By Richard Solly, Co-ordinator, London Mining Network
BHP’s online ‘shareholder engagement session’ on Wednesday 23 September represented a masterful step forward for BHP in exercising complete corporate control of the debate around its operations. It is impressive to see how the corporate mining world is taking advantage of the COVID-19 pandemic not only at operational level (see our report, Voices from the Ground) but in avoiding public accountability to the communities and workers whose lives it affects.
The ‘shareholder engagement session’ was strictly for shareholders only. Ten days before the event, the company told us triumphantly that we would not be able to use our tiny shareholdings to appoint ‘proxies’ – which is the way we use to ensure that representatives of mining-affected communities can speak at company shareholder gatherings. Even shareholders could not actually speak at the event: we had to submit questions in writing via the event’s website, and the company chose which questions it would answer and then rephrased them to make them easier to answer.
We consulted with our friends in communities affected by BHP’s operations and submitted many questions – about the continuing effects of the catastrophic Samarco tailings dam collapse in Brazil in November 2015, about injustices around Cerrejon Coal in Colombia, about water use and pollution around the company’s operations in Chile and Peru, about the disastrous effects of the proposed Resolution Copper project in the USA and about the company’s financial accountability for mine site and disaster reclamation. Between the handful of us who actually own a few shares each, we submitted all these questions (set out below).
A few were chosen and answered, as you can read. The response to mine was different, and I must compliment the company on its ability to appear accommodating while in fact being both patronising and unaccountable – a marvellous diplomatic achievement for which it should win some kind of award. After welcoming multiple questions from some shareholders, the head of BHP’s communications, who was the question master, then announced, two minutes before the end of the meeting, that a shareholder called Richard had submitted 18 questions and that there was not time to answer them all.
What a surprise! Given that they had prevented the people in Chile, Colombia and Peru, on whose behalf I submitted the questions, from asking them themselves, of course I had had to submit multiple questions. Was there a theme to the questions? asked the Chair, Ken MacKenzie. Well, replied the question master, nine of the questions concerned Cerrejon Coal, so maybe the Chair could speak about that.
How fortunate! The Chair was able to use the remaining minute to explain that because BHP only owns one-third of Cerrejon Coal, and that the other two owners, Anglo American and Glencore, also own only one-third each, and that the operations are managed by an independent company, BHP itself is of course not responsible for what goes on there, and they would pass the questions on to Cerrejon Coal’s management. The mine operates and has always operated, he said, in a “very complex socio-economic environment”. That is presumably a euphemism meaning that people have been forced off their land against their will, their livelihoods wrecked, and many of their social leaders threatened with death for criticising the mine’s operations.
Should BHP ever try to sue London Mining Network for anything we say about the company, we must remember to use that argument in our defence: as we have ten trustees, none of them is responsible for any of the decisions that they collectively take, even if they all vote in favour. Jolly good. Of course, the other approach might be to invoke common purpose laws and suggest that if BHP owns one third of an operation which is trampling on people’s rights and wrecking the local ecosystem, whoever actually does the dirty deeds, BHP shares the guilt.
In his introductory remarks, BHP’s Chair, Ken MacKenzie, noted that cultural heritage was important to shareholders and asserted that it always had been for BHP. I cannot help thinking that it might have become all the more important once the top brass at peer company Rio Tinto started losing their jobs for destroying the Juukan Gorge Aboriginal site in Western Australia. It was this outrage that led to the Australian Centre for Corporate Responsibility proposing a resolution for the AGM which Ken MacKenzie said the Board did not support. It was well meaning, he said, but had the unintended consequence of ‘disempowering’ traditional owners from managing their heritage by interfering with agreements that BHP already had with them. He might have said – though he did not – that the resolution was supported by Aboriginal organisations and that by defeating it the Board would have a better chance of going ahead with site destruction under arrangements which Aboriginal communities had already been pressured into accepting given the appalling legal regime still in place in Australia.
Ken MacKenzie also stressed – as did new Chief Executive Officer (CEO) Mike Henry – that the resources BHP produces are ‘essential now and in the future’. Not for them the task of imagining the possibility of a world in which we do not continually rip the guts out of Mother Earth to support a consumer lifestyle that is demonstrably ecologically unsustainable; rather, the constant repetition of the mining-industry’s greatly-loved mantra, that what they are doing is ‘essential’ because they way things are has to be the way things will be unto the ages of the ages.
Mike Henry – who seemed a rather affable and caring chap – also mentioned challenges which the industry ‘must face and play a part in overcoming’. These included gender balance, indigenous rights, environmental damage and climate change. The world is dynamic, he said, and global trends will drive demand for copper, nickel and potash even as demand for iron ore, metallurgical coal and gas slows. Whatever happens, BHP will profit. What will vary is the location of the communities and ecosystems that get shafted so it can do so. [He didn’t say those last two sentences – those are my gloss on what he had said. I wouldn’t want anyone to think he intends such things. But, just like the Board’s judgement on the shareholder resolution that it wants voted down, the company’s operations do have unintended consequences.]
Global economic scenarios
The equally affable question master (we’ll call him ‘QM’ to save my keyboard) then said he had had a question from ‘Cliff’. No surnames today. All jolly friendly and informal. Or perhaps it was to prevent people knowing who anyone really was. But the QM announced that Cliff was a Director of small shareholders’ association ShareSoc, so people could probably track him down even without knowing his surname.
QM said that Cliff was pleased with the BHP share price since March. But what were the global economic scenarios over the next two years? To what extent does demand for raw materials follow general economic activity? Will government stimulus support demand for raw materials?
Ken MacKenzie replied that oil demand had fallen more quickly than the fall in GDP but expected it would rebound more quickly. The stimulus in China for infrastructure projects offsets the weakness in iron ore demand elsewhere. Metallurgical coal had not been as lucky. China represents only 20% of demand. Economic weakness in Europe, Japan and India had hurt it. Half the demand for copper and nickel comes from China, so they had fared in between the two extremes. The base case, he said, is that the current strength in China will spill over into 2021 and recovery elsewhere will help the commodities market.
Dividend policy, capital reserves and economic opportunism
QM then read out another question from Cliff, about dividend policy, capital reserves and economic opportunism. The pandemic may present bargain opportunities. [Ah! how marvellous that all those unfortunate deaths may actually have a silver lining for BHP shareholders!] Why not therefore retain more cash for acquisitions? Ken MacKenzie replied that the company needs to be ready for the bottom of the cycle at all times. Then answer is in its balance sheet – and the Board does take it into account when it determines the dividend.
Cliff, added QM, was fearful of rampant inflation. Is BHP a good inflation hedge?
Mike Henry replied that it depended on where inflation goes. Rampant inflation would cause challenges for everyone, but the Board does not expect that to happen as the world is set up to avoid it. Moderate inflation would help the economy and would feed through to commodity prices, and BHP would benefit.
QM then said that Philip offered his congratulations on having a good year and thanks for a clear annual report. Historically miners have come unstuck when they lose control of capital expenditure. What is the Board’s guidance on BHP’s spend for the next two years?
Mike Henry said that BHP was investing in growing value for shareholders but that he ‘understands the pain’ when the company had not maintained tight control of expenditure. With a few possible exceptions, BHP would will spend no more than ‘single digit billions’ each year. There had been a lot of progress in developing and applying a capital allocation framework. There was proportionately more spend in copper than iron ore because of the bright future for copper. BHP had invested in the Spence growth option in Chile and this would begin to produce in the next twelve months.
QM said that Margaret’s question was: “You recommended a vote against the cultural heritage resolution. What steps are you taking to ensure that a disaster like Juukan Gorge does not happen on your watch?”
Ken MacKenzie replied that nobody wants that situation to happen ever again. Indigenous Peoples are key partners of BHP globally, he said. The Board and company have deep respect for Indigenous Peoples and their cultures, and partnerships with them are crucial for BHP’s operations and crucial to the company’s approach to social value. BHP has an Indigenous Peoples Policy Statement, an Indigenous Peoples Strategy and a Reconciliation Action Plan and its supports the Uluru Statement from the Heart. It strongly supports cultural heritage laws that enhance traditional owners’ views and role in decision-making and it had expressed this in government reviews, he said. BHP was engaged in listening to Aboriginal leaders at local, state and federal level in Australia and had taken on board the lessons from the inquiry that would strengthen its approach.
Mike Henry said that the issue is very important to him personally. There are some structural factors in Rio Tinto which helped lead to the Juukan Gorge incident and which are different in BHP. The team accountable for managing Indigenous Peoples’ heritage in BHP sits alongside mine planners, so new knowledge can be quickly reflected in mine plans. Over half of BHP’s Indigenous Heritage Team identify as indigenous and they are located in the field close to the company’s operations. Last year in BHP 85% of employees received training on Aboriginal and Torres Strait Islander history. BHP has changed its own work processes, he said: it has a system in place that requires new information to be uploaded so it is visible to everyone including mine planners so they can make adjustments. Any approval to impact any Aboriginal sites is valid for only twelve months and then has to be gone through again so new information is taken into account. There is ongoing engagement with traditional owners. They have a strong voice in all decisions regarding cultural heritage. In the case of South Flank, BHP has set up an advisory committee to improve decision-making. Decisions involving cultural heritage now have to be approved at a more senior level.
Ken MacKenzie added that the Board had not endorsed the resolution because Part A says that BHP should take unilateral action without consulting with traditional owners. The Board could not endorse a unilateral action without engaging with traditional owners and this would disempower them from managing their own cultural heritage. Part B of the resolution, he said, is not required as BHP had already told traditional owners that they are not restricted in talking about cultural heritage. Part C is not necessary, he said, as BHP keeps its membership of industry associations under constant review.
QM then asked a question on behalf of Geoff. This was our own Geoff Nettleton from LMN, asking on behalf of the Arizona Mining Reform Coalition. But the question had been cut off in the process of submission, so QM only said that it referred to indigenous rights at the Resolution Copper project in Arizona, USA. Mike Henry replied that the project was not managed by BHP, but he would be happy to convey any questions to the manager, Rio Tinto, and have them respond in writing. Any project that BHP participates in must meet BHP’s own requirements regarding Indigenous Peoples, he said. [Given that the San Carlos Apache people have made their opposition to the project known most recently in a submission to the Australian Senate’s hearing into Rio Tinto’s destruction of the Juukan Gorge site in Western Australia in May, you would think that thuis would be sufficient to cause both companies to pull out if they are serious about respecting Indigenous Peoples’ rights, rather than simply uttering the right words.] BHP has a deep ongoing engagement with First Nations Peoples around Resolution and this will continue between now and any decision being taken, he said.
QM said that Nicholas had asked about a detail in the Annual Report. Section 2.5 looks at an enhanced role for BHP’s board regarding the code of conduct and whistle blowing. It requires greater monitoring. Why had this change been necessary? How many whistle blowing incidents had there been in the last twelve months? Mike Henry replied that nowadays boards of companies were more focused on non-financial risk. “We have, as others have, elevated the visibility of our existing longstanding whistle blowing system,” he said.
QM then put another question from Nicholas, on monitoring and site visits: how are sites selected, who attends from the board, and is everything always okay or is there a mixture of good and bad practices? Ken MacKenzie said that such visits are difficult at present but members of the board had had a virtual tour of the Olympic Dam site a month ago through video and had engaged virtually with the management team. Site visits are part of the remit of the Sustainability Committee. Risk assurance and verification at site level occurs in this way. Each Risk and Audit Committee member is required to do at least one site visit each year. Boards are specialists in risk management. BHP’s board looks at the highest level risks and these are the ones the board focuses on and the visit schedule is put together accordingly. The four members of the Risk and Audit Committee all have strong operating backgrounds in risk management in oil, gas and mining. The entire board also does one site visit a year but it is more likely to be of a general nature, engaging with co-workers, and it includes offices as in Singapore and Perth and not only mine sites.
Mike Henry added that the board does pick up from time to time on things that need improving on, for instance personal discipline on safety behaviour. One visit to Pilbara led to encouragement to management to put more focus on engagement with traditional owners. This is an advantage of the breadth of experience in BHP’s board.
QM said that Colin had asked what had been the key challenges of COVID 19 from the company’s perspective? What is the outlook for BHP in the environment we are in? Mike Henry replied that it had been a challenging six to nine months but remarkable things had happened – the response of staff and the support of people around BHP to the keep the business operating safely. (He did not mention the criticisms from IndustriALL global union about the difference between the company’s response to the pandemic in Australia and its response in Chile and Peru, where levels of illness have been much higher.) There had been market disruption, he said, and some of BHP’s commodities had had a tough time. Metallurgical coal had been under pressure as it is less reliant on China, where the strongest economic recovery was occurring. But thanks to BHP’s strong balance sheet it had navigated the challenges well. In order to ensure the safety of BHP’s workers and host communities, social distancing and hygiene measures had been put in place quickly, rosters had been changed and more money spent on transport. The company had supported small and medium suppliers through the difficulties, shortening the time taken to pay invoices. BHP had also supported local health services. The company had kept its operations running safely and this had helped its financial results.
QM said that there had been several questions on Samarco. David had said that it had been five years since the tragedy of Samarco. Could BHP provide an update on the remediation process? Armando had asked when resettlements be completed? What measures had been taken to address the health risks associated with the contaminated environment? Does BHP agree that there are numerous studies that show it is much too early to prove that the river has recovered from the pollution?
Ken MacKenzie said he would provide a fuller update at the AGM in October. The Samarco dam failure was a tragedy that must never be forgotten and BHP was deeply sorry for the accident, especially for the loss of lives. The company is “committed to doing the right thing”. Samarco and its two shareholders, BHP and Vale, had set up the Renova Foundation to address the impacts of the tragedy. BHP is committed to supporting Renova’s 42 programmes of work on social, environmental and community remediation. Renova had spent 2.7 billion US dollars to date and he forecast another 2.2 billion dollars would be spent by 2022. BHP is providing 50% of that, and this had been noted in the company’s accounts.
The two most significant programmes, he said, are compensating people and resettlement. COVID 19 has impacted resettlement activity as well as environmental remediation. Samarco, Vale and BHP had approved the release of 120 million Brazilian reais to provide resources for local communities, such as respirators and ambulances, to fight COVID 19. A new scheme for compensating impacted people had been approved by a local court and he hoped this would speed things up. Local commissions representing 16 localities had entered this scheme and this represents around 60% of the people eligible for help.
Mike Henry added that strong progress had been made since the last AGM on resettlement, in spite of challenging circumstances. In the community of Bento Rodrigues, over 59% of the new infrastructure was complete, 35 houses were under construction and the pace was quickening. (It certainly needs to – it is five years since the disaster and people have still not been rehoused! See the question below which we submitted and which QM summarised out of recognition.) In Paracatu, progress was slower; and in Gesteira progress was even slower. But progress was being made in spite of COVID 19. [My goodness, Mike Henry would be the person to have with you on a really, really awful holiday, perhaps involving loss of limb and luggage, to help you look on the bright side…]
Regarding health, he said, there is ongoing work by Renova on sanitation and waste management, including river revitalisation work and improving the collection and treatment of sewage, which will improve health. The tailings are non-toxic, he asserted (failing to mention that the force of their sudden release down the river stirred up other, toxic, sediments left from earlier mining operations) but there is an extensive programme to monitor the river, with three programmes running to 2027. There are 92 monitoring stations along the Rio Doce, monitoring for overall water quality and sediment to ensure that the tailings sediment is continuing to reduce. All programmes are progressing well in spite of the challenges of COVID 19.
Cliff was then given yet another question. This one was on petroleum production. I failed to note it.
Strained trade relations
Then Wendy (through QM, of course) asked about contingency plans for Chinese restrictions on Australian trade. Mike Henry said that globally, there are problems with trade. BHP strongly supports free trade, he said, which creates prosperity and security.
BHP has very good relations with its Chinese customers and suppliers. Even in the depths of their COVID 19 crisis they went out of their way to meet their commitments to BHP.
The importance of the trading relationship is well understood by both Australia and China, and there is a recovery in China which is helping iron ore demand and prices, so all should be well.
John asked the Chair to comment on the actions BHP is taking to address climate change. Ken MacKenzie said that a lot of action was being taken. In July last year BHP had announced a range of actions which it committed to take this year and it had delivered on them all. It already had short term (to 2022) scope 1 (direct) and scope 2 (supply chain) carbon emissions targets and long term 2050 scope 1 and 2 targets. It had committed to set out medium term, science based targets. Its 2030 target is to reduce emissions by 30% from a 2020 base line. the second commitment it had made was that it would put in place goals on scope 3 emissions (emissions by others using the materials that BHP produces). Its big scope 3 emissions are in the steel sector, he said, with iron ore and metallurgical coal. BHP had established a goal to help the industry achieve 30% emissions intensity reductions after 2030. [How encouraging, given that if we are to save the climate from utter chaos we almost certainly need to reach zero emissions by 2030 – and BHP is only promising emissions intensity reductions.]
For transportation, he said, BHP supports a 40 % emissions intensity goal in BHP shipping. It is making climate investments to reduce emissions across its operations and value chain. It is clarifying and strengthening the link between climate targets and executive pay incentives: 10% of cash and deferred plans are now dedicated to climate targets. It updated its portfolio analysis four years ago following the Paris Accord, modifying its portfolio on the assumption that overall global temperature rises would be kept to two degrees. Last year it committed to redo this for a “well below two degree scenario.” The work had been redone and republished. [And I for one am so grateful that, as Rome burns, Nero is still fiddling – music makes the process of global climate apocalypse so much more enjoyable.]
Mike Henry added that BHP had not waited around for its recent presentation. Oh no: it had moved to securing renewable power for its operations in Chile. Within a few years there would be 100% renewable power for Escondida and Spence. It was seeking to replicate this in Australia, moving to 50% renewable energy for its Queensland coal assets. [Come again? You’re boasting about using renewable energy to power the continuation of your coal assets? Because you realise that carbon emissions are creating catastrophe? Is this or is this not a form of cognitive dissonance?] The company had also moved to Liquid Natural Gas (LNG) power for bulk shipping. Five vessels fuelled by LNG would reduce the carbon intensity of its transport.
BHP is also looking at the achievement of “a 1.5 degree world” and its implications for the company’s portfolio. In that world, BHP’s portfolio performs better than a less rapid move to decarbonise. “This is because many of our commodities are essential to the transition, like copper and nickel and to an extent potash. The world will need more of these the faster it seeks to decarbonise.” More steel will be needed, so more iron ore will be needed. Higher quality coking coal will help the steel industry to reduce its emissions. [So, having helped fry the planet, BHP is now the saviour, like a drug pusher selling downers to the people to whom he has just sold uppers; except that in the case of metallurgical coal, the supposed downer is actually an upper…]
One unreasonable shareholder submitted 18 questions
And then QM mentioned that I had submitted18 questions. See above. I am sure it was a big surprise to them that I submitted any questions. After all, I have only been attending their AGMs for around 18 years, and submitting questions every year. Far be it from me to suggest that they might have deliberately avoided having to answer them this year.
We get another chance to submit questions in writing ready for the company’s Australian AGM on 14 October. We will. And we’ll keep on at them until they answer them. The people whose communities they damage deserve accountability.
Our questions to BHP
Resolution Copper, Arizona, USA: questions based on concerns expressed by the Arizona Mining Reform Coalition
1) The US Forest Service is trying desperately to rush the Final Environmental Impact statement (FEIS) to get it done before a possible change in the US federal administration in January. Even now, just months before the Forest Service says the FEIS will be complete, Resolution Copper has changed the tailings design and we do not yet have the full details for this change or others that might still be in the works. Will BHP commit to slowing down the process so that it gets it right first time?
2) Arizona has had another year (so far) of severe drought compounding what is now more than 15 years of drought. Some Arizona communities have had the lowest rainfall for the monsoon season ever on record. Resolution Copper (or the Forest Service) has not yet responded to comments by Arizona Mining Reform Coalition on the DEIS about the ridiculously low projections they have for water use and how they will assure that they would not deprive communities, agriculture, or public lands of the water they need. Will BHP now respond to these comments?
3) The Forest Service is also completely botching the process for getting a signed agreement about how to treat cultural and sacred features as required by law. Will BHP urge the Forest Service to get it right the first time?
4) Despite all the promises from Rio Tinto and BHP that nothing like the May 24th destruction of the Juukan Gorge rock shelters will happen again, that is exactly what Resolution Copper plans to do. The mine plan calls for the deliberate and permanent destruction of not only Oak Flat, which is sacred to Indigenous Peoples, but a number of other culturally sensitive sites, for the toxic tailings dump and the pipeline corridors to get tailings to the dump. So if BHP (and Rio Tinto) mean what they now say about protecting sacred sites, they have no choice but to abandon the Resolution Copper project. Will BHP therefore abandon the Resolution Copper project?
5) The project is so poorly designed that it would be impossible for Resolution Copper (or any mining company for that matter) to carry it out successfully. It is an experiment that will surely fail, with dangerous repercussions for everyone concerned including BHP. Will BHP therefore abandon the Resolution Copper project?
Samarco iron ore operations, Minas Gerais, Brazil: questions based on concerns expressed by MAB, the Movement of People Affected by Dams
1) Resettlement: On November 5, 2020, it will be five years since the disaster of the collapse of the Fundão Dam. None of the resettlement [of the destroyed communities of Bento Rodrigues, Paracatu de Baixo and Gesteira] has been completed and the affected families continue to live in rented houses. According to the time-scale in the agreement between the Government and the RENOVA Foundation, the building of new settlements is very overdue and so what was a temporary situation risks becoming permanent. The promised date of completion has variously November 2018, November 2019, August 2020 and December 2020. The companies have now made a new request for February 2021. Meanwhile numerous works have been carried out inside the mining complex to prepare for the resumption of mining activities. Can BHP state when the resettlement of destroyed communities will actually be ready and what measures the RENOVA Foundation has taken to complete this with utmost urgency?
2) Health: Human health risk assessment studies carried out in Mariana and Barra Longa by Ambios Engenharia concluded that the areas that were studied are an urgent public health hazard, meaning that there is a risk to the health of populations exposed to contaminants through ingestion, inhalation or skin absorption of contaminated topsoil particles and contaminated household dust. There are, however, no measures in place to remedy or mitigate this situation, the mud remains in the same places where it was deposited after the dam collapse, and the RENOVA Foundation has denied responsibility for the population’s illness. Can BHP state what measures will be taken to eliminate the health risks to the people living in these contaminated environments?
3) Health: Following these studies by Ambios Engenharia, RENOVA ended their contract and presented a new health risk study methodology (Gaisma) to the Inter-federative Committee. The Ministry of Health issued a Technical Note rejecting this new methodology. In the BHP annual report it is claimed that this new methodology is recognized by health authorities, while in fact it is contested and the Federal Public Ministry has filed appeals to the court questioning the use of this methodology. Can BHP show the evidence that the health authorities have recognised the new methodology for studying health risks?
4) The UN Rapporteur on Toxic Waste has published a report on his visit to Brazil, in which he points out that several studies led to concerns about the effects of long-term exposure to toxic waste from the collapse of the Fundão Dam. Furthermore, in a comparative study of before and after the disaster, researchers from the Federal University of Espírito Santo (available at https://www.sciencedirect.com/science/article/pii/S0045653520320749) point out that the Cadmium and Arsenic rates increased considerably above the levels permitted by the Resolutions of the National Environment Council, thus forming an impermeable crust in the bed of the Rio Doce River bed in which the fine particles were incorporated into the sandy soil of the river bed and in the mouth. The study also points out that iron ore tailings deposited on the surface of the soil can release toxic metals when exposed to weathering and river rework, thus contaminating the entire food chain. According to evaluations by the Ramboll, the RENOVA programmes PG 38 (Research and Monitoring Program for the Rio Doce Basin, affected coastal and estuarine and marine areas) and PG 28 (Aquatic Biodiversity Conservation), are behind their deadlines, are only partially fulfilling their objectives, did not present objective data and had their reports disapproved (or only partially approved) by CIF and CTBio. Does BHP agree that there are numerous studies that indicate that it is much too early to conclude that the river ecology downstream of the Candonga Reservoir and along the coast has recovered from any tailings-related impacts?
Exploration in Ecuador: questions from community members in the INTAG region
1) Does BHP intend to mine in areas of Ecuador known to have critically endangered species of animals, or found only within the mining concessions and nowhere else on earth (endemic to the mining concessions)?
2) Does BHP intend to mine in areas designated as Protective Forests by the Ecuadorian government (Bosques Protectores), or where communities have not been properly consulted?
3) Will BHP commit to respecting the will of local communities and local governments if, after careful consideration, they decide to not allow mining, irrespective of what national governments say?
Cerrejón Coal, Colombia: questions based on concerns expressed by members of communities affected by the mine’s operations
Why is Cerrejón Coal (33.3% owned by BHP) not complying with Colombian court decisions?
The village of Tabaco, forcibly evicted in August 2001, has still not been reconstructed despite a court order in 2002 and an agreement signed between the company and the community in 2008. The company blames the local municipality for not playing its part covering the costs of the infrastructure, but international standards accept that such costs should be covered by companies. Villagers accuse the company of deliberately creating divisions. Will BHP insist that Cerrejón Coal honour the letter and spirit of the 2002 court order and the 2008 agreement?
Cerrejón Coal diverted the Arroyo Bruno, the main tributary of the Rio Rancheria, the only major river in the area, despite Colombian Constitutional Court ruling SU-698 of 2017 that the river should not be diverted. As a result, the natural course of the river has run dry while the artificial new course had only a small flow when LMN representatives visited last year. The communities, technical and academic participants, as well as social organizations have attacked the decision to keep the stream diverted – a decision that was made unilaterally by the ‘inter-institutional roundtable’ which includes Cerrejón Coal itself. The Delegate Auditor for Environmental Affairs of Colombia agreed with these criticisms in an audit report of July 2020. This report focused on the deficient reasons given for not returning the waters of the stream to their natural channel. The control entity recognizes that it is not giving “strict compliance with what is required in Sentence SU 698/17.” Will BHP insist that Cerrejón Coal comply with this ruling?
The Constitutional Court ordered Cerrejón to adopt measures to protect the rights to health and a healthy environment of the Wayuu Indigenous Reservation of Provincial through sentence T 614 of 2019. The sentence was published in February 2020, yet the company and the defendant Government Institutions have still not provided any type of accurate information, consultation, or actual participation in compliance with the orders. Even though the company has repeatedly denied the reported violations, the Court held that the community’s assertions are not unsupported. On the contrary, the Court’s ruling confirmed the serious health impacts that the community is exposed to by being within two kilometres of the mine. The company and the State Institutions have only had conversations with those sections of the communities that support the Cerrejón Coal company, while the rest of the community is not being consulted. Will BHP insist that Cerrejón Coal comply fully with the spirit and letter of Constitutional Court sentence T 614 of 2019?
Cerrejón Coal, Colombia: questions from Sintracarbon mine workers’ union
¿En que consiste la pugna interna de Glencore contra BHP (en el manejo de Cerrejón) por cotización y precio del carbón?
What is the internal conflict between Glencore and BHP over the management of Cerrejon, over the stock exchange listing and the price of coal?
¿Por que para el cambio de turno de 2X1 2×3 a un turno 7×3 7×4, donde los trabajadores y trabajadoras se afectarían en su seguridad, salud y vida, pero también afecta la unidad y arraigo familiar, se pretende por parte de Cerrejón imponerlo por la vía de la fuerza y arrogancia?
Why is Cerrejon forcibly and arrogantly imposing a change in shift from 2×1 2×3 to 7×3 7×4, given that it will affect not only the safety, health and life of workers, but also the unity and roots of their families?
¿Por que razón la sostenibilidad y supervivencia de Cerrejón depende de arrebatar derechos convencionales e imponer jornadas laborales extenúantes, que dejarían a unos 3.000 trabajadores directos e indirectos sin empleo en medio de la Pandemia generada por el COVID-19?
Why is it that the sustainability and survival of Cerrejón depend on taking away conventional rights and imposing strenuous working hours, which would leave about 3,000 direct and indirect workers without jobs in the midst of the Pandemic generated by COVID-19?
Escondida Mine, Chile: questions from members of communities affected by the mine’s operations
BHP’s Escondida Mine is going through two environmental processes in Chile, the first of them in the Antofagasta Environmental Court and the second in the Superintendency of the Environment.
The judicial process in the Antofagasta Environmental Court is the result of an environmental damage claim in which the following charges are made:
- Severe decrease in the levels of the Punta Negra Salt aquifer, compromising its regeneration, and elimination of water bodies.
- Degradation of or damage to soil composition (saline substratum)
- Total or partial loss of salt marshes and associated wetland vegetation.
- Loss of the particular ecosystem of the Punta Negra salt flats
- Modification or loss of habitat causing damage to the wildlife of the Punta Negra salt flat
- Loss of ecosystem services
- Biodiversity loss
A sanctioning process has begun in the Superintendency of the Environment based on the following charge, which according to the Superintendency’s own organic law counts as serious:
- Decrease in the water table in the “Tilopozo Sector” greater than 25 cm, continuously exceeding since 2005 the maximum acceptable decrease in the water table that can be supported by vegetation systems, as provided in Table N° 1 of the Act, without undertaking measures to reduce the exploitation period to less than 21 years.
Bearing in mind that the processes are underway, as well as the corresponding investigations, the questions to BHP are:
- Does BHP Minera Escondida have any critical retrospective analysis regarding its specific approach to caring for the environment in its operations?
- Beyond the results of the open processes (judicial and administrative), is there any action or process that should have been done better regarding the management of the aquifers that your environmental licenses were required to protect?
- From its perspective as an extractive company that feeds on current, past and future natural assets (namely, continental water) to produce capital, does it seem logical to create damage to aquifers which will take between 100 and 200 years to restore, bearing in mind that ecosystem services and the survival of an entire Indigenous People depend on them?
- In the same way, from your particular point of view as an extractive company, how do you explain to an entire Indigenous People that the aquifers of the Punta Negra salt flat and of Monturaqui-Tilopozo will have a recovery rate so slow that it far exceeds the actual life of a whole generation of human beings, taking into account that the spirituality, traditions, customs and economic activities of this Indigenous People depend on those same territories affected on the surface and underground?
Antamina, Peru: questions from TerraJusta
Antamina says that 100% of the water used in its operations comes from the rain and that 99% of the water used is recycled. However, there are 10 resolutions that give Antamina rights to freshwater sources including streams, a river and a lagoon in Ancash, and an aquifer in Barranca, Lima. In order to understand the impact of the mine on the local hydrological cycle more generally, we need to know more about the extent to which the company is using these fresh water sources and the criteria used to determine the use of rainwater and its consequences for local streams and aquifers. Could BHP confirm how many concessions for use of fresh water sources the company has in relation to the Antamina mine?
Demonstrating financial responsibility: questions from London Mining Network
Financially responsible companies provide for the cost of their activities right through to the cessation of those activities. Mining is highly disruptive to both local and global environments, and the costs of rehabilitation need to be fully recognised in mining companies’ provisions in their balance sheets. BHP has two major thermal coal exposures, Mt Arthur in New South Wales and Cerrejón in Colombia, with huge potential rehabilitation costs against a backdrop of falling coal prices and a global movement away from fossil fuel.
The Annual Report shows an increase in the estimate within the provision for closure and rehabilitation costs of $1,255m, representing 18% of the opening provision of $6,977m. The Annual Report does not disclose the reason for this. Will you provide a detailed explanation?
Given recent reports that BHP is actively considering offloading its coal assets, can you assure investors and other stakeholders that you will commit to funding the full rehabilitation of these sites in recognition of the disruption brought about by your past and current activity, and the profits you have made from them?
Good practice would be for mining companies to post full security with governments to cover the eventual cost of reclamation at the start of projects, to hold sufficient financial assurance against likely environmental damage and third-party losses, and to publish reclamation plans and estimates in a manner accessible to all stakeholders.
It is unclear from your Annual Report what level of security has been posted with the governments of the territories in which you operate for mine reclamation costs. Will you provide a breakdown at least for the ten countries where you have the most activity?
The extent to which BHP holds sufficient financial assurances to meet the costs of likely environmental damage and third-party losses that arise due to mine related accidents is unclear from your Annual Report. You should be clear about whether your approach is to self-insure. If so, where is this reflected in your accounts? If you are not planning to insure for this, this should be made more explicit.
Will you make clear your view on proposals to establish an industry-funded pool based on a charge against volume of production from operating mines, to cover reclamation costs where actual reclamation costs exceed estimated costs and a mine owner is unable to pay; or when the costs of an unexpected event, such as a tailings pond breach, exceed the financial assurances required for such a loss, and no party is found to be at fault, or the polluter is unable to pay?
Will you make clear your view on proposals to create a claims process for compensable damage which is arms-length from the mine operator and includes a process for review of disputes regarding claims adjudication without the need to go to court?
In the interests of transparency and accountability, and to reassure investors, will you publish, on an annual basis, site reclamation plans, reclamation cost estimates, and related security, for each of your mines and in aggregate? Will you also make publicly available on an annual basis proof of security provided for unexpected environmental harm events for each of your mines?