Foreign Investment Review Board believed to have eased 20-year-old merger restrictions on BHP

BHP is believed to have won concessions over how it organises its corporate affairs as the mining giant ends its dual-listed structure.

BHP CEO Mike Henry at BHP's London AGM in October. Picture: Mike Goldwater

BHP is clear to collapse its 20-year old dual-listed structure and make Australia the centre of its mining empire, with the company believed to have agreed a “modernised” framework with the Foreign Investment Review Board to end some of the restrictions on how the mining giant organises its affairs.

The details of BHP’s new deal with the federal government won’t be known until December 8, but the company is believed to have sought relaxation of a number of the requirements set by federal treasurer Peter Costello in 2001, when BHP merged with UK-listed Billiton – including a requirement its chief financial officer be based in Australia.

BHP is also believed to have sought an easing on restrictions that require the majority of its board meetings and executive committee meetings be held in Australia, and over the interpretation of conditions that say Australia must remain the “centre of administrative and practical management” of the company.

While BHP is believed to have assured the government that it plans no major restructuring of the company as a result of the changes, the mining giant is believed to have argued that the 20-year old restrictions no longer reflect the reality of operating as a global company – particularly in light of the disruptions over the last 18 months caused by the coronavirus pandemic, which forced board and executive meetings to move online in light of international travel restrictions.

BHP has only recently appointed a new Melbourne-based chief financial officer, David Lamont, with chief executive Mike Henry also Melbourne-based.

But the company is increasingly looking outside of Australia for growth.

BHP’s board ticked off on the first stage of the development of BHP’s Jansen potash project in Canada in August, when it announced it was considering ditching its dual listed structure, and selling its oil and gas assets to Woodside Petroleum.

The company is also pursuing the acquisition of Canadian nickel player Noront Resources, has accelerated exploration efforts in South America, and has been linked to the acquisition of copper projects in the Democratic Republic of Congo.

Relaxation of the 20-year old merger conditions would allow BHP to establish larger administrative centres in the Americas and elsewhere in the world, but carries the risk the company could also seek to send more Australian administrative jobs offshore.

BHP’s board ticked off on ending the dual-listed structure on Thursday night, ending the legacy of the company’s 2001 merger with Billiton.

The $US28bn merger with Billiton turned “The Big Australian” into the largest resources company in the world, allowing the two to merge without the tax payments and stamp duties that might have fallen due under a traditional takeover.

Shareholders will vote on the move in January, with 75 per cent of votes of both Australian and UK shareholders needed to change BHP’s corporate structure.

If shareholders approve the move, BHP’s Australian arm will acquire its UK entity. BHP will retain its primary listing on the ASX, but will move to a secondary listing on the London stock exchange.

BHP argues the collapse of the DLC will end the disparity between the trading prices of its Australian and UK shares – worth 15 to 20 per cent of its price ahead of the August announcement, and now down to only 2 to 3 per cent.

BHP shares closed up 52c, or 1.3 per cent, to $40.23 on Friday.