“A terrible tragedy… we are desperately sorry…” The BHP Billiton plc AGM 19 October 2017

“A terrible tragedy… we are desperately sorry…”

The BHP Billiton plc AGM 19 October 2017

By Richard Solly, Co-ordinator, London Mining Network

This year, London Mining Network and our friends at Colombia Solidarity Campaign, Society of St Columban and War on Want hosted visitors from Brazil, Colombia and the USA (with help also from our friends at ABColombia, CAFOD, Ecumenical Council for Corporate Responsibility, Gaia Foundation, Movimiento Jaguar Despierto, the Passionists, and People and Planet). Rodrigo Peret from the Churches and Mining Network, Thiago Alves da Silva from the Movement of People Affected by Dams, Angelica Ortiz from Fuerza de Mujeres Wayuu, Luisa Rodriguez from Colombian human rights organisation CINEP, Roger Featherstone from Arizona Mining Reform Coalition and Roy Chavez from Retired Miners and Concerned Citizens, were all able to attend the BHP Billiton plc AGM and to raise issues of concern. A protest was held outside the AGM in solidarity with communities affected by BHP’s operations.

This year’s BHP Billiton plc AGM was the first since the company decided to change its working name to the snappier ‘BHP’. But the legal entities involved are still officially named BHP Billiton plc (in the UK) and BHP Billiton Limited (in Australia).

Much more importantly, it was the second AGM since the catastrophic collapse of the tailings (fine wastes) dam at the Samarco iron ore mine in Brazil on 5 November 2015, which killed twenty people and polluted hundreds of miles of the Doce river basin and the sea around its mouth. BHP owns 50% of this venture. I was astounded at how long the AGM had been going on before anyone on the Board uttered the word “sorry”. This was all the more striking given the evidently genuine, and welcome, concern shown for worker safety. During questions on the Annual Report, shareholder Anthony Lee said that giving the company’s Chief Executive Officer a bonus while the tragedy of Samarco continues “implies to the outside world that BHP takes the view that the death and destruction caused by the tailings dam collapse may indeed have been awful but that ‘Hey-ho, life goes on’.” (I do not know Anthony Lee and he has nothing to do with us, so it is clearly not only us who are critical of the company’s response.)

It was the umpteenth AGM since BHP got involved in the Cerrejón coal mine in Colombia. Our friend Angelica Ortiz, from indigenous women’s organisation Fuerza de Mujeres Wayuu, told the company, “Every year, human rights and land defenders come to this AGM to denounce the negative impacts and the systematic violation of the fundamental rights of communities in La Guajira caused by the Cerrejón coal mine, which is owned in part by BHP Billiton. Leaders come here with the expectation that the situation will change. But unfortunately, the promises and the agreements that are made here are not reflected in La Guajira.”

Protesters display a map of the area round the Cerrejon Coal mine in Colombia so that shareholders have to ‘tread on villages’ as they enter the AGM.

BHP is extremely adept at good public relations, ensuring that the majority of its shareholders will have been reassured by all the explanations it makes of its behaviour around the world. But it becomes ever more draconian in its efforts to control not only its Annual General Meetings but the recording and publication of what occurs at those meetings.

Last year, it tried to curtail questions at the AGM by holding a pre-AGM information session. This, of course, simply doubled the number of questions about issues of concern. This year, new Chairman Ken MacKenzie insisted on taking all questions on the catastrophic Samarco tailings (fine wastes) dam disaster at the same time, thus enabling him and Chief Executive Officer Andrew Mackenzie to offer responses which did not satisfy the questioners while ensuring that the questioners did not have the opportunity of seeking further clarification. This set a precedent, so other questioners mostly allowed unsatisfactory answers to go unchallenged.

Years ago, the company used to post a video of its whole AGM on its website. I think it got fed up of publicising our criticisms, so it stopped doing that. This year, it even forbade use of laptops in the meeting, so I had to scribble notes by hand, and I find I cannot now write as fast as I can type – so there may be the odd gap in this AGM report. Still, if the company hoped to avoid the publication of a full account of the question and answer session, I hope we will have thwarted that hope.

What follows is a fairly full, but not exhaustive, account of what was said in the AGM, with minimal commentary. I concentrated on noting the points made by the company’s critics, and the company’s responses. This account includes only a few of the points made in the lengthy presentations by the Chairman and CEO; their full presentations are available as a webcast at https://edge.media-server.com/m6/p/bb59cacs.

Chairman’s presentation

1. Company Chairman Ken MacKenzie opened the meeting with a lengthy presentation. He said he realised that the company had responsibilities to local communities as well as to shareholders and workers. He said that BHP makes a contribution to many communities around the world. He said that his previous experience at AMCOR had shaped his approach to corporate culture. He had visited numerous BHP projects around the world in recent months. This had been a ‘listening tour’, and it was up to the Board to decide what course of action would be best for shareholders. He said that BHP had a 130 year history but had become simpler over the past five years as a result, among other things, of the demerger of South32 [which, of course, enables BHP to deny responsibility for activities undertaken over many years but now transferred to South32 – for instance, at Cerro Matoso in Colombia; see our report on last year’s AGM].

2. He said that the company now had five priorities:

i) The first priority is worker safety. One colleague, Rudi Ortiz Martinez, had been killed at Escondida in Chile and another, Daniel Springer, in Queensland in Australia, and the company sent its sincere condolences.
ii) Assessing the portfolio to evaluate value and returns: US shale assets had been assessed as non-core and the company is seeking ways to exit them.
iii) Capital discipline: a working group has been established to strengthen the application of capital allocation policies.
iv) Capability and culture: workers need to achieve continuous productivity gains, and there is a need for diversity on the Board.
v) Social licence to operate: this, said Mr MacKenzie, involves “doing the right thing”, and this creates value for shareholders. If the host nation and communities do not trust the company or do not feel that they benefit from the company’s presence, then the company does not deserve to be there. Companies need to do more than ever to achieve a social licence to operate. People, relationships and trust are the most important of BHP’s commodities, he said. Nowhere is this more important than at Samarco, he continued. BHP supported Samarco in the initial stages of response to the dam collapse disaster in November 2015 and is now working with communities to respond to their priorities. BHP is also trying to keep its greenhouse gas emissions below their 2006 baseline, and 2022 levels are to be restricted to 2017 levels even with increasing productivity.

CEO’s presentation

3. Chief Executive Officer (CEO) Andrew Mackenzie spoke about the impacts of worker fatalities on their family, friends, co-workers and all at BHP. He said that BHP commits itself to making sure that everyone goes home safe at the end of each working day. There had been some progress on safety in the past year, but it was not yet sufficient.

4. He said that the company continued trying to do what is right over the Fundao tailings dam disaster. Initially, the company had supported a humanitarian emergency response. It was now pursuing a more structured and strategic approach. Its commitment to helping communities is resolute and it aimed to achieve the best outcomes for everyone involved.

5. He said that BHP was very proud of its long-term environmental goals, including its aim to achieve zero net greenhouse gas emissions by the second half of the current century. Population growth and the rise in living standards will lead to a rise in demand for energy and minerals for decades to come, he said. Chinese policy is conducive to growth. BHP would increase its involvement in oil and copper. It would exit its shale options but would do so both urgently and patiently in order to get the best value from them.

6. The company aimed to achieve gender balance by 2025, which, according to research, would make the company safer and more productive. It was making progress towards that: women make up over 20% of its workforce, increasing 2.9% in the past year. Flexible working made the company more attractive.

7. BHP also invests in social projects. “When we show compassion, the outcomes outstrip our expectations,” he said. BHP must stand as an example of the contribution that a well-run business can make to society.

Polling and strolling

8. At this point, the Chairman opened the poll, to enable shareholders both to vote and to leave the AGM early [presumably so that they could avoid having to listen to the testimony of those whose communities are suffering so grievously from BHP’s failure to live up to the standards set out by the two Mackenzies].

Questions and answers

Desperately sorry for Samarco

9. The Chairman then asked for all questions on the subject of the Samarco disaster to be put before the company responded to any of them. [This, of course, ensured that it would not be possible – or at least not easy – for questioners to challenge any inadequacies in the responses given to their questions by the Board.]

10. Rodrigo Peret, a Franciscan Friar from the Churches and Mining Network in Brazil, said: “We follow the crime committed by Samarco. A report from the Brazilian police clearly stated that negligence and technical problems preceded the dam collapse. Considering the shared responsibility of BHP Billiton and Vale, what effective mitigation measures will be taken in the short, medium and long term to offset damage to surrounding communities? Many affected people are from rural communities and rely on agriculture or fishing. How will restoration of flora and fauna be done? Are there dates for which action will be taken and when?”

11. Shareholder Anthony Lee referred to Item 11 on the agenda, which involved benefits to be received by the Chief Executive. He said that in the light of the events at Samarco, he considered it a gross failure on the part of BHP that it should even consider such awards, and that if there were to be any awards they should be very much smaller. He said that giving the CEO such an award implied to the outside world that BHP took the view that the death and destruction caused by the tailings dam collapse may indeed have been awful but that “Hey-ho, life goes on.” He suggested that Board members may have asked themselves how they could consider granting a $9 million bonus to the CEO, and that they might have answered that institutional investors would wave it through, and that if there were any continuing controversy the company could say that the bonus had been approved by the AGM.

12. Researcher Paul Robson said that he had visited the entire length of the Rio Doce basin and places around the mouth of the river and had written a report about the impacts of the tailings dam rupture, published by London Mining Network a few days before the AGM. The problem was not just that 45 million cubic metres of dam waste had been released into the river system but that this had had effects including erosion and permanent changes to the system itself. It was one of the largest tragedies of its kind, and as tailings dams increase in size, the risk of new tragedies increases. Research into the impacts of the disaster had been commissioned in Brazil some months ago, and this was very important, but it was being financed by the companies through the Renova Foundation. What procedures were in place to ensure that all research into the dam collapse and its impacts would be transparent and conducted with full scientific rigour? Would its methodologies and results be transparent?

13. Thiago Alves da Silva, a resident of one of the communities affected by the Samarco disaster, and a representative of Brazilian organisation MAB (Movement of People Affected by Dams) said: “My question concerns the company’s operations in Minas Gerais, Brazil.

14. “In the name of communities affected by the Samarco tailings dam disaster, the Movement of People Affected by Dams (MAB) has made a number of demands, included in the letter to shareholders, which we are handing out today [see the Appendix to this report]. These demands include the following:

  • Accelerating the resettlement of Bento Rodrigues, Paracatu de Baixo, Gesteira and other affected communities where resettlement is necessary.
  • Ending the Mediated Indemnity Programme, because it generates mistrust among families, gives too much power to the companies and prevents affected people from pursuing their own priorities.
  • Indemnifying fishermen and artisanal miners throughout the Doce River basin, including the Traditional Communities, and meeting the claims of the Indigenous Peoples affected in accordance with international law.
  • Effectively solving water supply and water quality problems in all communities and cities in the River Doce basin.
  • Permanently solving the issue of job and income generation in the entire region affected
  • and effectively recuperating the River Doce basin from the environmental impacts suffered, restoring fauna and flora, marine and fresh water aquatic life.

15. “My question is, will BHP accept these demands or not?”

16. Researcher Richard Harkinson said that a year ago, then-Chairman of BHP Billiton, Jac Nasser, had promised transparency on the company’s review of its tailings dams. He had led people to believe that BHP would publish its review so that they could evaluate its rigour. There were tailings dams not only at Samarco but elsewhere. Richard said he had looked at the company’s Annual Report for information about contingency funding for public and criminal litigation in Brazil. Samarco Joint Venture partner Vale’s reporting on the matter appeared to be fuller, and Vale had stated that the cost of such litigation was impossible to evaluate. All that people could see of BHP’s provision was the money that it had put into the Renova Foundation. The consequences and impacts of the events at Samarco in November 2015 had been documented in London Mining Network’s new report. A new report from UNEP (United Nations Environment Programme) says that there should be enforcement of financial and criminal sanctions for non-compliance with mining regulations and best practice in tailings dam construction and operation. It is clear that there was non-compliance for years at Samarco, compounded by increased production during the iron ore price downturn, and the increased waste produced had overloaded the tailings dam. How could the company make the operations of the private foundation, Renova, transparent, and how could the company guarantee that it would operate effectively? Vale’s reporting, under US regulations, was fuller than BHP’s, under UK regulations. More transparency is needed on what BHP would do to address the needs of the people affected by the disaster.

17. Chairman Ken MacKenzie replied that the failure of the dam was a terrible tragedy and that BHP was committed to preventing such a disaster happening again, including sharing lessons with industry colleagues. There had been a comprehensive review of all BHP’s tailings dams and tailings dams. This had confirmed that its tailings dams were stable. The company was working with the International Council on Mining and Minerals (ICMM) to develop global tailings dam policies. There was a new framework for the identification and management of risks for tailings dams at operations in which BHP was involved but which it did not manage, and this framework was equivalent to the framework in use at BHP-operated sites.

18. He said that Renova was being funded by BHP and Vale in accordance with their agreement with the Brazilian government. There were 425 staff and 2,000 contractors. Thirteen information centres had been established throughout the river system to ensure engagement with communities. BHP and Vale fund the foundation but directors of the foundation must act in the best interests of Renova. Members of its governing body are appointed by BHP Billiton Brasil, Vale and Samarco, and the ‘Interfederative Committee’ (IFC)’ of twelve representatives from the Brazilian Government and environmental agencies. The IFC has created eleven ‘technical chambers’ with government representatives, and there is a 17-member Advisory Council involving people from affected communities, the IFC and others. There is a Fiscal Council and an independent auditor, currently Ernst and Young. There is a Panel organised under the auspices of the International Union for the Conservation of Nature (IUCN) involving international experts. It will produce public reports. It is chaired by Yolanda Kakabadse, WWF’s International President and the former Ecuadorian Minister of Environment.

19. [Desirable as it doubtless is in principle to maximise scrutiny of the Renova Foundation’s activities, I was by now thoroughly confused by the complexity of its governance structure – even more so because the Chairman several times talked about ‘committees’ when referring to bodies which in the company’s Annual Report are referred to as ‘councils’. Little wonder if local people do not feel any sense of control over such a complex body.]

20. He continued that one of these ‘committees’ (but which one? – and is it really a council?) apparently meets if there is a dispute between the parties within Renova. Many stakeholders are involved.

21. He said that there had been progress to date. Everyone wanted progress to be quicker but progress is being made. The State environmental monitoring agency had said that the quality of water in the Rio Doce is equivalent to before the disaster [a claim questioned by the findings of LMN’s report]. The tailings material is non-toxic [perhaps true, but as LMN’s report points out, the tailings may have mobilised other, toxic material in and around the river] and readily supports re-vegetation [this may be true of parts of the river valley but LMN’s report suggests that it varies].

22. On the social side, BHP wants to make faster progress. Resettlement of the communities of Bento Rodrigues, Paracatu de Baixo and Gesteira was behind schedule but there was extensive community consultation and participation. Outside these three communities, reconstruction was largely complete. There had been extensive consultation, with 1,700 community meetings involving 50,000 people. Payment of compensation for people who had lost their water supply was progressing but there was slow progress on general compensation. He said that BHP recognises that there is much more to do but its commitment to do the right thing is unwavering.

23. CEO Andrew Mackenzie added that the company had thought that around 400,000 people had lost their water supply, that probably half that number had in fact lost their supply and that more than half of these had received compensation. The company had identified 8,500 people who had lost their livelihood. The vast majority of these had received payment cards.

24. He said that getting consultation right was difficult. Better progress was necessary. The disaster had had “a big impact on civil society” [what an understatement!]. He said that local communities could attend all meetings of the Renova Foundation. More forms of consultation would be implemented. There is information on all of these things in the company’s Sustainability Report.

25. On the letter to shareholders from MAB, the CEO said he understood people’s frustration that progress is not faster. Progress has been faster in smaller communities than in larger ones. In Bento Rodrigues, 92% of the people had agreed to the plan [I wonder what the alternative would have been: people who are desperate may agree to proposals that are not necessarily the best or most generous, for want of any other possibility]. The company had acquired land for resettlement, but now there are problems with planning permission. People had been successfully rehoused and should have a new community in 2019. Work had also been done on counselling those affected. Regarding the other demands, “we know we had a very unpleasant impact on the health of the Rio Doce and we have to make good. But some impacts were there before the incident and we have to discuss how to evaluate our responsibility.” Regarding costs, he said, the company needed agreement with the affected people and had to follow Brazilian procedures.

26. BHP Finance Director Peter Beaven said that the Annual Report contained six pages of disclosure about what the company had spent around Samarco and how much it expected to spend. Towards the back of the report, in ‘Additional Information’, there are another two or three pages on legal proceedings. Expenditure for this year had been over $400 million and over a billion dollars more would be spent, including 300 million more this year.

27. Andrew Mackenzie said that the company was “desperately sorry that this has happened, and we know we won’t always get it right.” [I found it interesting that it was only at this point of the meeting that anyone on the Board actually said sorry for this catastrophic disaster.] The company would be transparent in reporting and was committed to raising the standards of tailings dam management. In two weeks there would be a meeting of the International Council on Mining and Metals, and BHP would make raising tailings dam standards a crucial issue. The company is investing in more science so that the lessons about what went wrong can be learned.

28. Ken MacKenzie said that the company had done its best to communicate what it was doing, and Andrew Mackenzie would be available after the AGM to speak to those who wanted to know more.

Problems at Cerrejón Coal

29. Angelica Ortiz, from Fuerza de Mujeres Wayúu in the province of La Guajira, Colombia, said the following, with the help of interpreter Seb Ordonez: “My name is Angelica Ortiz. I am from the Wayúu Women’s Force Movement.

30. “Every year, human rights and land defenders come to this AGM to denounce the negative impacts and the systematic violation of the fundamental rights of communities in La Guajira caused by the Cerrejón coal mine, which is owned in part by BHP Billiton. Leaders come here with the expectation that the situation will change. But unfortunately, the promises and the agreements that are made here are not reflected in La Guajira.

31. “In this regard, we wish to ask this meeting and the directors of BHP Billiton the following five questions:

– When will the company start to provide comprehensive compensation to communities who have been displaced by social, cultural and economic harm caused?

– What can BHP Billiton do to ensure that Cerrejón does not continue to cause the rupture of the social fabric of the communities? What measures will you take in your action plans to safeguard the cultural identity of Wayúu, Afro-descendant and small-scale farming communities?

– Since 2015, different courts in Colombia have ordered the company to reduce contamination levels and to act in favour of the right to health of Moises Daniel Guette, a Wayúu child from the Indigenous Provincial Reserve, who is currently suffering from serious respiratory problems and haemoglobin deficiencies. However, the company has not accepted responsibility or taken any action after two years. What will you do to guarantee the health of Moises Guette?

– What plans does the company have to guarantee the supply of drinking water to communities whose water sources have been contaminated, and for the communities which have been re-settled and do not have access to this basic, fundamental right?

– Year after year, the company is asked not to carry out or promote any further forced evictions. Sixteen years ago, in 2001, the community of Tabaco was violently evicted. Since then, further cases of forced evictions have occurred. In February 2016, Mr. Tomas Ustate and the families of the community of Roche were also forcibly evicted. Just last month, on September 28 of this year, Eneida Diaz de Barbosa and her daughter (Eneida Barbosa Diaz), in Chancleta, were evicted and expropriated from their home.

– What concrete actions will the company carry out to repair the damages caused?
– How will the company ensure there are no more forced evictions and expropriations of Afro, Wayúu and small-scale farming communities?
– What are the guarantees that due process will be followed in cases of relocation or resettlement?

32. Chairman Ken MacKenzie replied that Andrew Mackenzie had recently visited the Cerrejón mine. He said that “to level the playing field”, Cerrejón produces high quality, low ash coal. The mine began in the 1970s and BHP became involved in 2000. It owns 33% of the mine. Anglo American and Glencore also each own 33%. Cerrejón Coal is an independent Joint Venture not operated by BHP. BHP is committed to seeing Cerrejón operate successfully while also being a good corporate citizen. Andrew Mackenzie had visited the site because of issues raised at last year’s AGM.

33. [I was astounded by Mr MacKenzie’s use of the expression “to level the playing field”. The implication was that the Cerrejón mine’s critics enjoyed some kind of unfair advantage over the company – a company supported by the financial power and diplomatic connections of three of the world’s largest and richest mining multinationals and backed by the full, armed might of the Colombian state. We would love to see the playing field levelled. The recent eviction of Eneida Diaz, carried out with the help of armed officers from Colombia’s brutal ESMAD riot police, demonstrates beyond reasonable doubt that the ‘playing field’ continues to be skewed very heavily in favour of the mining companies. The communities’ high ground is the moral high ground – unarmed, on low income, and without state-sponsored diplomatic support. I am constantly reminded of the story of David and Goliath – and, given the outcome of that story, I am comforted by it too.]

34. Andrew Mackenzie said that it was important to understand that the area around the Cerrejón mine had suffered years of drought until 2016, when the drought broke. The drought had produced a lot of dust. Whenever dust levels were too high, “we would stop mining or change direction.” [It was interesting to note that, although BHP seems keen, at times, to emphasize that Samarco, Cerrejón and Resolution Copper are projects which BHP does not operate or control, Mr Mackenzie frequently used the pronoun ‘we’ when speaking of these operations.] The ending of the drought had meant that the situation was less challenging now.

35. He said that there was a lot of smuggling across the Venezuelan frontier, especially of petroleum products, and guerrillas had been present in the area. [The relevance of this remark was not immediately clear to me.]

36. He said that some of the matters raised at AGMs had happened before BHP became an owner of the mine. [In fact, very few such matters have been raised over the years: much more often our friends from La Guajira have spoken about events that have occurred since BHP bought into the mine in 2000.] He said that there were strong resettlement procedures in place in line with Colombian law and international standards. People must be treated fairly and respectfully. He said, “The Colombian government decides who is eligible for consultation and we often go over and above this. In most cases we have done a good job including over the provision of water.” The indigenous community of Tamaquito had volunteered to be resettled because, although it was outside the mining concession, it was affected by mining activities close by. Water availability at the new site was found to be inadequate. Water pumping equipment was put in place but broke down, and it relied on spare parts sourced from Switzerland, so simpler machinery was put in place and the leader of Tamaquito had said that it was all now okay.

37. Andrew Mackenzie continued that he extended his sympathy to Moises and hoped for his full recovery. Cerrejón Coal had offered support for his health needs but medical reports had shown that his health problems were not caused by Cerrejón.

38. He said that the eviction of Mrs Diaz would not comply with BHP’s policies if it had occurred as it had been described, but she was living on a piece of land rented from the mine, and she had been told three years ago that the land would be needed and that the company would help to move her and her animals, but the time ran out. He said that he put a different interpretation on the eviction. [For our understanding of Eneida’s understanding of the eviction, see https://londonminingnetwork.org/2017/10/once-again-Cerrejón-coal-uses-force-to-remove-farming-families/. She had already had to move once because of mine expansion. Now she has been forced to move a second time.]

39. Ken MacKenzie said that the company made the same offer as they had made to those concerned about Samarco, to discuss concerns with Andrew Mackenzie after the AGM.

40. Luisa Rodriguez, from human rights organisation CINEP in Bogota, Colombia, said: “My name is Luisa Rodriguez Gaitán of CINEP – The Centre for Popular Education and Research / Programme for Peace. We work alongside Afro, indigenous and small-scale farming communities of La Guajira, monitoring the socio-environmental impacts and territorial transformations caused by the open-cast mining of Cerrejón in the region.

41. “BHP aligns its activities following economic, trade and investment rules that benefit the company and guarantee profits. However, you do not properly meet national and international standards to ensure the minimal protection of the fundamental rights of the populations affected by your activities or the protection of the environment.

42. “Faced with this unfavourable situation for the population of La Guajira, and for our country, we would like to know the following:

– Given the irregularities in the actions of the company, the Colombian State has ruled through different judgements in favour of the communities for the protection of their fundamental rights to prior consultation; a healthy environment, health, access to drinking water and due process in La Guajira. What are the concrete measures that the company is taking to follow up and to carry out the fulfilment of the different judgements and rulings that hold the company accountable?

– What actions do you plan to take to comply with the need to provide transparent water and air pollution measures and studies in which communities can participate actively and autonomously?

– The different reports on the activities and behaviour of the company have not brought about any tangible change in the situation of the communities. When will BHP next go to La Guajira?

– Like any mining company, Cerrejón must present its closure plan in view of its possible cessation of operations in the near future. What are the measures of prevention, minimization and control of the effects on health, the ecosystem and the local economy in this closure plan? When will you present this plan to local communities and national and international society? Does the company envisage an action plan for a possible transition period within the framework of the cessation of operations?

43. “The communities of La Guajira and different sectors of civil society at regional, national and international level demand an end to the expansion of the mining frontier in La Guajira.”

44. Andrew Mackenzie said that he had discussed all these points with several communities when he had visited La Guajira. He said that people were broadly satisfied with the way Cerrejón behaves. It had improved its behaviour since BHP became involved. [That is undoubtedly true; unfortunately, it isn’t saying much.] BHP had driven standards on Free Prior Informed Consent (FPIC) higher through the ICMM. What BHP would choose to do is not necessarily what the Colombian government wants to do, and it is the government that determines the conditions of the mine lease. He said, “We do a lot on water.” Most (more than 92%) of the water used in the mine is not suitable for human consumption. “We are very sensitive to the use of drinking water. We comply with legal rulings even if we don’t agree with them.” [What an extraordinary statement! Which of us is not expected to comply with legal rulings even if we do not agree with them? Mr Mackenzie appeared to think that this was evidence of the company’s great-heartedness.] Maybe there was more that the company could do regarding working with communities on air pollution monitoring, but a lot was already happening.

45. He said that all BHP’s mines had mine closure plans. He undertook to check whether the Cerrejón mine closure plan had been adequately disclosed.

46. He said, “We bring huge economic benefits.” Many thousands of people found jobs at the mine, and “we could do more if we could expand, but we would only do that if local people want it. We have gone above and beyond on all issues, to the satisfaction of the majority of people.”

Standards in Joint Ventures

47. Janet Rowley, representing the Local Authority Pension Fund Forum, spoke about the risks of Joint Ventures. Operations at Samarco and Cerrejón are Joint Ventures. BHP’s Joint Venture partners may have health, safety and environmental standards which are lower than BHP’s own standards. Would BHP work with its partners to ensure that their standards were raised?

48. Ken MacKenzie said that BHP had learnt lessons from Samarco and taken action. Oversight of all the company’s non-operated projects had been centralised. BHP had developed international standards regarding Joint Ventures which were the same as BHP’s own standards.

49. Andrew Mackenzie said that the company would comply with ICMM standards – BHP had driven these after the disaster at Samarco. He could not say that the Samarco disaster could have been prevented if Joint Venture governance standards had been different, but there is now a demand for more information about Joint Ventures and within ICMM there is a more active discussion about how all ICMM standards can be adopted in all Joint Ventures. Previously this had not been given the emphasis that it actually needed.

Why Resolution Copper is a bad project

50. Roy Chavez introduced himself as a lifelong resident of Superior, Arizona. At various times he had served both as Mayor and as Town Manager. He was a former miner and had worked for BHP in Arizona in the past. He was concerned about the Resolution Copper project being pursued at Oak Flat, Arizona, by Rio Tinto and BHP.

51. Roy spoke about the problems of land subsidence caused by block cave mining. In this case, a very large amount of ore would be removed a mile beneath the surface and the result would be that the surface would collapse into the resultant void. The area was prime ecological habitat and sacred to the San Carlos Apache people. It was also widely used by many people for recreational purposes. Job creation would be minimal compared to other forms of mining, and the mined material would be exported, probably to China, for processing. A toxic tailings dump would be created, threatening the well-being of local residents. Would BHP be willing to withdraw from this ill-conceived project?

52. Ken MacKenzie said that Resolution Copper was being managed by Rio Tinto and that detailed questions should be directed to them.

53. Andrew Mackenzie said that there was a protocol that BHP would not comment on something that someone else was operating [although they had just spent a considerable amount of time doing precisely that]. But in this case BHP simply had an option. No decision had yet been taken to go ahead. Critical to the project is arriving at a land exchange. The project cannot go ahead without it. The project would require block caving and this would disturb the surface. The site would reflect what the company had learnt about tailings dams. The company would not rush things. It does want the project to be conducted in the spirit of Free, Prior Informed Consent (FPIC). Rio Tinto would surely agree with this, and it is their intention to do so. Many people are frustrated that the project has not yet gone ahead. At this stage, not all approvals have been granted. BHP would make sure that Rio Tinto follows FPIC processes and even then BHP would evaluate whether or not to continue with the project.

Opposition to mining in Ecuador

54. Sebastian Ordonez, from War on Want, read a statement from the Mayor of Santa Ana de Cotacachi in the province of Intag in Ecuador.

Cotacachi, October 10th 2017

Mr. Andrew Mackenzie,
CEO, BHP Billiton

56. Dear Mr. Andrew Mackenzie,

I extend a cordial greeting from the Autonomous Government of the Municipality of Santa Ana de Cotacachi.

57. I am writing this letter in order to alert you about the official position of our government regarding mining in our territory. This territory includes the whole area of Intag, Ecuador, where, so far, your company owns five mining concessions covering a total of 22,570 hectares affecting five protected areas.

58. I respectfully request that, as CEO of BHP Billiton, you take into account the following legal arguments and respect our decision to keep the Canton Cotacachi free of mining. Failure to do so will indicate your disrespect for the decisions of our autonomous government, as well as the decision of the great majority of civil society in Canton Cotacachi, and will put at risk your investments in our region.

59. Apart from the political will of the population not to allow the expansion of mining in the
Canton of Cotacachi, our canton currently has several legal tools prohibiting and / or rejecting large-scale mining. The most recent of these is the resolution that rejects mining itself, which was unanimously approved by the Municipal Council in July 2017.

60. Apart from the aforementioned resolution, our canton is governed by the ordinance that declares Cotacachi an ecological Canton, a legal instrument in force since April 2001,
which is published in the civil registry of the nation of Ecuador. This ordinance contains several clauses designed to protect the water and biodiversity of the Canton of Cotacachi, and to promote sustainable development. Therefore, mining would openly violate the ordinance.

61. I take this opportunity to point out that mining is not included in our plan for territorial development, a legal and mandatory instrument, written together with the communities and other local governments of our area, to guide and control the development of our territory.

62. In addition, we note that mining has been strongly rejected annually by civil society in our Canton – and especially by residents of the Intag area since the first Assembly of Cantonal Unity held in 1996. These are participatory spaces that allow civil society to raise their concerns and needs, which the Canton then turns into concrete policies and actions for our local government.

63. Finally, we report that your five concessions in the Canton of Cotacachi affect the following protected forests and buffer zones: a part of your concession Santa Teresa 2, would affect the buffer zone of the Cotacachi – Cayapas Ecological Reserve, one of the most biodiverse national protected areas in Ecuador and in the world. The same concession affects two protected forests: Siempre Verde and El Placer-La Florida. The Sabaleta 2 and Sabaleta 3 mining concessions, on the other hand, affect the entire protected forest of Cebu. All these protected areas have their respective declarations issued by Ecuador’s Ministry of Environment and are an integral part of our strategy to conserve our renewable resources and promote sustainable development. The protected reserves, it should be noted, are part of the initiative of the Cantonal Government of Cotacachi and the Provincial Government of Imbabura, to build a new Geo Park in the north of the country – a large and inclusive conservation unit.
In view of the foregoing, I kindly request that you withdraw your concessions from our Canton as soon as possible, and respect the will of the communities and our local government.

64. Sure to have your favourable attention on this request, I subscribe to you.

Sincerely yours,
Jomar Cevallos Moreno
Mayor, Decentralized Autonomous Government
Municipality Santa Ana de Cotacachi

65. Andrew Mackenzie said that the statement was news. BHP had not been in Ecuador for long. Others in Ecuador were encouraging the company to get involved. At present, all the company wants to do is some exploration, and if anything were to be found, a whole range of discussions would then need to be had. If copper is found in sufficient quantities, the local communities can then decide what to do regarding their economic development. [Given that they have clearly already decided that they do not want mining, and have expressed this view with some force, considerable effort would be needed to subvert their decision. I wonder what this effort might involve. Efforts in other places, by other people, to persuade people to drop their opposition to mining, have not always been very pleasant.]

Responsibility at Resolution Copper

66. Roger Featherstone, of the Arizona Mining Reform Coalition, spoke further about the Resolution Copper project. He said that the process through which the land exchange had been passed through the US Congress was shameful, as it had been added to a ‘must-pass’ National Defence Bill. The tailings dam planned for the mine was to be engineered in exactly the same way as the failed dam at Samarco but would be four or five times the size. Other and better possibilities included re-opening a nearby BHP copper mine which had been closed a few years ago. The town of Queen Valley would be four miles downstream from the tailings dump site. Roger said that a year and a half previously he had attended a Rio Tinto AGM and had brought an agreement from the citizens of Queen Valley, asking Rio Tinto to take responsibility for any damage done as a result of mine development. Rio Tinto had refused to sign this agreement. It had been revised as an agreement for BHP to sign. Would the company sign it? Roger made the agreement [see Appendix below] available to the Board.

67. Ken MacKenzie said that it would not be appropriate for BHP to sign such an agreement, as Rio Tinto is the operator of the project.

68. Andrew Mackenzie said that the project had not yet been approved. It was a potential operation, an option. Options sometimes do not materialise, or they totally change shape. The tailings dam site has not been determined and “we would evaluate other sites if we decided to go ahead.” Roger had been looking at old designs: if the project were to go ahead, the tailings dam design would take into account what had been learnt in recent years. Andrew Mackenzie said he took the point about the way the land exchange had been done, but there were always people for and people against proposals, and “we have to find out what is the will of the people, and if people do not want us, it is unlikely we’d go ahead, but lots of people do want it.” But this was a Rio Tinto responsibility, he said, and it would not be appropriate for BHP to “sign a piece of paper”.

Who’s running BHP?

69. Shareholder Anthony Lee asked who was currently running BHP. Was it the two Mackenzies and the Board, or was it Paul Singer [CEO of investors Elliott Management]? He said that the AGM was being held in Westminster but that four members of the Board held no shares in BHP Billiton plc, only in the Australian entity, BHP Billiton Limited. Why do some Board members not hold shares in the company? If BHP is to be registered in the UK then all Board members should hold shares in BHP Billiton plc.

70. Ken MacKenzie assured Mr Lee that it was the two Mackenzies who were running BHP. The consultation had not been a polling exercise. The Board makes decisions and communicates those decisions to others. Regarding shareholding, every director has to hold shares equivalent at least to the value of a year’s annual fees in either BHP Billiton plc or BHP Billiton Limited.

Tailings dams

71. Researcher Richard Harkinson spoke again. He said that the Board had brought up the significance of the ICMM, of which it was a leading member. Andrew Mackenzie had suggested that BHP drove policy there. ICMM had not discussed tailings dams for eight years, and there had been eight significant tailings dam failures since 2014. ICMM is advisory. Their suggestion is that companies make Boards more responsible. The UNEP report stated that “Tailings dams are complex systems. They are also unforgiving systems, in terms of the number of things that have to go right. Their reliability is contingent on consistently flawless execution in planning, in subsurface investigation, in analysis and design, in construction quality, in operational diligence, in monitoring, in regulatory actions, and in risk management at every level. All of these activities are subject to human error.” Do any BHP Board members have a grounding in environmental risk management? The Local Authority Pension Fund Forum had expressed difficulty in understanding how BHP operates in Joint Ventures. Representatives from Arizona had spoken about problems there. The tailings dam facility there would inevitably be upstream of lived-in communities. The size of the dam would be much greater than at Samarco. How will BHP make its Board responsible in tailings dam management?

72. Ken MacKenzie replied that the previous year external experts had conducted a review of all the company’s dams and had determined that all of them were safe and stable. (Richard Harkinson called out, “Publish it!”) The study had been shared within ICMM. BHP would continued to work on this in 2018.

Executive pay

73. Ken MacKenzie continued that, regarding Anthony Lee‘s earlier question on Item 7 of the AGM agenda, Andrew Mackenzie had received no bonus in the year of the Samarco disaster. Director Carolyn Henson, of the Remuneration Committee, added that Andrew Mackenzie’s base salary had not changed since 2015 when he was appointed, and that was a 25% cut from that of his predecessor. With his bonus, this year he would receive $4.5 million. [Where I was sitting, we were tempted to shout out that we wondered how he could get by on this level of pay, and to ask if he would be using a food bank; but we refrained from doing so.]

Resolutions 22 and 23

74. Ken MacKenzie then spoke about Resolution 23, which the Board opposed. He said that by the end of the calendar year, the company would publish its review of its membership of industry bodies and a comparison of those bodies’ positions on various matters and those of BHP itself.

75. Daniel Wiseman, of law firm Client Earth, read out a statement prepared by the Australasian Centre for Corporate Responsibility, who assisted a group of 100 Australian shareholders in BHP Billiton Limited to propose resolutions 22 and 23, both opposed by the Board.

76. He said: “Resolution 22 is required under Australian law to give a group of shareholders the right to propose advisory resolutions for consideration at the company’s AGM. Such resolutions are allowed under company law in the US and the UK but are illegal in Australia. Such advisory resolutions give the Board an insight into what shareholders think – in a formal, democratic fashion – and we commend the resolution to our fellow shareholders as a way of showing support for equality of shareholder rights around the world.

77. “Turning to Resolution 23: we note that the Board states in the Notice of Meeting its support for some elements of this advisory resolution. ACCR commends and thanks the board for its commitment to a review of industry body memberships.

78. “The shareholders that requisitioned this resolution are concerned by the misalignment between our company’s industry-leading position and actions on climate change, and those of industry groups of which it is a member.

79. “In Australia, we have had a decade of climate and energy policy chaos, caused in large part by the influence of industry lobby groups, funded by our company, whose activities have impinged upon and undermined national policy settings. Just this week, the Australian government, pushed by the Minerals Council of Australia, abandoned the central recommendation of its Chief Scientist to set a Clean Energy Target in order to implement Australia’s commitments under the Paris Agreement. Our company is the largest funder of this industry group, whose positions on climate change and the continued use of coal in Australia are in direct contrast to those of our company.

80. “Misalignment between the company’s position as represented to shareholders and the activities of industry groups of which it is member have the potential to cause reputational risk to the company, as well as to damage its financial interests. In this context, a review alone is insufficient. The Australian shareholders who have proposed this resolution believe that an objective terms of reference, with additional transparency and a threshold, albeit a high one, for termination of memberships where misalignment is identified, is required.

81. “To this end, we commend resolution 23 to our fellow shareholders.”

82. Daniel then asked, “Do you believe that national policy settings are important in curbing climate change, and, if so, will you terminate funding to groups which do not align with the company’s climate position and may cause damage to our company’s interests?”

83. A representative of HSBC then asked a question broadly supporting resolutions 22 and 23 and focussing on whether the review into industry body affiliations would consider governance issues in those bodies.

84. Chairman Ken MacKenzie said that the company accepted that it should be looking anew at governance around industry association membership. Only BHP speaks for BHP, and the company’s policies are on its website. By 31 December the company would compare its climate policies with the policies of industry associations of which it is a member. There are benefits to membership of trade associations, for instance regarding health and safety or water stewardship. But on climate issues, BHP would compare positions, publish its findings and then decide whether to remain members or pull out. BHP would also look at disclosure of payments to industry associations.

85. Carlota Garcia-Manas, representing the Church Commissioners and the Church of England Pensions Board, noted that they would abstain from voting for resolutions 22 and 23 because of the particular wording of the resolutions but they supported the spirit of the resolutions. They accepted the commitments which the company had already made. Would BHP end its membership of associations at odds with the company’s own climate position? Would BHP do an annual review of its membership of industry associations?

86. Ken MacKenzie reiterated that BHP would publish its review and will announce the actions that it had decided to take.

87. Daniel Wiseman asked whether the Board believed that national policy settings were important. Would the company stop funding associations with climate policies at odds with the company’s position?

88. Ken MacKenzie said that the company would take a look at misaligned policies and would either stay, go or stay with conditions. BHP’s position on climate change is that the company accepts the science on climate change. Climate change has to be limited while affordable energy is also provided. The effects of climate change have to be mitigated. BHP wants a price to be placed on carbon. Nations need policies on the stability and security of energy. BHP is ‘technology neutral’ and is involved in both fossil fuels and renewable energy.

89. At this, the meeting petered out, and we sallied forth into the outside air, glad to get out of that vast, enclosed temple of money, that theatre of double-speak, where we are told that progress is being made on restoring the Rio Doce in Brazil when community members from the area tell us that ‘the river is dead’; that the company wants to ‘do the right thing’ while unarmed elderly farming women are removed from their land by armed riot police in Colombia; and that correct procedures will be followed in Arizona when the necessary land exchange was smuggled through the US Congress in the dead of night as a rider to a Bill about National Defence. So, for us and our friends, the struggle continues…

 

APPENDIX

Letter to shareholders in BHP Billiton plc (BHP) from the Movement of People Affected by Dams, supported by the Churches and Mining Network

Thursday 19 October 2017

The Movement of People Affected by Dams (MAB) is a Brazilian social organization that has a 26 years history. It is organized in all regions of Brazil, providing information and organizing people affected by dams. MAB has been operating in the Doce river basin for 25 years.

We denounce the rupture of the Fundão Dam, owned by Samarco Mineração SA, a joint venture of Vale Mineração SA and BHP Billiton, on November 5, 2015. It resulted in 622 km of destruction caused by mining tailings mud, from the Mariana city region, in Minas Gerais state, to the mouth of the Doce river in Regência, district of Linhares, Espírito Santo state. It is the biggest crime committed by the mining industry in Brazil, with about 50 million cubic metres of tailings dumped into the local ecosystem.

Together with the international network Churches and Mining and with the support of London Mining Network, we bring the indignation of the families of 19 people killed by this crime, of a mother whose baby died in her womb due to the power of the mud flow, and of others who lost their lives after the dam failure due to illness, sadness and lack of assistance.

We denounce the Renova Foundation, created by BHP Billiton and Vale Mineração S.A, which acts not to protect the rights of those affected but as an instrument to delay remedy and create a farce called “Social Dialogue”, which is the multiplication of meetings that solve nothing, simply making a pretence of participation by those affected.

Given to this scenario, the affected people insist that BHP Billiton:
– Accelerate the resettlement of Bento Rodrigues, Paracatu de Baixo, Gesteira and other affected communities where resettlement is necessary. BHP has not even submitted deadlines for construction work as more than 350 families are still homeless two years after the dam burst.
– Announce the end of the Mediated Indemnity Program (PIM), which addresses issues related to material and moral damages as well as problems caused by the lack of water supply in large cities along the River Doce basin. This programme individualizes the process, generates mistrust among families, simulates a mediation that does not really exist, puts in the hands of companies the power to decide deadlines and values, ​​and damages the autonomy of the people affected, who have the right to make their own proposals according to their own criteria and methodologies to achieve just reparation.
– Indemnify fishermen and artisanal miners throughout the Doce River basin, including the Traditional Communities, which have not yet received any compensation, and meet the claims of the Indigenous Peoples affected in accordance with international law.
– Effectively solve water supply and water quality problems in all communities and cities in the River Doce basin.
– Permanently solve the issue of job and income generation in the entire region affected in response to the serious social crisis generated among the local population, especially among freshwater and saltwater fishermen, as well as rural producers.
– Effectively recuperate the River Doce basin from the environmental impacts suffered, restoring fauna and flora, marine and fresh water aquatic life. It is urgent to re-establish life in its all aspects.

Day by day, we will strengthen our organization and grow our struggle, because we understand that this is the only way to achieve effective rights and dignity. We hope that this Assembly, gathered annually to celebrate its profits, will not forget all of us who are covered in mud and outraged by the death and neglect we have experienced in distant Brazilian lands.

Water for life, not for death!

 

AGREEMENT TO
INDEMNIFY AND HOLD HARMLES
Between
BHP Billiton
And the residents of QUEEN VALLEY

This Agreement (“Agreement”) is entered into by and between BHP Billiton, a Anglo-Australian corporation, located in Melbourne, Australia, and London, England, and a parent corporation of Resolution Copper Mining Company, a Delaware limited liability company, including any successor, assign, affiliate, member, or joint venture of Resolution Copper Mining, LLC (as defined by P.L. 113-291, § 3003) or any contractor retained by BHP Billiton or Resolution Copper Mining, LLC, and the community of Queen Valley, a census-designated place located in Pinal County, Arizona and its residents, utilities and other entities as defined herein (“Queen Valley”) (collectively “Parties”).

Section 1: Recitals

The Parties hereby agree as follows:

1.1. This Agreement shall apply to and govern any and all of BHP Billiton’s intended land exchange activities codified at P.L. 113-291, § 3003 and Mine related activities as defined herein.

1.2. BPH Billiton agrees to and assumes full liability for any and all damages to the residents of Queen Valley, the businesses of Queen Valley, the utilities of Queen Valley, and the Queen Valley Golf Course as a result of land exchange and any and all Mine related activities.  BPH Billiton shall defend, hold harmless and indemnify Queen Valley from any and all liabilities, losses, damages, suits, claims, judgments, fines, penalties, demands or expenses, including, but not limited to, as may be reasonably determined to be necessary by Queen Valley (a) all reasonable costs to investigate, correct, clean up or mitigate any harms of any type experienced by Queen Valley due to the legislated land exchange or any Mine related activities; and (b) all attorney’s fees, court costs, expert fees, and consultant expenses incurred by or on behalf of Queen Valley as the result of the land exchange codified at P.L. 113-291 § 3003 and/or any of the Mine related activities performed by BPH Billiton or its contractors.

1.3. Regardless of any provision of State or Federal law, BPH Billiton shall not interfere with or injure the water rights, physical water supply or the water quality of water relied upon by Queen Valley (whether surface or groundwater) for any purpose.  BPH Billiton expressly assumes full liability for such injuries in accordance with Section 1.2 of this Agreement.

Section 2: Definitions

2.1. “Queen Valley” means the community of Queen Valley, the individual residents of Queen Valley, the businesses of Queen Valley, the utilities of Queen Valley, and the Queen Valley Golf Course.

2.3. “Mining related activities” means those activities outlined in P.L. 113-291 § 3003, and all activities outlined for the proposed mine described in the General Plan of Operations, Resolution Copper Mining (“Mining Plan”), initially submitted on November 15, 2013 and subsequently amended or supplemented, and any other mine related actions of any kind, including, but not limited to, the “granting of any permits, rights-of-way, or approvals for the construction of associated power, water, transportation, processing, tailings, waste disposal, or other ancillary facilities” as described in P.L. 113-291 § 3003.

Section 3: Miscellaneous Provisions

3.1. Parties agree that the terms of this Agreement shall be immediately binding, and shall be retroactively effective to the date of the passage of P.L. 113-291 § 3003 (December 19, 2014). Any future agreements entered between Parties shall be memorialized by adopting an Addendum to this Agreement.

3.2. If any provision of this Agreement is held to be invalid or unenforceable, the remaining provisions shall continue to be valid and enforceable to the full extent permitted by law. If any such provision or part is stricken in accordance with this Section, the stricken provision or part will be replaced by such trier of fact, to the extent reasonably possible, with a legal, enforceable and valid provision that preserves the intent of the Parties reflected in this Agreement, and comes close to expressing the intent of the stricken provision or part.

3.3. This Agreement shall be governed under Arizona Law.

 

 

____________________________________ _________________________________
Representative, DATE
BPH Billiton

 

____________________________________ __________________________________
Authorized DATE
Official,
Queen
Valley, Arizona

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