BHP says it could cut key skills programs if IR reforms progress

BHP chief executive Mike Henry says major skills investments – which are life-changing for some people – might have to be sacrificed if Same Job, Same Pay reforms get up.

BHP will need to look at cost cutting measures such as killing off its $300m FutureFit Academy program should the government’s Same Job, Same Pay measures be adopted as currently designed, chief executive Mike Henry said.

Both Mr Henry and chair Ken MacKenzie flagged several times in their addresses to the company’s annual meeting held in Adelaide on Wednesday, that the planned industrial relations reforms posed a threat to the attractiveness of Australia as an investment destination.

The Same Job, Same Pay reforms were a key election promise from the Albanese government, and seek to ensure, in the government’s interpretation, that labour hire workers are paid the same as directly employed employees doing the same job at the same work site.

BHP and the resources industry generally have argued that the reforms ignore issues such as the value of experience for long-term employees, and BHP has said the change would cost it $1.3bn annually.

“Of course, the direct impact is going to be on profitability, which goes then to the dividends payable to shareholders because that’s ultimately where the impact is in the near term,’’ Mr Henry said after Wednesday’s meeting.

In terms of what decisions BHP might have to take should the reforms pass into law as they are currently written, Mr Henry said it came down to running BHP “in as disciplined and productive a way as possible’’.

“To the extent the pressure increases, we’ll have to look for what further measures can be taken. One of the measures we’ve called out is FutureFit academies.

“These academies were stood up voluntarily by BHP to help train oftentimes young Australians new to the industry, to be able to get them from the jobs that they were in, which might be a hospitality job or a job in some other much lower paying sector, and to give them the skills they need to enter mining, which is kind of a big career, a life-changing career opportunity for them.’’

Mr Henry said 1500 people had so far been inducted into the academies, “but it is at a voluntary cost of $300m”.

“These are the sorts of things where we’re going to face some difficult trade-offs in the event that costs are arbitrarily increased through something like the Same Job, Same Pay legislation,’’ he said.

During his speech at the AGM, Mr Henry said that following the company’s acquisition and integration of OZ Minerals and its South Australian copper mines earlier this year, “with stable and competitive government policies in place in South Australia, there will be a strong case for future capital investment in these assets relative to other potential investment options in our portfolio’’.

Mr Henry said there was a “once-in-a-generation” opportunity for Australia to capture more than its fair share of global mining investment flow, but again warned that the policy settings had to be right.

“This will require government and industry to work together to improve the competitiveness of Australia’s mining sector so that the nation can enjoy the future benefits this opportunity can bring,’’ Mr Henry said.

“It’s against this backdrop that we are closely watching policy changes at the Australian

federal government level, some of which risk our national competitiveness.

“In particular, BHP shares concerns of the broader business community that the Australian

government’s Same Job, Same Pay proposal will increase costs and reduce Australia’s

investment competitiveness at a time when competition for investment is fierce globally and

other nations are working to become more competitive and more attractive.

“The proposed changes are not about ‘closing loopholes’ but are the most significant and far-reaching changes to Australian workplace relations since WorkChoices.’’

Mr Henry said Same Job, Same Pay could reduce the value of any potential growth plans in SA – where it wants to increase copper production to 500,000 tonnes per year over time from this year’s guidance of 310,000-340,000 tonnes – by up to $US2bn.

“And it risks directly impacting dividends for the 17 million Australians who hold BHP shares directly, or indirectly via superannuation,’’ Mr Henry said.

“This is not just about BHP. These concerns are shared by businesses large and small

across the country, and getting these policies wrong risks impacting Australians’ retirement

savings.’’

Also during the meeting, Mr MacKenzie defended BHP’s decision to tip $2m in to the Yes campaign in the voice referendum, telling shareholders the mining giant had “clear business reasons” for the decision.

“I can’t think of a social issue with greater connection to BHP’s business,” he said.

“(Our) relationships with traditional owners and other Indigenous partners are some of the most important relationships we have.

“We operate on the traditional lands of Indigenous peoples … and we have long-term agreements with traditional owners and other First Nations peoples.

“These are critical relationships to BHP’s ability to start projects, expand existing projects and to our operational continuity.

“They go to the heart of what we do as a mining company, and they’re integral to our businesses, and creation of shareholder value.”

Mr MacKenzie said the company respected the outcome of the voice referendum, and would continue to progress its own Reconciliation Action Plan.

“We remain committed to incorporate Indigenous perspectives and knowledge in the way we operate and manage our business,’’ he said.

BHP’s board on Tuesday approved $US4.9bn ($7.7bn) of spending on the second stage of its Jansen potash project in Canada, in a move that will double production capacity and boost BHP’s exposure to fertiliser minerals for food production.

The latest round of investment is set to transform Jansen into one of the world’s largest potash mines, doubling production capacity to approximately 8.5 million tonnes annually, according to the company.

BHP has identified potash as a future facing commodity along with copper and nickel. Potash is a potassium-rich salt used as fertiliser to boost agricultural production.