MAC: Mines and Communities

Mineral Policy Institute commentary of issues raised during the BHPB Annual General Meeting, Sydney

Published by MAC on 2004-07-15

Mineral Policy Institute commentary of issues raised during the BHPB Annual General Meeting, Sydney Oct 22nd 2004

BHPB held the first of its two AGM’s in Sydney this year. Shareholders were greeted with a picket by local community members from an area just south of the Sydney who have formed the “Nepean Action Group” to counter threats to their environment posed by a BHPB coal mining proposal. They are seeking to save the Nepean River, located around an hour from the site of the A.G.M in Sydney, from destruction by longwall mining, a practice that has already irreversibly devastated a number of rivers in their district, and lead to contamination, loss of water flows and destruction of fish and aquatic life in the rivers.

Supported by the Mineral Policy Institute and the Greens Senator, Lee Rhiannon, locals held banners and placards were entitled “BHPB wrecks rivers” and “101 ways to send the Nepean Up Shit Creek. …1. BHP, 2.BHP. 3. BHP…101 BHPB.” while a bucket of dead fish was dumped at the door.

Inside the action was not less heated. The meeting started with the usual financial reporting and despite platitudes paid to environmental and social issues, a worrying hint from the management that little has changed in the company despite its many ethical commitments. Chip Goodyear, the CEO of BHP, who has the notorious past role as a vice president of the Freeport Mine in Indonesia, - a project infamous for its ongoing environmental destruction and human rights abuses- outlined the company’s approach to securing future growth:

“Where to from here? ...More of the same. We wish to continue the same thing that got us here today.”

Such a commitment seems to contradict the responses to concerned shareholders assuring them that things in the company have changed. It would hardly inspire hope or faith in the communities where BHPB is proposing to mine.

The range of complaints and pleas for ethical conduct that arose when question time came around verified the fears that shareholders are still reaping profits on the back of impoverishment of the lives, livelihoods and environments of those living around BHPB’s mines.

Workers Issues

Several shareholders raised with anger the news that BHPB' operations last year caused the deaths of 17 workers in several industrial accidents and criticised the company’s failures to safeguard their workers. One shareholder noted the large gap between the company’s commitment to ‘zero harm’ and the unacceptably large number of fatalities.

The Nepean River

An issue close to home and heart for the shareholders attending the meeting in Sydney- which is facing a water crisis- was raised early on in the meeting. Caroline Graham who has lived for three generations along the Nepean Region spoke about the destruction that had occurred along other rivers where this mining practice had occurred. Huge cracks in the river drained away the rivers flow, remediation measures on these rivers continue to fail, and a successful court case found BHPB’s mining operations responsible for the damage. Government documents continue to indicate that up to 90% of the flows are lost in some of these rivers, and efforts to fix the cracks have been largely unsuccessful, with the possibility for successful remediation in serious doubt.

She gave a gripping and emotionally charged speech, recalling her youth spent swimming in the waterholes and enjoying the river. Caroline pleaded with the company not to mine under the Nepean River, and explained how the destruction of the Cataract and Georges rivers had devastated the community.

Later in the meeting, Ray Smith, an ex miner who has worked for BHPB for around 20 years in one of the coal mines in the area joined his voice to hers, outlining that there was plenty of coal in the region and that there was no need to mine under the rivers as there was enough coal to keep the operations running elsewhere in the area.

Both were met by strong applause from shareholders, a message to the board of BHPB that mining under the Nepean is set not only to pose serious environmental and reputational risks, but is also likely to meet major resistance from the shareholding.

Ok Tedi

Queries over the company’s commitments regarding the Ok Tedi mine caused controversy and rattled Argus. The company would clearly prefer the issue would just go away, and has made major efforts to wash their hands of the disaster project, and convince the public that it is now someone else’s problem.

Kuntamari Croft, who attended as a proxy on behalf of ethical shareholders noted BHPB’s ongoing connection with the Sustainable Development Trust Company, the company in which BHPB transferred its majority shareholding in the Ok Tedi mine in exchange for indemnity for liability for damages from the mine. She highlighted BHPB’s appointment of 3 of the directors on the company, and thus the fact that it still had a voice, if somewhat removed, in the management of Ok Tedi mine. She noted the commitments it made to shareholders during the 2001 AGM to ensure that the mine was well managed regarding the environment after their exit, and that it would fulfil the social and environmental obligations shareholders would expect of the company. Kuntamari Croft noted that there was no funding or planning for any environmental remediation on the downstream river system, which has suffered widespread devastation and asked Argus whether this could be seen to fulfil the commitments the company had made to shareholders. Shareholders responded to this statement with a supportive applause.

BHPB CEO, who is entrenching his nickname of “Don’t Argue” Argus, ignored her question and proceeded to deflect the issues raised by questioning the accuracy of the facts she stated. Instead of responding to the issue of whether the company had fulfilled its commitments made in statements to shareholders in 2001, the CEO denied any interest whatsoever in the company in which BHPB had transferred its shares, and claimed that they did not appoint directors to the company.

Argus was grilled further on his ‘deflect and defer’ tactics, as the question was later followed up by Techa Beaumont, attending as a representative for Mineral Policy Institute, who sought clarification on Argus’s denial that BHBP appointed directors to the company. When Argus denied any ongoing connection, she then proceeded to quote the 2002 Annual Report of the Trust Company set up by BHP which states “BHPB appoints three directors on the trust company….”

She sought the board’s clarification on environmental management commitments and asked for the board’s comments on news that an acid mine drainage problem, previously only outlined as a ‘possibility’ was now occurring. According to BHPB’s own 1999 reports, the results would be ‘catastrophic’, yet the communities downstream had not been made aware of this possibility when they signed off on BHPB’s exit from the mine.

“Don’t Argue” Argus pulled out his famous ‘smoke and mirror’ tricks which has ranked him as one of the most combatative and unresponsive chairmen in Australia, diverting the questions and gruffly rebuking further efforts to get a straight answer. He claimed that communities downstream of the mine were happy with the arrangements for the mine’s continuation – a tenuous claim contradicted by studies by the Dean of the University of PNG law faculty, and by ongoing efforts by downstream communities and PNG parliamentarians from the region to overturn the arrangements that facilitated BHPB’s exit.

El Cerrejon mine, Columbia

Chris Doran from Pressure Point outlined ongoing community concerns and human rights abuses at the El Cerrejon mine in Columbia, of which BHPB is part owner, and sought their commitment to fairly resettle local communities who are suffering as a result of the mine. He also raised a BHPB proposal to divert a river in the region, outlining the reliance of local communities on the water resources in the dry and drought prone province of Guijira. BHPB defended its current practices at the mine. BHPB failed to respond to specific points raised regarding their approach to the request for resettlement of the community of Tamquito, which is considered to be under an effective siege by the mine which has bought up all the land surrounding the small village and made it impossible for the local community to maintain their traditional activities and livelihoods.

Ocean dumping of mine waste, and mining on Gag Island, Indonesia

Gag Island was clearly a sensitive issue for the company, as groups including the Mineral Policy Institute had informed shareholders at last years A.G.M of a range of concerns with the project. Special attention was paid to the project during the meeting, as the company acknowledged numerous queries from shareholders about the project on the small island.

Igor O'Neil, speaking as a representative of the Mineral Policy Institute, related the results of the World bank-sponsored Extractive Industries review which highlighted the lack of scientific evidence that disposing of mine waste into the ocean (a practice known as Deep Sea Tailings Placement) was safe for communties and the environment. Igor reminded the BHPB Directors of the opening speeches which spoke of BHPB's self-appointed status as an "industry leader". Igor challenged Chairman Chip Goodyear to take a real industry leadership position by introducing a policy: never to dispose of mine waste into the ocean. Unfortunately, BHPB directors made it clear in their reply are not willing to take a clear position for the future, but they confirmed that BHPB will not use ocean dumping at any of it's current planned projects, including Gag Island.

In Don Argus' and Chip Goodyears' comments on the Gag Island issue, BHPB noted that in July 2004, the Indonesian Parliament endorsed a Presidential decree which gave BHPB special permission to ignore a national Forestry Law ban on mining in Protected Forests. However, the Directors were obviously keen to avoid further controversy over the project at this years meeting, stating that they had not made a decision on the project, nor allocated any funds for this year to its development. In Don Argus' words, Gag Island is "not in their project pipeline."

BHPB backtracks on denial of ongoing links to Ok Tedi Trust Fund

A day after the BHPB AGM chairman Don Argus backtracked on his denial during the AGM of any ongoing links between BHPB and the trust fund in which they placed their shares in the mine in 2000.

At the BHPB A.G.M on Friday, combatative BHPB CEO, nicknamed ‘Don’t Argue’ Argus, successfully avoided the substance of questions by creating controversy over this secondary issue. Argus denied that BHPB appointed any of the directors of the company with a request for those raising the issues to ‘get their facts right’, and conveniently diverted shareholder attention from the issues at the heart of the question.

A letter from BHPB received by The Mineral Policy Institute on Monday 25th of October acknowledged the fact that BHPB appoints 3 of the directors to the Sustainable Program Company, an issue denied and then deflected by the Chairman of BHPB during his responses to questions at the A.G.M on Friday. Annual Reports of the SDP Company acknowledge that there are three BHPB appointed directors on the company, Dr Ross Garnaut, Hon Jim Carlton and Ms Trish Caswell. The Annual Reports of the trust company acknowledge that the board continues to report to BHPB Billiton and that the rules and constitution of the Trust Company can only be changed with BHPB’s consent.

The question conveniently pushed to the side was the extent to which the company has fulfilled environmental and social commitments made to shareholders in its 2001 AGM when it was justifying its cut and run tactics from the disaster project, and how the company would respond to news of a likely ‘catastrophic’ acid mine drainage problem in the mine.

Concerns were expressed about the consistency of the commitments made to shareholders with recent disclosures that there had been no allocation of funds for remediation of the devastated river system upon mine closure, and for impacts of acid drainage problems predicted by BHPB’s consultants prior to their exit as likely to cause ‘catastrophic’ outcomes that were not discussed with communities who would be affected.

The trust fund was set up in the process of BHPB’s exit from the mine, and the company placed their 52% majority shareholding, along with their liability for damages caused by the mine into the company domiciled in Singapore. The legal arrangements were agreed upon between BHPB and the government of Papua New Guinea. While in theory the constitution of the trust requires the funds to be utilised to fund ‘sustainable development’ projects in Papua New Guinea, the funds accrue only from future profits of the mine, and thus are dependent upon its ongoing operation, and continued environmental destruction.

The majority of the money is locked away in a ‘long term’ fund which prioritises provision of indemnity for stakeholders in the Ok Tedi mine, including the PNG Government and BHP Billiton, and fulfilling contractual obligations and calls on shareholders of the mine before spending on sustainable development purposes. Given that the impacts of the mine extend into the Gulf of Papua and Torres Strait, as well as into Indonesia, contingent liabilities could easily exceed the future profits that the trust will accrue from the mine’s operations.

“The extent of the environmental, economic and social devastation caused by this mine is unprecedented, with the real costs of remedying this destruction exceeding what the trust fund could forseeably make from the BHPB’s shares in the mine.

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