Global Investment Watch

Company Background

The current conglomerate was formed when Australian minerals and oil company BHP Limited acquired UK mining company Billiton Plc back in 2001. The result of the merger is a two-headquartered company that is run as a single entity with the same board of directors and common management. The company is listed on both the ASX and LSE exchanges. The Melbourne side is called BHP Billiton Limited while the London business is BHP Billiton Plc. The two collectively are known as BHP Billiton. The company ranks among the world’s top producers of iron ore and coal (thermal and metallurgical) and is a major producer of petroleum products such as crude oil and natural gas. Other units produce aluminum, base metals, diamonds, manganese, and stainless steel.

Recent Events

In early 2007, BHP made an unsolicited offer for Rio Tinto. The combined company would create the world’s largest minerals company and one of the largest companies in the world. Under the proposed offer, each Rio Tinto share would be exchanged for approximately three BHP Billiton shares. In November 2007, Rio Tinto’s Board of Directors rejected the offer but BHP Billiton appears intent on pursuing the deal. Facing a deadline set by British regulators, BHP made a formal revised offer in February 2008 worth roughly $147 billion. However, BHP’s prospects of pulling off the second-largest takeover ever were complicated when the aluminum companies Alcoa of the U.S. and China’s Chinalco teamed up to acquire 12% of Rio Tinto’s London-listed shares, which equates to 9% of the whole company. Rio Tintois widely criticized by trade union groups like the National Union of Mineworkers and the Federation of Chemical Mine Workers’ Union for its refusal to adhere to the trade union rights and the company’s vehement anti-labor tactics.

Labor & Human Rights Record

BHP Billiton workers are represented by several unions around the world including the Australian Manufacturing Workers Union (AWU), the National Union of Mineworkers (NUM, South Africa), the Union of Northern Workers (UNW, Canada) and the Sindicato de la Industria del Carbon in Colombia among others.

The company has faced a slew of allegations of human rights and safety violations along with significant strike activity. BHP Billiton has received a number of health and safety as well as environmental fines. The following summary is not an exhaustive list of recent issues regarding the company.

The company’s goal of zero fatalities was not met in 2007. One fatal accident occurred at the Mozal operations in Mozambique; three worker deaths were reported at two of the company’s base metals operations; and three fatal incidents occurred in the company’s energy coal operations. In November 2007, five of the company’s employees died in a helicopter crash in Angola. The helicopter was shuttling people between the company’s Angolan headquarters and the exploration site.

Thirteen of 19 big corporate Olympic sponsors, including BHP Billiton, have flunked a test challenging them to pressure China over the 2008 Olympic Games host’s support of Sudan, a U.S. advocacy group said Monday. Dream for Darfur said it graded the companies on whether they took steps to influence or contact China or the International Olympic Committee, donated aid to Darfur or appointed a point person on Darfur, among other criteria. BHP Billiton received an F-rating due to inaction.

According to The Guardian (London), a report by the charity War on Want made allegations that British mining corporations are “complicit” in human rights abuses while making large profits in developing countries and cited BHP Billiton along with Rio Tinto in the report.

On November 1, 2007, Wendsler Nosie Sr. Chairman San Carlos Apache Tribe submitted his testimony to express The Tribe’s strong opposition to the legislative land exchange proposed by H.R. 3301, which would allow foreign owned mining giants, Rio Tinto PLC (UK) and BHP Billiton Ltd (Australia), to “desecrate” the aboriginal homeland of the Apache People and acquire and mine approximately 3,025 acres of public lands near Superior, Arizona. H.R. 3301 would also bypass the “hard look” required by the National Environmental Policy Act, 42 U.S.C. 4321 et seq. (NEPA) and other important environmental and cultural resource protection laws. These lands are sacred and holy places. So too is the nearby area known as Devil’s Canyon, which also will be desecrated if this legislative land exchange is approved.

Also in November 2007, unionized workers at the Cerro Colorado copper mine in Chile walked off the job to protest the alleged unjustified firing of fellow employees. The workers were protesting what they consider the illegitimate firing of 11 employees, four of which have been suffering from work-related illnesses, Marín said. The union is awaiting an agreement with the company before deciding how to proceed. BHP Billiton declined to comment on the alleged firing of workers.

Recently, workers at the Ekati Diamond Mine represented by the Public Service Alliance of Canada North reached a tentative settlement for a second collective agreement at Canada’s only unionized diamond mine. The new contract contains significant improvements for diamond workers, including annual indexed wage increases above the rate of inflation, a very good incentive pay plan, improved seniority and layoff protection, better Short Term Disability program and other benefits to workers.

In January 2007, Ok Tedi River villagers sued BHP Billiton and operators of Papua New Guinea’s Ok Tedi copper mine for more than $5 billion for the destruction of the Ningerum people’s traditional lands. PNG lawyer Carmellus Narakobi lodged the lawsuit in Port Moresby’s National Court on behalf of 13,000 villagers seeking compensation for the destruction of their land along 38km of the river. “The Ningerum people have suffered from tons and tons of arsenic, copper, zinc and other heavy metals dumped into this once pristine habitat,” he said. BHP Billiton was forced to abandon the destructive mining project after studies showed that the operation was causing great environmental harms. Villagers are no longer able to safely eat locally harvested fish or food grown from their own gardens. It is estimated that it will take 300 years to clean up the area of the contamination, which the mining operation caused.

In August, BHP Billiton, along with resource giant BlueScope Steel reached a confidential settlement with the widow of a Cardiff asbestos victim who died last year after testifying at his own case. It was stated that the victim had been owed a duty of care by his alleged former employer BlueScope Steel (formerly John Lysaght Australia) and then owner of the Australia site, BHP Billiton. In a similar case, an Adelaide man, who is dying of lung cancer, is suing the company for allegedly exposing him to asbestos 40 years ago.

The Australian Business reported in July that BHP Billiton faces an investigation into its possible role in the forced eviction of the population of a Colombian town that was then bulldozed to make way for a coalmine. The investigation, by the Organization for Economic Co-operation & Development, is also expected to examine BHP involvement, if any, in allegations that the mine is choking off access around five other towns in a bid to secure more land for coal mining in a policy that locals have branded “estrangulacion.”

In June 2007, Australian miners on workplace agreements at BHP Billiton’s Pilbara iron ore mines were angry about what they described as “belligerent and overbearing treatment” from management. About 200 miners signed a petition complaining of threats, stress, low morale and risks to safety, as miners have been placed in areas where they lack experience. An investigation by the Office of Workplace services has not found any breaches of the Workplace Relations Act by the company.

In the same month workers at the company’s Samancor Manganese mine in South Africa went on a six day strike over discrimination claims that black workers had to walk 2 km home at the end of the day after bus routes from the mine were changed for safety reasons, while employees of other races got transport in front of their homes. The National Union of Mineworkers (NUM) called the strike and management has agreed to introduce a new shuttle service in which smaller buses will be dispatched to stops agreed by the NUM.

In February the company steered clear of a strike at its Cerro Colorado copper mine in Chile as union workers voted to accept the company’s latest pay offer. Workers accepted a 4.8% pay raise in real terms plus bonuses totaling 7.2mn pesos (US$13,162) per employee.

In January labor contract negotiations between operators at the Cerrejón mine in Colombia and the Sindicato de la Industria del Carbonunion resumed after failing to yield an agreement earlier in the month. Cerrejón finally reached an agreement ending the threat of a strike by 3,100 workers. The agreement included a 7.7% salary increase, and an agreement on the issue of healthcare. The awarding of loans to workers for non-specific use was also settled according to a union member.

That same month, the company denied a bid by the AWU to investigate the death of a 19-year old miner at its Cannington mine in Australia. Daniel Hensler had been undertaking electrical work underground near Mount Isa at Cannington Mine when he died. A spokesperson for BHP Billiton commented, ”As three separate investigations are already being conducted, we do not believe that anything can be usefully added by carrying out a fourth investigation.”

In 2006, workers at the company’s Escondida mine in Chile went on a month-long strike after failed negotiations with management over salary and working conditions for women. The strike was ultimately resolved when management and the union reached a deal.

Another 2006 strike occurred at Canada’s Ekati Diamond mine, when unionized workers went on strike for approximately 11 weeks. The company eventually came to a labor agreement with the union that included salary increases and paid personal leave days based on length of service.

In June 2005, the company was forced to suspend operations at one of its copper mines in Peru when protesters raided the site and demanded that the company spend more time improving local roads. In 2006 the company helped lead negotiations between the Peruvian Government and the mining industry to establish a contribution program aimed at enhancing corporate support for social programs in the poorest areas of the country where the mines operate. Community contributions by the company’s Antamina mine operations are expected to reach around $60 million in 2007.

Despite the implementation of a human rights training program for employees at its Cerrejón Coal operation in 2003, the company came under fire in 2004 for its mining operations in Colombia when the Mineral Policy Institute, Friends of the Earth Australia and United States NGO PressurePoint strongly condemned BHP Billiton’s conduct in operating its Cerrejón Norte coal mine in Colombia, as reported on the Friends of the Earth Australia website. According to the groups, the company and its consortium partners forcibly displaced a number of Indigenous communities with no compensation to make way for the expansion of the mine. According to PressurePoint, the company refused to negotiate with the community and instead waged a campaign of intimidation and harassment, including visits by security forces and denial of land rights. The group also alleges that mine officials bulldozed the houses of several Sarahita community members with no compensation, continuing what PressurePoint characterizes as violent intimidation. Friends of the Earth, PressurePoint and the Mineral Policy Institute fear that BHP Billiton has similar plans to forcibly displace communities in Tamaquitos, Roche, Chancleta and Patilla. The corporation’s human rights training program began in 2004 and by 2006 provided training for various stakeholders including public security forces, private security forces, Indigenous leaders an authorities, civil and government authorities as well as employees of the mine. The company, in collaboration with the National Ombudsman’s Office, has also integrated a Human Rights Early Warning System into the training program as a means of preventing massacres and forced displacements. To date, this system has prevented two potentially criminal events according to the company’s sustainability report.

In 2004, the company also faced labor problems and strikes concerning pay, working conditions and health and safety standards of its mining operations in Western Australia. Although management said that they would respect the picket lines when AWU union workers at the company’s Yandi iron ore mine went on strike in July 2004, AWU National Secretary Bill Shorten alleged that two management cars tried to ram through the pickets. Information regarding the outcome of the strike was not available.

Geographic Risk Assessment

BHP Billiton has operations on six continents and 25 countries. Sales: Asia 46%, Europe 28%, Australia 11%, North America 7%, Southern Africa 4%, South America 2%, other 2%.

In March the company decided to shut down the Johannesburg corporate headquarters it created in 2006 for its energy coal division, in another reduction of its business base in SA. It has decided to merge the customer sector groups (CSGs) for energy coal and metallurgical coal and base the combined operation at head office in Melbourne, Australia.

The company operates in Columbia, China, Angola, Democratic Republic of Congo, Liberia and Kazakhstan. Countries on this list are either lacking labor legislation that recognizes fundamental worker rights or they have labor legislation, but it is not enforced.

Conclusion

While workers at BHP Billiton are represented by several unions around the world, the company has faced a slew of allegations of human rights and safety violations along with significant strike activity in recent years. Moreover, the company has received a number of health and safety as well as environmental fines in 2007 and 2008. Though the company has taken steps to ameliorate several of the problems it faces, serious issues of human rights and workplace abuses still persist.