BHP bosses defend company’s decision to stay in gas and oil ‘for the medium term’
BHP management has batted away shareholder criticism of the miner’s intention to continue investing in gas despite claiming it will dramatically reduce its greenhouse gas emissions over the next decade.
Speaking at BHP’s Australian annual meeting on Wednesday evening, chairman Ken MacKenzie also addressed the fallout from rival Rio Tinto’s decision to blow up 46,000-year-old rock shelters at Juukan Gorge in the Pilbara.
MacKenzie said it was a tragedy that had resulted in a loss of trust in the entire mining industry but said BHP would push ahead with a nearby project over which heritage concerns have been raised.
BHP plans to sell or close mines that produce coal burned to make power within two years as part of a plan to cut its emissions by 30% within 10 years – a move the company says will put it in line with the international Paris agreement to limit the rise in global heating to 1.5C.
However, MacKenzie and the chief executive, Mike Henry, defended the company’s continued interest in gas and oil, telling shareholders BHP would continue to invest in the fossil fuels for at least the short term.
“We accept the science around climate change and we support the Paris goals,” MacKenzie said. “The reality is that all current plausible scenarios show that fossil fuels will be part of the energy mix for decades.”
Henry said the company saw oil and gas as “something to invest in for the short to medium term”.
On Juukan Gorge, MacKenzie said the destruction of the rock shelters “was a tragedy”. “It was a loss of a unique cultural heritage, but it was also a loss of trust,” he said. “It’s had an impact across the industry as a whole.”
The chairman said BHP had set up a new heritage consultation body with the Banjima people who have told a parliamentary inquiry they had no choice but to “trade away their heritage” to mining companies.
The inquiry had heard up to 86 significant sites could be destroyed by BHP’s South Flank iron ore mine expansion project in the Pilbara.
“At this point, there is no change to the schedule at South Flank,” MacKenzie told shareholders.
However, speaking after the AGM, he said the company would not take any further action that would disrupt the South Flank sites until it had the consent of traditional owners. “Just because we get approval to disrupt them doesn’t mean we’re going to,” he said.
MacKenzie also again defended the company’s continued involvement in oil and gas, stating coalmines lasted a long time but oil and gas resources ran out more quickly. BHP had about seven years’ worth of oil and gas left, he said.
In his address to shareholders, he said BHP was an “essential company” which saw “great opportunity” in an uncertain world rocked by social unrest, recessions caused by the coronavirus pandemic and the threat of global heating.
“Because as great as the challenges the world is facing, we know the answer to many of them can be found in the very resources we produce,” he said.
“Our products are essential for global economic growth and the transition to a lower-carbon world. We provide the materials that improve the lives of billions of people in developing nations, and help engineers realise the dream of cleaner power, more efficient transportation, communications and battery storage.”
Shareholders had been set to consider a resolution put forward by the Australasian Centre for Corporate Responsibility that would have required it to stop mining that could damage Indigenous heritage sites.
However, the resolution was withdrawn on Tuesday after BHP struck a deal with First Nations Heritage Protection Alliance, a peak body representing traditional owners, on how to deal with significant sites.
MacKenzie told shareholders the agreement included making sure there was “free, prior and informed consent in agreement making and that regulatory regimes should respect and reflect this right”.
“We have also set new aspirations for cultural heritage keeping places to even better advance traditional owners’ values, culture and pride,” he said. “Places where artefacts can be stored and visited, and also places of knowledge, learning and celebration of the unique living cultures they are connected to.”