Social responsibility is always something companies are keen to advertise at annual general meetings, and BHP Billiton (BLT) predictably wheeled out its triumphs: injuries down, taxes and royalties up, and a promise to seek even better standards moving forward. But the subject seemed to dominate an even larger share of the limelight than usual. Perhaps it was the sting of the Australian government's watered-down resource super profits tax--the mineral resources rent tax--the implication being that BHP isn't paying its fair share. Or was it a reaction to the regulatory knock-backs for the Pilbara iron ore joint venture and PotashCorp (POT) bid--a licking of the wounds? Is BHP too big to be a good thing for the world? Or maybe CEO Marius Kloppers simply invited a green-washing in his call for a clear carbon price signal.
Whatever it was, it made for an odd 150th anniversary meeting for a mining company. Does BHP really think anthropogenic carbon dioxide emissions contribute to a global temperature rise? Chairman Jacques Nasser made a seemingly strong statement: "For several years now, we have recognised that the science of climate change demonstrates that human activities have a negative impact on our climate and consequently pose risks to our society and economic well-being." However, it's still unclear. By accident or design, Nasser's statement makes no direct reference to carbon dioxide and is one step removed from BHP's position. Further, it's ambiguous, potentially recognition only of someone else's stance.
Does it really matter anyway? We've previously argued a tax on carbon is really just an exercise in wealth redistribution. The trick is to make sure you're on the right side of the equation. BHP's diversified business model will have some divisional winners and some losers. We highlighted Olympic Dam's uranium as a winner. And customers may end up wearing much of the carbon cost in any case, as long as there's a globally level playing field. Kloppers reported, "This year our total energy use and greenhouse gas emissions were the lowest since 2007. We have reduced the amount of greenhouse gas emitted per unit of production by 7% in the last four years." We're unsure whether this was a function of product mix or genuine gains.
There was positive commentary on more familiar ground. Nasser said, "We are witnessing an extraordinary structural shift and period of growth in the global economy toward China and other emerging markets, and we are still only at the beginning of this era of growth and change." Further, "As a board, we feel confident that these factors will drive continued global economic growth and, importantly, long-term demand for our diversified portfolio of products." And, "We believe that our products, combined with our capacity to scale up to meet this unprecedented demand, positions BHP Billiton in a pivotal time and place in history." No ambiguity there! BHP is in a sweet spot that has a long way to run yet. The company highlighted the still-low per capita income and the number of economies at initial stages of their development, India the most obvious.
A much-anticipated grilling for failed takeover bids turned out to be a nonevent. Nasser later expressed the board's full confidence in Kloppers to pursue further acquisitions. Woodside Petroleum, here we come? BHP highlighted the benefit of its diversified earnings stream through unprecedented global financial disruption. The more stable sum of parts allows investment throughout the cycle. Kloppers said, "The pullback in investments by our competitors during the global financial crisis means that supply is lagging. As a result, the overall supply-demand conditions are favourable to us."What about the suggestion that BHP is too big to grow? Kloppers' answer: "We are a scalable organisation with a simple portfolio of large upstream expandable assets." It's business as usual with a socially responsible bent.
