Full report on the AGM by Richard Solly, Co-ordinator, London Mining Network
1. There is a webcast of the introductory speeches by Chairman Ken MacKenzie and CEO Andrew Mackenzie at https://edge.media-server.com/m6/p/gesyeeo5 (registration is necessary). BHP no longer posts a video of the whole AGM on its website, presumably to avoid publicising the many criticisms against the company: the question and answer session on the Annual Report was entirely dominated by challenges to the company for its record on human rights, including indigenous and worker rights, and environmental impacts, including climate change. As last year, there was a ban on the use of all electronic devices during the AGM so I was unable to type notes straight on to my laptop. I assume that this is also intended to ensure that the publication of a timely report on all that was said at the AGM is rendered more difficult.
2. In his opening remarks, company Chairman Ken MacKenzie spoke briefly about the Samarco tailings dam collapse in Brazil in November 2015, saying that the companies involved, including BHP, had agreed with the Brazilian government to give even more help to communities (suggesting, of course, that the help given so far has been adequate, even generous, rather than minimal and inadequate). He spoke of the ‘tragedy’ of Samarco, as though it were something for which the companies were not entirely responsible.
3. Company Chief Executive Officer (CEO) Andrew Mackenzie said he looks forward each year to the London AGM. (I do not share that feeling…) He said that safety is the top priority for the company. He regretted the death of two colleagues at BHP’s operated assets in 2017.
4. He said there had been progress in the recovery of communities and ecosystems affected by the Samarco disaster. He had visited the Samarco operations in May and been impressed by the technical expertise, compassion and dedication of the staff involved. They were working closely with the Renova Foundation (established by the companies involved to handle compensation and rehabilitation in the wake of the disaster). Community participation is key, he said. Three communities need to be relocated and rebuilt. It is expected that this process will be completed by 2020. Almost 10,000 financial assistance cards have been given to those affected, including those making a living by fishing. Plans for the rehabilitation of 40,000 hectares of affected land are in their final stages of preparation. He said that BHP is “determined to do the right thing”.
5. He said that investment in host communities is key to what BHP does. The company is committed to openness. A water report was launched in August, and this represented a step forward in water governance and quality.
6. As a major producer and consumer of fossil fuels, he said, BHP accepted responsibility for limiting its own carbon emissions. It would meet its targets this year and reach net zero emissions by the second half of this century (a mere twenty or thirty years after net zero emissions need to be achieved by everyone if we are to avert an ecological catastrophe of civilization-destroying proportions, so that’s alright then.) The world can count on BHP to show leadership on this, he said. (Phew, what a relief! We can all sleep soundly in our beds – until they are blown away by increasingly powerful winds or washed away by increased torrential rainfall or rising sea levels.)
7. And then he broke the news that many shareholders wished to hear – indeed, for some shareholders present it appeared to be the only thing they care about. The company had declared a record final dividend to shareholders. At least those who live in temperate metropolitan countries and who will die before the worst impacts of climate change kick in can spend a few more years enjoying the wealth extracted from the labour of mine workers and land taken from indigenous, African-descent and peasant communities. “O pardon me, thou bleeding piece of earth, that I am meek and gentle with these butchers!” as Mark Antony says over Caesar’s murdered body in Shakespeare’s Julius Caesar, Act III, scene I – though I can’t think why this quote comes to mind in the context of a mining company AGM.
8. Andrew Mackenzie noted that BHP now has only 13 operated assets, down from 30 three years ago, and that this simplification of its structure was an advantage. He said that protectionism undercuts confidence and destroys productivity. (He did not mention any particular President of any particular country in this context.) However, he seemed optimistic: urbanisation will increase the demand for electrification and fertilisers, leading to increased demand for BHP’s copper and phosphates, and BHP will capitalise on the shift to a low-carbon future even while it profits from the earth-shattering death throes of the fossil fuel economy (I paraphrase).
9. Finally, Andrew Mackenzie noted that progress had been made towards gender balance in BHP’s work force and that the company wants to increase female leadership. There is more flexible working in the company now than before, the gender pay gap is being addressed and female recruitment in the past year had reached 40% and the company is aiming for 50%. Jolly good. Perhaps having more women involved will reduce the amount of destruction; though casting my mind back over the last 40 years’ worth of British Prime Ministers, I doubt that the connection is automatic.
The Chairman then called for questions.
Samarco tailings dam disaster, Brazil
10. Paul Robson, of London Mining Network, asked about the Fundao Tailings Dam collapse at the Samarco operations in Brazil in 2015. He said: “The remarks by the Chair and the CEO had a strong focus on safety. There was no mention, however, of tailings dams – despite the fact that tailings dams are the principal safety issue facing the mining industry and that a tailings dam of this company suffered a catastrophic collapse three years ago in Brazil. Can you give this meeting a clear statement of the steps being taken to improve the safety of tailings management?
11. “We are approaching the third anniversary of the catastrophic collapse of the Fundao tailings dam in Brazil. Fifty million cubic metres of mining waste entered at high speed an already polluted river basin. There is not yet a comprehensive scientific report of the impacts of this disastrous event. It is curious that we do not have such a statement three years after the disaster. The company’s annual report presents some isolated results without giving the source and with no context.
12. “Renova has contracted the International Union for Conservation of Nature as advisors on environmental recovery. The main recommendation is that a comprehensive scientific assessment of the impacts of the dam collapse be carried out and published with urgency.
13. “Does your company accept the recommendations of the IUCN report? Can your company make a commitment that there will be a comprehensive scientific assessment of the impacts of the dam collapse and resulting risks by this time next year? Can you tell us now what procedure is being followed to carry out such a comprehensive scientific assessment? Who is doing the work? Where can we read about it?”
14. Rather than responding to Paul’s question straight away, Chairman Ken McKenzie asked for all questions on the Samarco disaster to be asked so that the company could answer them all together – or perhaps so that they could avoid answering the more difficult questions while ensuring that the questioners could not easily insist on receiving an answer.
15. Leticia Oliveira, from Mariana, the community in Brazil closest to the Samarco iron ore mine where the Fundao tailings dam collapse took place, and representing MAB, the Movement of People Affected by Dams, said: “It has been almost three years since the Samarco crime in the Rio Doce basin took place, and only one out of three hundred houses has been rebuilt for affected communities. I have some questions regarding this situation.
16. “You are always creating rules and categories that exclude some affected people from the process of reparations. To this day, almost three years since the crime, there are many people who have not been recognized, especially women, fisher folk, people who collect gold from the river and people who have been left without access to water at some point. Non-recognition creates more problems and more stress for those who have been affected, it means making them invisible and re-victimizing them. When will you recognize all of the different types of people who have been affected by the crime?
17. “My second question is very simple: When will people be able to have their lives back? When will fisher-folk return to fishing, when will farmers return to cultivate the land, when will the laundresses return to wash the clothes on the river, when will people have their houses back? Or will these people not be able to do that, will they have their way of life back? And will you compensate these people for the loss of their way of life, until they are able to get it back?
18. “My third questions is regarding the dam that is being built in the municipality of the Rio Doce, with the tailings removed from Candonga – Do you, BHP, have control over the new dam? People are very worried about this new dam being built over them, there have already been some problems in the tailings accumulation area in last July. Another dam, really?”
19. Lucineide Soares, from Brazilian trade union CNQ/CUT, said she represented workers from Samarco. Redundant workers should also be considered victims of the dam failure, but the Renova Foundation does not recognise them as victims and they are receiving no systematic support. They had suffered loss of work and health impacts including depression. What would BHP do for these workers? Would they be dismissed?
20. Ken MacKenzie replied: “Regarding safety of tailings dams, the Samarco dam failure will stay with us for a very long time. We are very sorry for the impacts, especially the loss of life, but we are committed to full and fair compensation for all the impacts. We are supporting the Renova Foundation in addressing things in a timely way. In 2016 there was insufficient consultation with affected people. The increased involvement outlined in the settlement will address this. New governance structures are strengthening involvement by communities. The Board originally included seven people from the companies and government and two from communities. It now includes three from communities. The Board is to monitor when the programmes are complete.”
21. He explained that each ‘chamber’ within the Renova Foundation has now been expanded to include two people from the communities. The ‘Forum of Observers’ includes representation from affected communities, including people with traditional livelihoods. One of the special advisers is supporting communities in dealing with Renova. There has been significant progress in the past twelve months. Environmental recovery is progressing well. The water quality standard was met 12 months in advance and 50% of the people due compensation have received it. “We want to assure full and fair compensation and reconstruction,” he said. “In 2016 we conducted a comprehensive review of all significant tailings dams using external experts and this concluded that our dams are stable. We have shared all the lessons widely including through the ICMM [International Council on Mining and Metals]. In the last 18 months there have been more external reviews showing that all our dams are safe and stable. It remains a focus to restart Samarco but only if it is safe, economically viable and has community support. It will require licenses from state and federal bodies and will involve community hearings.”
22. Andrew Mackenzie added: “Regarding tailings dam management, we have led the work through the ICMM, of which I am deputy chairman. We are calling for a more rigorous review process throughout the industry. Our dams are safe and stable but we are interested in the science of tailings dam management. How can we continue to use the lessons and make things safer? How can we avoid tailings dam failure in future? We are investigating this. It is high on the agenda and the ICMM. Regarding the consolidation of technical impact studies, we have read the IUCN report, and it is a good basis for work. We want Renova to work with them to fix the terrible consequences of the disaster.”
23. He said that the company would work along the lines of the agreement with prosecutors. “We are providing funds to ensure access to the best possible experts and mediation. We are funding this under the prosecuting authorities. On the rebuilding of communities, we share the desire to make fast progress. Ground clearing is necessary before the resettlement of Bento Rodriguez. The delay is because of our inability to get all the necessary permits to build a town, to clear the area, and agreement on the town plan. We have to work on the other two communities, too, Paracatu and Gesteira. We have purchased land to reconstruct but the licensing process is slow. At Gesteira the landowner is asking much more than the market value of the land. We are at stage 3 for the biggest community, stage 2 for the next community, and stage 1 for the smallest community. We will have to follow all legal and regulatory processes but are pushing hard to finish it as quickly as possible.
24. “Regarding Candonga,” he continued, “the river flows into the Rio Doce. It used to be a significant hydro dam. It held up the majority of the tailings from Samarco, but is now filled with sediment. We must decide with the authorities how much to move and how to make it safe. The tailings are inert, they are no creating a prolonged pollution issue so it may be best to leave them there. But we have moved some, putting them behind secure walls to allow them to dry out. There have been some problems and we have stopped work while we determine the best way forward.
25. “On compensation, a comprehensive compensation is a core part of the agreement made after the disaster. The recent reform of the agreement includes even more community compensation. This has been widely to make sure that all people who lost out will receive fair treatment. Three hundred people are working for Renova to make sure that people receive compensation. So far 60% of applicants have received compensation. The number of people may increase. It has to be fair, full and considered on an individual basis, supported by independent advisers, and has to be equal. A lot of people are unable to fish but we have worked to compensate them with the cost of living plus loss of business. Payments are on their way. Regarding the recognition of women, all people are being treated equally. There is the custom that the head of household gets the compensation and most of these are men, even if we don’t agree this should be so. Regarding workers, one of the humanitarian issues we must confront is that the disaster has removed the possibility of well paid livelihoods at the mine. This is why we favour a restart but this is complex and we can’t push on without permits. Some work has started to allow the restart to happen, but we want to do it safely and sustainably.”
Cerro Matoso, Colombia
26. Louise Winstanley of ABColombia, working on behalf of development agencies CAFOD, Christian Aid, Oxfam, SCIAF and Trocaire, said: “I would like to address my question to the historical legacy of BHP Billiton in Colombia in relation to one of the largest open pit ferronickel mines exploited by BHP, the Cerro Matoso mine. This mine was spun off in 2015 to South 32. I am aware that BHP has passed all its obligations and liabilities on to South32, but given the importance that BHP places on a good reputation and its desire to do the right thing – it was good to hear Andrew Mackenzie earlier re-iterating BHP’s determination to do the right thing – I want to ask that BHP not walk away from its historical responsibilities.
27.”The Cerro Matoso mine is situated in the territory of indigenous peoples at risk of – according to the Colombian Constitutional Court – physical and cultural extinction. Whilst BHP owned this mine it was made aware by the communities and NGOs of – in addition to other things – the life-threatening diseases linked to mineral exploitation they were experiencing. At that time the community were discussing with BHP about paying for an independent medical study. This medical survey was finally undertaken by the Institute of Legal Medicine and Forensic Sciences and the results were presented to the Colombian Constitutional Court. The report indicates nickel levels in blood and urine samples of indigenous and Afro-descendant communities living around the mine and up to 15 km away in amounts significantly – and I really do mean significantly – higher than World Health Organisations (WHO) recommended levels. The information presented to the Constitutional Court also demonstrated air pollution, soil and water contamination. The Indigenous community members have been diagnosed with serious health complaints, like lung cancer and other deadly diseases.
28. “Will BHP accept its moral responsibility to pressure its successor to compensate with communities for 30 years of damage to their health? In considering this it is important to note that the constitutional Court ruled in December of last year that that Cerro Matoso must address the health needs of the community and it ordered the company amongst other things to:
• pay for medical bills
• obtain a new environmental license, as the one it was operating under did not come up to constitutional standards – and this was also the case when BHP was operating the mine
• initiate procedures to address the environmental impacts of its operations and to decontaminate the ecosystems they had polluted (air, soil and water) and
• set up an ethnic development fund for the community.
29. “After decades of suffering from toxic waste emissions Indigenous Peoples around the Cerro Matoso Mine are dying through lack of medical care. Although the Court has recently – at the request of South32 – nullified the damages awarded – note – not on medical grounds but on a legal technicality – will BHP respond to its moral obligations to address the health issues it left behind after spinning off South32 and pressure your successor to respond to this with compensation for the community? I note the Chairman, Mr MacKenzie, said he was happy about contributing to communities where BHP operate, the indigenous Peoples of Cerro Matoso have been strung out by BHP waiting for years for the promised medical survey.”
30. Ken MacKenzie replied that since 2015 Cerro Matoso had been part of South 32. “Cerro Matoso is owned and operated by South 32 and you need to raise these issues with South 32,” he said. “It is not appropriate for us to comment. When Cerro Matoso was part of BHP it was held to the same standard as any other operation in BHP. We always apply our own standards and these are often more strict than the local regulations.” At the time of BHP’s divestment, he said, the nickel exposure standard was twice as strict as the Colombian standard. (In other words, the answer is no: BHP will not respond to its moral obligations.)
Cerrejon Coal, Colombia
31. Misael Socarras, from the indigenous Wayuu village of La Gran Parada, one of the many communities affected by the Cerrejon Coal mine (of which BHP owns 33%) in the province of La Guajira, Colombia, said: “I am from La Gran Parada, in La Guajira, from the Ipuana family, and I live close to the train from the mine to the port.
32. “My first question is about water. How do you plan to repair the damage done to the water sources of La Guajira, given that there are already 17 streams that have dried up? And how do you plan to resolve the uncertainties of the constitutional court judgement on the diversion of the Bruno stream?
33. “My second question: Cerrejon has produced irreparable damages, cultural, spiritual and socio-cultural, to the Wayuu and Afro-descendant people. There have been displacements from ancestral territory. We are very worried about the spiritual impacts and the profanations of sacred places. How can you repair this damage that you have done to the Wayuu and Afro-descendant people? There is an impact on dreaming. Our spiritual doctors cannot dream and cannot guide the people as a result. The spirit of water is no longer in the water. You are displacing the spirits. This is very important to us. What are you going to do about it?”
34. Ken Mackenzie called for all questions on Cerrejon before he would answer.
35. Rosa Maria Mateus from Colombia began her speech by saying ironically that the people in charge of the company looked very well seated on the platform, making reference to their interest in demonstrating their power from the physical layout of the AGM. She went on: “My name is Rosa María Mateus Parra, and I am part of the Jose Alvear Restrepo Lawyers’ Collective, an organization that defends human rights in Colombia. We are here because we accompany the communities of La Guajira that have been and continue to be affected and damaged by the Cerrejón mine; and we have verified your responsibility in the damage and the lack of reparation.
36. “The coal from which you make your profit is coal smeared with blood, with the tears of women who mourn their territory, with children sick from coal dust, either through skin outbreaks or respiratory problems; with communities that have lost so much: their territories, their water sources, their culture, their ancestral spirituality, and their language.
37. “But we know that it is useless to insist on this, unfortunately you can never understand the damage we are talking about or its gravity.
38. “It may be that the world is condemned to suffering the invisible dictatorship of finance and profits, and that no one in this auditorium is worried that the money they receive comes at the cost of the life of a Wayuu child. Maybe it doesn’t matter because it is not your child who will not be able to sleep tonight due to a coughing fit, and it does not matter because you will not be the parents and the mothers who will cry because their children die of thirst and hunger. In La Guajira, more than 4,000 children have died because of this.
39. “It may be that the world is condemned to live under the spell of the words of those who lie, who deceive and take advantage of the vulnerability of people.
40. “It may be that you are condemned to white-washed reports on Social Responsibility, and therefore it may be that you are condemned to lies: because the communities have not been resettled; because BHP has a historical debt to the community of Tabaco, because there are judicial sentences against the company that they have not fulfilled, because this company does not respect the parameters of the right to Prior Consultation, because the child Moises Guette Uriana continues to breathe contaminated air, because you own a mine in a country that does not meet international environmental standards.
41. “We are not going to ask questions, we asked them last year and they remain unanswered, the situation does not change, the tendencies and patterns are evident: Power asymmetries that impede relations from developing in equal conditions, revolving doors that are equal to corruption, and irreparability of the damage if you continue with the extraction.
42. “You have failed us and we have no other option but to continue to demand for the rights of communities and the environment, and we will use all means available.
43. “But for you and for us and for the whole world there is only one reality, and that is climate change. One day companies will no longer be able to mask their figures, simply because the world is no longer going to put up with their lies. Climate change is something that we will all live and nobody will be able to flee from it: we will not be able to eat money.”
44. (By this time I had the distinct impression that Chairman Ken MacKenzie was not enjoying the AGM, even if CEO Andrew Mackenzie was. It was just little things he said, and the way that he said them, like, “Can you come to the point? Can you ask your question?” Someone suggested at one stage that he may be a little tired, and he snapped back that he was not tired, in that way that one does when one is really very tired and a bit fractious as a result.)
45. Aldo Raul Amaya Daza, President of Sintracarbon, the Colombian union of coal mine workers which organises workers at the Cerrejon mine, said that he works in the Cerrejon mine. He said that when BHP had arrived in the area they were smiling. But the mine had created health problems for workers and many problems for the communities affected by its operations. There had been a death at Cerrejon recently. One concern, given the possibility of coal markets diminishing because of global action on climate change, was what would happen when mining comes to an end. He asked for the mine closure plan and for commitments on health and safety. He invited Ken McKenzie to visit the Cerrejon mine.
46. Hidanora Esther Perez Camposano, also from the Sintracarbon union at the Cerrejon mine in Colombia, stood up, and Ken MacKenzie interrupted her almost immediately, saying that she could meet with the Board after the AGM. ” Keep your remarks short and go to your questions,” he said – rather crossly, I thought.
47. Hidanora said: ” I am a worker from the mine and a member of the displaced community of Oreganal. How do you plan to achieve gender balance in Cerrejon in production, maintenance, mining machinery handlers? Only 10% are women at present. What projects will you implement after mine closure for Afro-descendant communities?”
48. Ken MacKenzie replied: “Thanks for the invitation to visit Cerrejon. We have more Board visits planned for the coming year. Andrew has recently been there. Cerrejon is a large tier 1 resource producing high quality coal. It started in the 1970s and BHP got involved in 2000 and only owns 33% of the mine. Many issues raised are legacy issues. It employs 12,000 people of whom 60% come from the area but 45,000 other people are reliant upon it for their livelihood. It makes a very important contribution to the regional and national economies. It pays 551 million US dollars in taxes and invested over 8 million dollars in social initiatives.” He said that BHP acknowledged that it is a complex operating environment and “not all has gone properly”. When issues are raised at AGMs the Board passes them onto local management. “It is especially important that affected communities do not suffer and livelihoods are not damaged,” he continued. “There has been water stress in the area for a long time and it is not under the control of the company. BHP has a good influence on management. We actively participate in the committee of shareholders giving guidance and advice on legacy issues and strengthening relations with communities. New procedures for BHP joint ventures were introduced a year ago. We are committed to working with management to enhance their behaviour.”
49. Andrew Mackenzie added: “There is more to do. We need to improve things. With our renewed commitment to non-operated joint ventures we are putting in more effort. The track record is not all bad. There are people who are not happy but many community members and workers are grateful for the economic impact that Cerrejon has in that poor region of Colombia. How do we balance the rights and spiritualisms of indigenous peoples and the impacts of inter-culturalisation to allow greater self-determination and spiritualism?” [I suspect that Andrew Mackenzie is not familiar with anthropological terminology, let alone Indigenous spirituality….] “We are upgrading policies and will put them into practice.
50. “On resettlement, a significant number have been resettled and the approach has changed. We favour free prior informed consent. Not all resettlements have gone well. Water is a problem and we push Cerrejon management to do better and they push themselves to do better. Only 7% of Cerrejon’s water is of a quality that could be used for human consumption and we have gone beyond our duty to improve water security for local people. 20,000 people in 300 communities have benefited from that. We understand the constitutional court decision about the Arroyo Bruno diversion. We thought we had consulted widely but we will do so more widely and not do the project before that.
51. “On gender balance, we need to do more on that to build better more welcoming culture and work practices.
52. “Regarding the life of the mine, we only have a lease until 2034 and we don’t know if we’ll go beyond that. We have strong obligations to have a closure plan but we don’t see it being implemented for a long time. This is high quality low cost coal, potentially a 100-year resource. We don’t see it closing when our license runs out and we think the mine can continue for much longer without seeking alternative economic activity.
53. “Regarding safety, we need to improve risk management processes in Cerrejon. We regret the death of that worker and with better risk management this could have been avoided.”
Membership of industry associations
54. Roger Gerry, representing Share Action, asked a question about BHP’s audit of its key differences from the main industry lobbying alliances of which it is a member. He asked if the company would publish an updated audit of its trade association memberships.
55. Ken Mackenzie replied: “Industry associations play a key role in improving industry standards. They serve a meaningful purpose. We need these kind of associations in our industry and they add value but we recognise that shareholders have an increasing interest in these associations, so we mapped our own membership of associations and the differences with our own views. There were three associations which had discrepancies. We left the World Coal Association because the discrepancy was irreconcilable but other associations, like the US Chamber of Commerce, we decided to engage with and be a force for good and we have joined forums in the US Chamber of Commerce to influence its policies. We have done a lot of work with the Mineral Council of Australia (MCA), especially since we did the review. The MCA has updated its climate change policy bringing them more in line with our policies. We continue to monitor the situation. We are looking at the new IPCC [International Panel on Climate Change] report. We are strong advocates of the Paris Agreement and will analyse the findings of the IPCC report. 1.5 degrees Celsius will involve carbon capture and storage (CCS) and forest planting. Coal 21 is working on CCS and that is our involvement with that association. We need to capture carbon somehow and therefore we need organisations doing this research. We have strong policies on climate change.”
56. Jeff Drayton, of the Mining and Energy division of Australian union CFMEU, representing mining and energy workers in New South Wales, said that at the Mount Arthur thermal coal mine 105 employees were made redundant and then BHP had begun contracting workers. There is now a 50/50 split between contractors and employees. “We are concerned about accidents and injuries,” he said. “The key reason is the attempt to use contractors, including those with little experience. What will BHP do to address this?”
57. Ken MacKenzie replied: “Nothing is more important than safety. The two deaths this year were devastating. We firmly believe that nothing is achieved safely. We always follow up at Board level. From the safety perspective we don’t differentiate between employees and contractors but we know we must double our efforts around contractors’ safety.”
58. Andrew McKenzie added: “Mike Henry of Minerals Australia has more details. We are aligned ons afety and would expect to respond to incidents drawn to our attention. We are working on getting more incidents reported to us so we can do more to respond. We are asking all workers to bear safety in mind and report things. We are on your side. Regarding more contractors, we don’t agree this is a problem in itself but we are concerned about high turnover. We need to get even tighter on induction processes for all contractors who come on our sites. It works well to have contractors working with employees but the safety culture must be the same and the duty of care is the same.”
Industry associations again
59. Edward Wood-Collins, representing Influence Map, said that they had looked at BHP’s assessment of its trade association memberships but it looked selective. “We are concerned you did not know about the MCA’s ongoing lobbying, and the US Chamber of Commerce also continues lobbying. Can you commit to an annual assessment of memberships in the light of this?”
60. Ken MacKenzie replied: “Yes, we will continue to map industry association positions against our own as part of our internal process. We are not committed to publishing it but it is part of our internal process. Shareholders have complimented us on our process. Only BHP speaks for BHP.”
61. Kemal Ozkan, from Global Union IndustriALL, said: “It is important that BHP consider sustainability as a core value. There is an excellent economic result but sustainability also includes social, environment and labour issues. There was no employee recognition in the CEO’s talk today but employees are key to the success of the company. You refer to industry associations but you are also developing international standards and multi-stakeholder initiatives and you only refer to industry associations. In your report you refer to the Sustainable Development Goals. It is important to create jobs but you also needs to respect fundamental rights at work. There is no reference to these issues even in the Sustainable Development Report which only mentions keeping national law. The quality of employment is important. There has been a deterioration in the quality of employment at BHP. The company is not offering permanent employment to people and it is ramping up the number of contracted out workers vis-a-vis employees. How are you planning to make decent work a target for you? Regarding Sustainable Development Goal 17, it says there is a need for global cooperative partnerships. You said there would be a record number of questions and that there are other opportunities to talk but this is the only opportunity for us to see your face and engage with you. How are you going to develop stakeholder engagement? Most of the questions here are related to social issues and these are important.”
62. Ken Mackenzie replied: ” The company is always interested in engaging with stakeholders. You say we deal with economic not social issues but social license is at the core of all that we do: building trust, being open and transparent. We are committed to this way beyond economics. Andrew is passionate about getting the right culture in the organisation and the right conditions for workers.”
63. Andrew MacKenzie added: “We are tireless in visiting operations around the world and we always hold gatherings to give an idea of what is happening in the company, and it always involves union and non-union members. Internal social media enables workers and management to interact. Some of the people who resist this are more traditional trade unionists with an old view of union-management relations. People can communicate with us confidentially and up to 80% of workers participate. There are confidential lines to raise confidential issues anonymously. This is a shareholder meeting so we are primarily addressing shareholders. We engage with NGOs and suppliers and suppliers and unions in different forums. We are committed to stakeholder capitalism, inclusive capitalism, and we give voice to a wide range of people, including workers.”
Iron ore mining in Western Australia
64. A shareholder from Port Hedland in the Pilbara region of Western Australia, said: “I am a grandmother, a business owner and a former school principal. I am concerned about Port Hedland and the reputation of BHP. There is a failure of attention to social issues. You said trust is very important for local communities but a common theme is the failure to do the right thing in local communities. The most common health problems in Port Hedland are respiratory. My 22-month-old grandchild was rushed to hospital with respiratory problems. Another child suffering from respiratory problems moved away and got better, came back and got worse again. Visitors to the town complain that they develop coughs and dry throats while in town. Monitoring shows continuing high levels of dust. Even a small child knows if they make a mess they have to clear it up. The core values of the company include integrity. In Port Hedland we have learned nothing from Samarco and the other cases around the world. I’d like to feel that Port Hedland will be one of the places where you finally get your act together and stop polluting. How can BHP hold itself to be an ethical company while it continues to pollute?”
65. Ken MacKenzie replied: “We are aware of dust problems in Port Hedland. A lot of work has gone into dust management. We have spent $400m. since 2010. The effectiveness of these measures is monitored continuously. Dust exceedance events have fallen and we are not the only company operating in Port Hedland but we are engaging with the community about dust.”
66. Andrew Mackenzie added: “We can always do better but you have seen improvements and we are not the only company involved and it is naturally dusty. We have made agreements with particular customers to accept particular loads of ore so we don’t need to blend the ore in the area and can take it straight to the ship and other technical innovations to reduce dust including the use of water curtains, reduction of stacking, and taking operations away from the port to reduce dust. We are making more use of fogging techniques, trying to seal vehicles better.”
67. Another shareholder from Western Australia, said: “There is a reputational issue at Port Hedland. The Western Australian state government on Monday sought to introduce a Special Control Area on the west of the community to reduce the growth of the town population, but the existing residents continue to face health risks, including the risk of death. Property values have plummeted, which traps people in Port Hedland. Why should existing residents have to move to be safe from someone else’s dust? It was plainly reported by the state government that the potential number of people is small because the population is small. Dust may account for one extra death per year and three extra hospital admissions per year. The level of PM10 in the west end is conducive to an extra death per year and should be reduced. Health risks attributable to dust are expected to increase. The health department said that extra dust reduction is not possible but that it is not a big problem because the population is small. BHP needs to improve and not be associated with such thinking. Our business is always engaging with small groups – local communities, indigenous peoples, workers. We cannot say that people are less important just because they are part of a small group. Our company’s contribution to dust production may be significant. Over 20 years it could contribute to 20 extra deaths. I suppose you would not consider it right to expose people to this level of risk, given that the population is only 5000, especially if the company can improve things by simple steps. Will the company improve the sharing of information and better address dust production?”
68. Ken MacKenzie replied: “We are very concerned about social license. We always comply with local health & safety standards and usually exceed government standards. Andrew has explained our dust management but we are not the only operator.”
69. Andrew Mackenzie added: “The Western Australian government is grappling with the issues of best land use in Western Australia. The report has just come out. We have not had a full opportunity to grapple with it but we will work with the WA government and with the local community. We continue to do all the things I outlined regarding dust suppression. The WA government is looking at how best to use land for industrial, residential and other uses.”
70. Steve Smyth, from CFMEU in Queensland, said: “There are several BHP mines in Queensland and six employees have lung disease. They have not worked up to 18 months but this does not seem to be recorded. One of these recently died because of silicosis and pneumoconiosis. How is this recorded? A lot of operations are open cut mines. On employment, you talk about equality. We see equality among the employees but not among contractors. There are 2000 employees and 6000 contractors, some of them working already for 5 or 6 years. Equality should be across the board.”
71. Ken MacKenzie replied: “Regarding lung disease among coal mine workers we are deeply disappointed at the re-emergence of this. We have reduced our coal dust exposure standard to a level lower than the legal limit and have committed to reducing our limit to half of the Queensland limit. Six of the sick workers continue to work, two are no longer working. There is ongoing testing and medical care.”
72. Andrew Mackenzie added: “We don’t count chronic health issues within our safety figures but as occupational health issues. We are scrupulous in reviewing all risks at Board level. We review all risks and make them fully visible. There is no attempt to hide them. This needs a collective response across the industry and in the health sector. We work closely with the regulator and across the industry and have pushed our own exposure limits down. We have introduced a new procedure to create awareness and improve standards. There is no attempt not to report.”
Auditing BHP’s operations
73. Stephen Hunt, from the USW union in Vancouver, Canada, said: “I represent workers in BHP affiliated with IndustriALL. I was once a miner at BHP. Your words in the annual report are correct, but as you can see in this room, there is a tremendous amount of mistrust, and that is a liability. The Board has to assess risks, and all these issues impacting on trust must terrify the Board. The work that you are doing to clean up the tailings dam disaster is good but it should not have happened. Tailings dams are never supposed to fail. I represent people who sustain themselves by mining and tailings dams should not fail. BHP is now being compared to Grupo Mexico. You need to wrap up your work quickly. We work with Glencore and recently met with its CEO in Switzerland. He agreed we could travel with him to the Democratic Republic of Congo where cobalt is being extracted by children. There are arguments about where the lines were drawn. IndustriALL accompanied the CEO to DRC to find out what’s going on. We agreed with Rio Tinto on a global tour to audit each of its mines to monitor health & safety and to look at displaced communities. Will your CEO agree to work with IndustriALL to set up a system of auditing all your operations around the world?”
74. Ken MacKenzie replied: “Our first job is risk management. We have our people front-line engaged in health & safety. Your question is an operational question and this is not the forum for it.”
More on workers’ rights
75. Kirstine Drew, from the Trade Union Advisory Committee to the Organisation for Economic Co-operation and Development asked about BHP’s attitude to worker rights, trade unions and outsourcing.
76. Ken MacKenzie replied: “We are concerned for all workers, whether outsourced or not. We are committed to working with people with respect and have introduced an anti-slavery policy. We have a duty of care to all workers, outsourced or not.”
More on iron ore in Western Australia
77. Another shareholder from Port Hedland, Western Australia, said that when she was a child she was told that mining iron ore would help reduce poverty, and that Australian iron ore exports could help build cities of a million people in six weeks. She said: “I’m very concerned to hear from people around the world about it is causing loss of home, health and livelihood, so much so that they come across the world to talk to the Board about what they are suffering. How can we build cities of a million people in six weeks when we are a mining company? One ship holds enough to build 6000 houses and we fill 6 ships a day. We are good at making money and I like that.” Referring to BHP’s social investments, she said, “It is good that you put that money into schools around the world.” But she warned, “Children fall in love with the mining industry but they are asking the same questions as we are asking today. My grand-daughter, who is 10, had to move out of Port Hedland because her 12-year-old brother developed respiratory problems. Children are learning about environmental problems. The money is there and we can spend it on fixing problems rather than saying we are having conversations with you.” She offered to the Board some reports about the impacts of dust contamination in Port Hedland. She said that the reports themselves were physically marked with iron ore dust to bring the point home. She had attempted to bring some small pieces of iron ore from Port Hedland into the AGM but had now be allowed to do so because “it was judged to be unsafe”.
78. Ken Mackenzie replied: “We are also committed to building communities and our social license is about creating sustainable businesses. We voluntarily put 1% of our income after tax into social projects, including in the Pilbara, around $200 million on top of $400 million spent on dust suppression.”
Resolution Copper, Arizona
79. Roger Featherstone, from Tucson, Arizona, in the southwestern USA, said: “I am the Director of the Arizona Mining Reform Coalition. Thank you for hearing me again this year. I have a question about BHP’s involvement with Rio Tinto in the proposed Resolution Copper mine project.
80. “BHP and Rio Tinto are planning a large underground block cave mine, an hour east of Phoenix, Arizona, that would destroy Oak Flat, render permanently unusable 7,000 acres under a toxic tailings dump, and send mineral concentrates out of the US for final processing in another country, most likely, China.
81. “As you know, there a number of problems with this proposed mine because Oak Flat is sacred to Native Americans and an ecological and recreational haven.
82. “In addition, there are a number of technological problems with the proposal:
• It is clear that the current tailings location is not viable from an ecological or technical standpoint.
• The plan calls for a tailings dam engineered exactly like the failed dam at Samarco.
• A new report shows that Rio Tinto’s proposal has not seriously considered additional very hot water deep underground or taken into account the additional amount of power needed to cool the mine and to to pump the additional water.
83. “The report recommends that anyone investing in the project take a serious look at the projects flaws. I have a copy of that report I’d like to share with you, and a summary handout is available to the shareholders.
84. “When BHP got involved in this destructive project, it turned its back on viable mining operations it owns (or used to own) in Arizona. In light of this, are you and your shareholders comfortable that your investment in this ill-advised project will be profitable and a wise and socially responsible investment? And, will BHP drop its interest in the Oak Flat proposal and focus on better alternatives? Will you divest? You used to have the trust of the community and now, thanks to Rio Tinto, that trust is gone.”
85. Ken MacKenzie replied: “We are interested in that investment and want to develop a copper mine. The Resolution project is being managed by Rio Tinto. We take an active role on the Board but it is still in the very early stages. The tailings dam plan is still being analysed by the US Forest Service and 5 or 6 alternatives are being looked at. We are not expecting a response regarding the location until 2019.”
86. Andrew Mackenzie added: “Water issues are central to the development of the mine but they are being handled by Rio Tinto. I am not aware of the issue you have raised but we will raise it with them.”
87. Paul Doughty, representing the Local Authority Pension Fund Forum, said that UK local authorities collectively hold 1.5% of BHP’s shares. He asked, “In the light of today’s meeting, what is BHP’s due diligence process to assess environment, social and governance issues and viability, especially in shared ventures? You are starting to lose trust in communities before projects even start and we are concerned about financial viabilitiy and risks to communities that have not been fully costed. Maybe it is time to pull out of the Resolution project.”
88. Ken MacKenzie said, rather curtly, that he had already answered the point.
Copper mining in Chile
89. Lucio Cuenca, from Chile, said: “Good morning. My name is Lucio Cuenca, I am the director of the Latin American Observatory of Environmental Conflicts, OLCA – an organisation that supports communities affected by mining in northern Chile, a number of whom are affected by BHP operations. I bring to this assembly questions about the rights violations of indigenous peoples, of destroyed ecosystems and of over-exploited water sources.
90. “I want to ask about the BHP Escondida Project. This project extracts vast amounts of water from the ecosystem of the Punta Negra Salt Flat and the Atacama Salt flat. The damage and impacts to these valuable ecosystems have been denounced for several years by environmental organisations, parliamentarians, but especially by the Licanantay indigenous community from the town of Peine. A situation that’s been denounced by the Chilean parliament, through a special commission.
91. “Although the company announced in 2017 that it had stopped extracting water from the Punta Negra Salt flat, nothing has been said about evaluating historical ecosystem and socio-cultural damage caused, nor about the restoration or repair of the salt flats.
92. “In the case of the Atacama Salt flat, where the company’s environmental license to extract water ends in 2018, the company has presented a new project – Monturaqui – to extend the extraction of water for an additional 11 years.
93. “How will you address the damage caused to Punta Negra Salt flat for their ecosystem repair? It is simply not enough to keep irrigating superficially and if the company made a strong investment in seawater desalination, which is fully operational since 2017, why not stop using fresh salt water now?
94. “The indigenous Aymara community of Cancosa is the community which lives closest to the Pampa Lagunillas wetland, where the ‘Continuity plan for the BHP operation, Cerro Colorado’ will permit the company to draw underground water until the year 2023.
95. “This indigenous community has been systematically denouncing the environmental and cultural impacts caused by the destruction and drying up of water sources; and the intervention of archaeological sites, in a community that has 9000 years of history.
“Although the continuity plan for Cerro Colorado obtained an environmental license in 2015, this was carried out through an Indigenous Consultation which did not include the Community of Cancosa, as established in ILO Convention 169.
96. “Currently, there are legal processes that seek to annul the environmental permit, and there are new, very serious complaints of environmental infractions, and breach of protocols, at the Environmental Ombudsman and the Council of National Monuments.
97. “Now that BHP has announced the sale of Cerro Colorado, how will it ensure reparations for the environmental disaster caused, including not recognizing the Rights of the Aymara Community of Cancosa as an indigenous people under new management?”
98. Ken MacKenzie replied: “Regarding water, we understand it is shared we need a sustainable approach. We launched this year an industry-leading water report on inputs and outputs and we are transparent regarding data. Regarding northern Chile, it is very arid. We recognise the importance of water, which is why we build a water plant for industrial use in 2006, and the Escondida water supply commissioned this year is one of the largest desalination plants in the world. There is a 180km pipeline from the plant to the mine. We spent billions on it. There will be annual reduction of 54% by 2020 in the use of groundwater and by 2030 we plan to stop all groundwater extraction.”
99. Andrew Mackenzie added: “We are the only company which prioritises desalination of water and we have handed back water rights to the government and communities. We are seeking extraction of some water rights but are fully engaging ILO169 [the resolution of the International Labour Organisation which mandates prior consultation with Indigenous Peoples when major projects are to be constructed on their land] and we did accept responsibility for damage to the ecosystem at Punta Negra and engaged indigenous peoples in a resolution plan.”
100. There were a few more questions from individual shareholders about dividends, share value and corporate simplification, including one from a shareholder who attends a number of mining company AGMs, listens to testimony from representatives of numerous communities suffering human rights abuses and environmental damage caused by whichever company it happens to be, and then speaks about the importance of dividends and announces that his wife either is or is not happy with the current dividend level. At this AGM, I felt that he outdid himself in insensitivity towards the people who had travelled from the ends of the earth to tell shareholders about the impacts of BHP’s operations on their lives and livelihoods: he ended his intervention with an angry denunciation of the great evil represented by the corporate tax policies of Jeremy Corbyn MP, leader of the UK’s Labour Party. This represented, he said, a “shocking attempt to get hold of 10% of our shares.” Goodness: doesn’t that just totally eclipse the death threats, dislocation and dehydration faced by the company’s critics?