BHP alliance with environmental charities will end in tears

Australia’s biggest miner is creating a most unlikely alliance with environmental charities. It can only end in tears.

Incoming Chief Executive Officer Ken MacKenzie (centre) addresses shareholders at BHP Billiton's Annual General Meeting (AGM) in Melbourne today. Picture: AAP.

Is BHP serious? Australia’s biggest miner — which had its AGM in Melbourne today — is creating a most unlikely alliance with environmental charities. It can only end in tears.

Against a background of a serious split inside the minerals council of Australia — once the most powerful industrial lobby group in the nation — BHP is now openly clashing with the MCA and effectively lobbying on behalf of the same charities that will march in the streets against it.

Now whatever the hopes or ambitions of the current regime at BHP, led by chief executive Andrew Mackenzie, the company will always needs to dig, blast and disrupt the landscape where it explores and produces resources.

Despite high safety standards, BHP will invariably have accidents, not to mention fatalities and despite earnest environmental aspirations it can still find itself in a huge human and environmental catastrophe such as Brazil’s Samarco dam disaster.

In fact MacsKenzie said today settlement negotiations for BHP’s role in the disaster which killed 19 people in 2015 are still continuing in the courts. “These processes can take many years to evolve’ he explained. (BHP was in a joint venture with miner Vale at Samarco in Brazil).

So on the one hand BHP is dealing with Samarco and on the other it is openly advocating for tax deductible environmental charities such as Greenpeace and the Wilderness Society to be protected from moves by the MCA to restrict environmental charities. Under discussion are new regulations which would limit spending on activism to ten per cent of an environmental charity’s budget, while 25 per cent of budgets would have to be spent on ‘remedial’ work such as on-the-ground clean ups.

The charities, needless to say, are cautiously welcoming of the implicit support from a major miner which can now line up beside significant forces such as law firm Arnold Bloch Leibler which had already voiced serious concerns about the proposals.

But BHP shareholders must be puzzled indeed.

BHP has traditionally been a ‘core’ holding in most Australian retail portfolios. No doubt shareholders at the AGM were reassured to know their company has been talking in such moral tones about the need for charities to be allowed to flourish and miners to build community trust — but they must also surely be worried about how on earth BHP could even remotely satisfy the very forces to which it is forming such an unlikely coalition?

Moreover, environmentalists might also be wondering how long this will last and, if BHP was not at war with its own industry lobby group might the issue have been treated differently?