
Alex Scrivener of Global Justice Now spoke about the company’s Indomet opencast metallurgical coal project in Central Kalimantan, Indonesia. He had visited the Haju mine site two years previously. It was situated next to a pristine river important to local communities as a source of water for drinking and other purposes. BHP Billiton says that the Haju mine will not affect water quality, but Alex had seen no evidence of this. The company had done an analysis of the site and its Social Responsibility Panel had visited the area. Alex said he would like access to these reports. Community members were angry about problems caused them some years ago when people purporting to represent BHP Billiton had told them that they would get a better price for their land if they cleared parts of the forest; they were then prosecuted for doing so, as it was illegal. Compensation had been minimal. Alex said he would like access to the company’s documents on this matter as well.
Jac Nasser replied that there had been a long-standing dialogue on this issue. BHP Billiton was always open to telling Alex what the company was doing. It was in the company’s best interests to do so. The mine development schedule had changed but the company’s values had not changed. Indomet has the potential to become a world class metallurgical coal resource. The area had undergone accelerated development over the past twenty years and was not longer a pristine wilderness. The Indonesian government wants the resource developed, and if BHP Billiton leaves, it would be handed over to another mining company, not set aside for conservation. BHP Billiton can make a positive social contribution and raise the standard of mining in the area.
Andrew Mackenzie added that on the question of access to the company’s reports, he would need to look at the matter on a case by case basis. He would think about it. He did not have a personal problem with sharing the report of the Forum for Corporate Responsibility but it was not his report so he would have to ask them if they would be happy to share it. They would be meeting in just under a month and Andrew Mackenzie would let Alex know after this.
On the matter of land compensation, Andrew Mackenzie said that it was a vexed issue that had been going on for around ten years. Where the company operates is government-owned forest and the community did not have formal rights over it. BHP Billiton did provide some compensation which at the time it thought was fair and reasonable. The desire to achieve more compensation by clearing land was encouraged by others, not by BHP Billiton.
On the matter of water quality, Andrew Mackenzie said that the company had shared its report on biodiversity, which answered some of those questions.
Andrew Hickman of London Mining Network then spoke about Indomet and climate change. He said that Jac Nasser talked a good talk about the company’s values and its global leadership on climate change, but that the Indomet project was in the middle of rainforest. The area was changing, but the question is, how fast? The Indomet project is ‘extreme coal’. The company is developing an operation in one of the biggest carbon sinks in the world, in the ‘lungs’ of Asia. It talks of opening a new mine in the next two years. Earlier, the company had talked of proceeding slowly. The position of a lot of the communities in the area is not aligned with that of the company. Neither they nor the campaigners supporting them wanted BHP Billiton to develop a massive coal mine in a rainforest. If the company continued, it would not only be allowing the emissions from burning the coal it mined but also destroying one of the most important carbon sinks in Asia. Surely this fell below the limits of acceptability?
Jac Nasser said that BHP Billiton is advocating a ‘two degree world’ (which I took to mean a world in which global average temperatures are no greater than two degrees Celsius above pre-industrial levels) and that is what is in its climate change report. The report shows where the company is regarding leadership on the issue. The matter is of strategic importance and is a governance issue at board level. All the members of the board work with management to develop strategy. BHP Billiton believes that limiting climate change and providing access to affordable energy are both essential to long-term sustainable development. The company encourages governments to develop long-term, effective policy frameworks, including a price on carbon. This is a priority at board and executive level. The climate change report shows that BHP Billiton is one of the few companies with a resilient porfolio because of its diversity, cost and quality. Leadership is taken by the board and management on climate change and the company remains committed to action on the matter.
Andrew Mackenzie added that he and Andrew Hickman would have to agree to disagree on Indomet. BHP Billiton thinks it unlikely that if they pulled out there would be no mining of coal. If BHP Billiton developed the mine, it would be to the highest standards in the world and would return the forest after mining to what it is today. He said that BHP Billiton puts money into the protection of forests which are the lungs of the planet and has more investments to announce. There is no basis for saying that if the Indomet mine were not developed, less metallurgical coal would be burnt. In fact, metallurgical coal would be mined elsewhere, of a lower quality, producing higher emissions when burnt. He said he was committed to CCS. There is no solution other than CCS to the production of carbon dioxide from steel and cement making. The world needs CCS and BHP Billiton is showing the greatest leadership in the world on this. The company is a leader in the sympathetic development of assets, restoration of the lungs of the planet, use of profits for conservation, and the development of CCS.
Many shareholders applauded.
Andrew Hickman suggested that, in the case of the Indomet project, the concession could perhaps be considered for alternative outcomes, such as REDD schemes (the UN’s programme Reducing Emissions from Deforestation and Forest Degradation) which could be better than being handed over to another mining company.
A spokesperson for German shareholders suggested that, although he cared about environmental issues, there were differences of opinion about climate change, and the company should take a more relaxed view. (Perhaps this gentleman does not personally know anyone young enough to expect to live for the next few decades, as the appalling consequences of our current half-hearted actions become ever more destructively apparent; or perhaps he does, but nurtures a strong personal dislike for them.)
I asked about the proposed Oak Flat copper mine in Arizona, which is operated by Resolution Copper, a joint venture between BHP Billiton and Rio Tinto. I said that the proposed mine is exceedingly controversial for a number of reasons, particularly in relying on a contentious bill passed through Congress that gives away public lands for this mine, and the concerted opposition of the Apache who consider the land sacred, and who argue they have not given their required free, prior, and informed consent for the project. I said that although BHP Billiton is the minority partner in Resolution Copper, surely the dispute would be both damaging and embarassing for the company. Why is BHP Billiton allowing Rio Tinto to act in such an irresponsible manner in their handling of Oak Flat? In order to save its reputation, would it divest from the project?
Andrew McKenzie replied that it was good that the question stressed that BHP Billiton is not the operating partner. The company is aware there are concerns on the project. He had visited and talked to people in the US government. He understood that Rio Tinto was trying to resolve the issue of the land swap to the satisfaction of the indigenous peoples. He said he felt uncomfortable talking about it because BHP Billiton is not the operating party.
I said that I would pass this on to the Arizona Mining Reform Coalition.
Juliet Phillips, from ShareAction, asked about climate change. She said:
“With the UN climate negotiations fast approaching, there’s growing consensus amongst investors and civil society alike that there is no room at the negotiating table for those who are not committed to limiting climate change to two degrees. We appreciate the recent steps that BHP Billiton has taken to demonstrate how your portfolio is resilient to actions that may be taken internationally to keep global temperature rise to within that limit. However, it is our view that a firm of your size, standing and impact should go further. To state, as you have done in your new report, that BHP Billiton has ‘no preferred outcome’ in terms of temperature change in your scenario planning is less than an inspiring statement of corporate citizenship.
“The combined upstream and downstream emissions of the company are enormous, far bigger than many nations across the world. The company could take ownership of its emissions just as the many countries who will gather in Paris this December are doing. We want to see you be more than a reactive spectator, waiting for a global accord. Action and leadership are needed now from BHP Billiton. Initiatives such as your investment in low carbon technologies and adaptation projects are hugely welcome. They will remain something of a sideshow until you address the fundamental high carbon composition of your asset portfolio.
“As such, we want to invite you as a board of directors to consider taking a more proactive approach to embedding the two degrees goal in your business strategy. We urge you to show leadership, going beyond portfolio testing, putting words into action and transforming your business model accordingly to make the many communities you operate in safer in the years ahead.”
Jac Nasser said he was very disappointed at Juliet’s reaction to the climate change portfolio analysis. In the board’s view, the company is indeed showing leadership. It supports transition to a ‘two degree world’ but has to consider other possibilities in its portfolio and planning. It had tested its portfolio against shock events and more extreme events, allowing it to stretch its thinking. It does not ascribe probabilities to particular scenarios because it cannot control them. Its planning is designed to challenge the status quo. It considers both a more rapid and a more orderly transition. It also considers a ‘three degree world’. It is consistent with every independent assessment that the company has and with government targets around the world, which do not currently get the world to a ‘two degree environment’. The company constantly updates its analysis. This is a start, and a work in progress. The company needs to plan for a range of outcomes It advocates for a ‘two degree world’. He said he hoped Juliet would reconsider her view of the company but that it was up to the company to help her change her mind.
Juliet wrote about her reflections on this interchange on the ShareAction website.
The whole AGM felt to me like a conversation with a cocaine dealer who is kindly also offering high-quality, low cost medical care and counselling for cocaine addicts, and using that as a justification for peddling the cocaine in the first place. After all, if he were not providing it, someone else would be, and probably it would be of lower quality, and would therefore do more damage, and without the medical care and counselling. Not that I’ve had such a conversation with a cocaine dealer – it’s just that if I did, I am sure it would have something in common with a BHP Billiton AGM…
BHP Billiton may well be an industry leader in all manner of ways, including on climate change. But it is fiddling while Rome burns. As the world hurtles towards ecological apocalypse triggered by climate change, BHP Billiton is doing way too little, even if it is doing more than most in the industry. It is like the Cerrejón mine: the fact that it is probably the ‘best mine in Colombia‘ does not show that it is good – simply how truly appalling all the others are.
After the AGM, Danilo and Samuel met briefly with Jac Nasser and at greater length with Andrew Mackenzie. As always, they listened to our friends’ concerns. But are they going to do anything about them? We’ll see.
Press coverage of the AGM:
Danilo and Samuel also toured Scotland, and among other things joined fossil fuel divestment campaigners outside the Scottish Parliament to draw attention to the impacts of MSPs’ pension fund investments.
For news and articles in Spanish and English about mining impacts in La Guajira, Colombia, visit http://extractivismoencolombia.org/.
Danilo and Samuel’s tour in the UK has been organised by London Mining Network, Colombia Solidarity Campaign, Friends of the Earth Scotland, Movimiento Jaguar Despierto, Stop Mad Mining and War on Want.
The Stop Mad Mining project is implemented with the assistance of the European Union. The contents of this website are the sole responsibility of the Project (Co-) Beneficiaries, and can in no way be taken to reflect the views of the European Union.