BHP threatens to quit Minerals Council over coal promotion

BHP has threatened to leave the Minerals Council if the lobby group continues to promote coal-fired power as an energy solution.

BHP has threatened to leave the Minerals Council of Australia if the influential lobby group continues to promote coal-fired power as a solution to the nation’s energy crisis and doesn’t stop focusing on power reliability and affordability at the expense of emissions reduction.

The world’s biggest miner, which provides 17 per cent of the Minerals Council budget, yesterday delivered a public rebuke to the nation’s key mining lobby, which has been strongly promoting coal in recent years.

BHP said it would review its Minerals Council membership if the group pushes energy policy positions that differ from it.

The strong statements, which rankled other Minerals Council members but did not provoke a public response, came as BHP released a review of its membership of industry groups that hold positions on climate and energy policy. BHP, which owns the Mount Arthur thermal coal mine in the Hunter Valley and a stake in the Cerrejon mine in Colombia, also said it would quit the World Coal Association and the US Chamber of Commerce over differences in climate change positions.

The global miner outlined two key differences between its climate change policy it has developed under chief executive Andrew Mackenzie and that of the Minerals Council.

One was that the lobby group had at times argued that energy policy should prioritise reliability and affordability over “other policy goals” and had highlighted the costs of meeting international climate commitments.

“We believe climate policy and energy policy are inextricably linked, and that energy reliability, energy affordability and emissions reduction should be considered on an integrated basis,” BHP said.

The importance of reliability and affordability are shaping as election issues in Australia, with the Coalition saying they are more important than emissions reductions, although the latter will ­remain important. Big manufacturers, including BlueScope Steel, and the Manufacturing Australia industry group, have also called for cost and reliability to be prioritised.

The second policy difference for BHP was that the Minerals Council had called for policy changes that specifically encourage so-called high-efficiency, low-emissions (HELE) coal plants in Australia.

“We believe energy markets should be both fuel and technology neutral, and should not artificially favour one type of technology over another,” BHP said.

“We also believe governments should focus on setting policies to facilitate efficient markets. Government intervention in resources and energy markets should only be in response to a demonstrated market failure and informed by cost-benefit analysis.”

The miner said it would remain a Minerals Council member but would tell the group to stop pushing these policies.

“BHP will ... request that the MCA refrain from policy activity or advocacy in these areas, (will maintain a register of material differences, and will review its membership of the MCA if it has not refrained from such policy ­activity or advocacy within a reasonable period, being not more than 12 months,” BHP said.

BHP said benefits of belonging to the Minerals Council included enhancement to its commitment to improving the health, safety, environmental and community performance of its operations.

The new demands come after BHP in September forced the removal of Minerals Council chief executive Brendan Pearson over his strong lobbying for coal.

The Minerals Council yesterday had little to say on the matter.

“BHP has been a valued member of the Minerals Council for many years, and we look forward to that relationship continuing in the future,” a spokesman said.

The 22-year-old MCA is one of the nation’s most influential business lobby groups, evidenced by its successful campaign against Kevin Rudd’s resource super profits tax in 2010.

But the MCA’s role in the ­energy debate has become complicated. In 2013, it swallowed the Australian Coal Association as the big miners went on cost-cutting drives. This means it needs to represent the nation’s coalminers.

But its biggest members, BHP and Rio Tinto, are moving away from or have exited thermal coal.

BHP, whose Queensland coal operations mine coking coal used in steelmaking, reduced its thermal coal exposure when it included South African coal assets into its 2015 South32 spin-off.

Rio, which provides almost as much as BHP’s $1.8m in Minerals Council annual revenue, sold its thermal coal mine in NSW this year and has quietly stepped down from the World Coal Association.

Yesterday, Rio, Glencore, Whitehaven Coal and New Hope Group all declined to comment on BHP’s move.

However the World Coal Association said it was disappointed with BHP’s stance and felt its review didn’t accurately reflect its views. The London-based World Coal Association is a global lobbyist for coal producers, with its members accounting for 20 per cent of global coal production, including Anglo American PLC and Glencore PLC.

“The WCA has always supported a balanced approach that integrates climate and energy policy; working toward a low-emission future for coal. We hope to be able to continue working with BHP on this basis in the future,” said the association’s chairman, Mick Buffier.

The US Chamber of Commerce said it looked forward to discussing the issues with BHP.

“The chamber believes that the climate is changing, and that man is contributing to these changes,” the group said in an email. “We also believe that technology and innovation, rather than unachievable federal mandates, offer the best approach for reducing greenhouse gas emissions and mitigating the impacts of climate change.”