BHP says it expects industrial action to grow as economic uncertainty swirls

BHP chief executive Mike Henry has told the company’s AGM more industrial relations disputes loom as new federal workplace laws start to take effect.

BHP chair Ken MacKenzie and chief executive Mike Henry at the annual general meeting in Brisbane. Picture: Luke Marsden

BHP chief executive Mike Henry expects more industrial relations disputes as new federal workplace laws start to take effect at an uncertain time for the global economy.

The warning comes as BHP grapples with “same job, same pay” requirements and attempts to re-unionise the West Australian iron ore industry under the Albanese government’s industrial relations changes.

“We believe the dynamics that are being embedded currently create greater potential for conflict, including in some parts of the nation where there hasn’t been a real recent track record of industrial relations disputes,” Mr Henry said on the sidelines of the company’s annual general meeting in Brisbane. Amid speculation he could be preparing to hand over the board reins in 2025, BHP chair Ken MacKenzie said succession would be discussed with his fellow directors at the end of the year.

He is entering his ninth year as BHP chairman, while Mr Henry has been in the chief executive seat for about five years.

“We are developing internal candidates for both the chair role and the CEO role,” Mr MacKenzie said.

BHP has been forced to the negotiating table by unions that gained a toehold in its iron ore operations in WA through changes to the Fair Work Act.

The push to re-unionise the iron ore industry after decades of industrial peace includes demands that BHP pay workers a $10,000 annual bonus and guaranteed annual pay rises of at least 5 per cent along with a raft of new conditions around rosters, bonuses and penalty rates.

The Australian Workers’ Union, along with the Electrical Trades Union and the Australian Manufacturing Workers’ Union, initiated bargaining unilaterally, without having to show they represented a significant number of workers.

Mr Henry said BHP would work very hard with employees and any unions they chose to represent them to avoid strikes and other industrial disputes.

“We genuinely pride ourselves on working together with others to achieve win-win outcomes. However, some of the policies that are being put in place do give rise to a greater likelihood of industrial disruption,” he said.

Mr Henry said one area of concern was around same job, same pay changes as he reignited his row with the government over industrial relations.

“These are specifically about cost and productivity. We have a crazy situation here in the mining industry in Australia, where over the past 25 years, productivity has moved sideways as wages have doubled,” he said.

“That is not a route to maintain a competitive industry, and this industry has to remain competitive globally.”

Mr Henry said BHP had supported changes to the industrial relations regime to help the lower-paid and those in less-secure employment sectors in Australia, but always made the point that miners were well paid relative to all other industries.

BHP said the increased risk of industrial disputes came at a “very uncertain time” for the global economy.

BHP chief executive Mike Henry and other board members at the AGM in Brisbane. Picture: Luke Marsden

The mining giant said it was comfortable with its portfolio of assets, including its big bets on copper and potash, in an era of commodity price volatility where iron ore’s star might begin to fade.

China’s economic malaise and a waning reliance on the property sector for growth has cast doubt on whether iron ore will continue to deliver eye-watering profits for BHP and Rio Tinto, with both signalling demand may have peaked.

“If you look at the broad arc of where we see commodities going from here, we’ve been clear previously that as the Chinese economy continues to develop and evolve over time economic growth will become less steel intensive,” Mr Henry said.

“Iron ore demand will slow over a long enough time horizon and at the same time we see more iron ore coming to market from WA and from west Africa and so on. The competition will heat up, but we’re very well placed given where we’ve moved ourselves on the cost curve.”

Mr Henry said copper and potash demand would be a lot more resilient as commodities in greater demand as economies moved through that early stage of ­development.

The BHP chairman attempted to hose down suggestions BHP could soon test the faith of investors in copper by revisiting one of the biggest takeover deals in its history.

BHP chair Ken MacKenzie in Brisbane.

Mr MacKenzie said the mining giant had “moved on” after being rebuffed in its previous $74bn takeover tilt at Anglo American.

Mr Henry ignited speculation about a revised bid with a recent visit to South Africa, where he reportedly met with the state-owned Public Investment Cor­poration, which has a 7.5 per cent stake in Anglo.

Under British takeover rules, BHP is in a standstill period until November 29 after a making a spurned all-scrip takeover offer for Anglo and then walking in May.

“We thought there was an opportunity here to create something unique and special, a bit of a sort of a one plus one equals three opportunity,” Mr MacKenzie told the AGM.

“We had a clear view in our mind around the value that we can create and the value that we were prepared to pay. Unfortunately, Anglo American shareholders had a different view, and they thought there was more value in the plan that their management wanted to execute. And so, they moved on and, quite frankly, so have we. It was never a transaction that we had to do, it was a nice to have, not a must do.”

Anglo chief executive Duncan Wanblad is trying to sell off assets, including its five coking coal mines in Queensland, to strengthen the balance sheet and appease shareholders.

The $7bn sale process has been hampered by doubts over how long the Grosvenor mine will remain out of action after an underground fire.

One theory is BHP could bide its time as pressure builds on Anglo to deliver on its copper-focused restructure.

BHP showed it still had an appetite for copper acquisitions in August with a $3.2bn punt on a 50 per cent share alongside Lundin Mining in two projects high in the Andes in Argentina.

Mr Henry said BHP had other options to grow its copper portfolio, including in South Australia with the Oak Dam project.

Originally published as BHP says it expects industrial action to grow as economic uncertainty swirls