BHP Billiton: Corporate Rap Sheet

BHP Billiton

By Philip Mattera

BHP Billiton, known traditionally as Big Australian, is now the largest diversified resource company in the world. Its dual headquarters and dual stock listings in Britain and Australia reflect the fact that the business is the result of the 2001 merger of BHP (formerly Broken Hill Proprietary, a mining giant in Australia) and Billiton of South Africa. Aside from its extensive extractive operations in its home countries, the company is also active in places such as Chile (copper), Colombia (coal and nickel) and Canada (diamonds). BHP Billiton has often been the subject of controversy over its hardline labor relations policies and what is seen as its overly aggressive pursuit of new mining opportunities in poor countries.

 

Environment and Product Safety 

The lead BHP started mining in Broken Hill in the late 1880s was dangerous to the health of both the miners and nearby residents. The workers came in direct contact with ore dust, while townspeople were exposed through the emissions of the smelter furnaces. Accidents, often fatal, were also a fact of life for the miners and their families.

Environmental problems have persisted in more recent times. In 1994 BHP subsidiary Ok Tedi Mining Ltd. was sued by a group of land owners in Papua New Guinea who charged that the company was destroying the Ok Tedi River through its dumping of toxic mining waste. BHP used its influence to get the Papua New Guinea parliament to pass a law that created a compensation fund for the landowners but barred any future liability for the company. The litigation, brought with the help of an Australian law firm, continued, and in June 1996 the company agreed to a settlement worth about US$400 million. That did not end the controversy. In 2007 a new lawsuit asking for US$4 billion in damages was filed on behalf of 13,000 villagers whose traditional land was said to have been destroyed by the company’s dumping.

In preparation for an action at BHP’s 2008 annual meeting, the London Mining Network issued a paper listing a series of environmental problems at the company’s operations around the world, including excessive water use at a copper mine in Chile, exploration for nickel near a Guatemalan lake that is part of a national reserve, and other nickel exploration in a part of Indonesian-controlled West Papua that had been designated a protected area until the mining industry intervened. A 2011 alternative annual report on BHP’s activities published by the London Mining Network and other groups also highlighted environmental problems relating to the company’s coal mining on the Indonesian island of Kalimantan and coal and uranium mining in Australia.

In 2011 BHP entered the controversial business of hyrdraulic fracturing, or fracking, by purchasing U.S. shale oil properties in Arkansas, Louisiana and Texas.

 

Labor

From the very beginning BHP had a union presence. The Amalgamated Miner's Association (AMA) of Australasia began organizing at the company in 1886, but it took some time to sign up a majority of the company's employees. By 1889 the union was powerful enough to win a strike called in support of the demand for a closed shop. The following year, the directors of BHP briefly shut down the mines in support of the management drive to crush a longshoremen's strike. This in turn prompted a three-week strike at BHP that ended with an agreement between the two sides to settle disputes through arbitration.

Two years later relations between labor and management at BHP and other mines in the area deteriorated after the employers decided to institute a piecework-type system in place of the exclusive employment of unionized hourly wage workers. The AMA took the miners out on strike, while the employers brought in outside police to protect their property and the strikebreakers who were also recruited from outside. After four months the impoverished workers ended their walkout, and the AMA lost its recognition from the employers.

Labor did not stay beaten for long. The AMA and other unions rebuilt their power, and in 1909 a clash over wage cuts led to a management lockout and the arrest of union leaders. An arbitrator ruled in favor of the workers, which helped persuade the management of BHP to cut back the company's operations in Broken Hill. Labor militancy in the town continued during the following years—including a year-long walkout in 1919-20—inspired in part by the local activities of the Industrial Workers of the World.

After BHP became primarily a steel company it found itself in a long-running contest with a group of militant unions in that industry. BHP originally created a US-style company union and used a blacklist to avoid hiring union activists. During the labor shortages of the Second World War BHP could not be so selective in its hiring, and soon it was forced to recognize independent unions. The tension relations with those unions abated after 1982, when the Australian government instituted a restructuring plan for the steel industry that included measures to limit strikes. The plan also reduced employment in the company's steel operations by some 40 percent (BHP spun off those operations in 2002).

BHP’s labor practices seemed to harden after the merger with Billiton. In 2001 the International Metalworkers Federation issued a statement condemning the company for “its callous disregard for workers’ collective rights” and for attempting to “marginalize or eliminate trade union activity by aggressively promoting individual contracts,” especially in Australia. The federation launched an international pressure campaign against the company.

BHP continued its policy of trying to negotiate with individual workers at its Australian operations rather than working with unions. This prompted the United Nations make an offer in 2003 to send representatives of the International Labor Organization to try to get the company to observe international norms on collective bargaining rights.

When workers at BHP Billiton’s Ekati diamond operations in Canada tried to organize a union, the company resisted, forcing the Public Service Alliance union to call a strike in 2006. When the company brought in strikebreakers, the union mounted a pressure campaign that included full-page ads in the New York Times and Wall Street Journal that referred to “dirty diamonds.” The union later won a contract.

Workers at BHP Billiton’s Escondida copper mine in Chile had to stay on strike for 25 days in 2006 before reaching agreement with the company on a new contract with wage increases and bonuses. Similarly, workers at BHP’s Cerro Matoso nickel mine in Colombia were on strike for four weeks in 2008 before getting an acceptable contract renewal offer from the company.

In January 2009 the company announced plans to to eliminate 6,000 jobs worldwide because of the slump in the nickel market.

 

Human Rights 

BHP has been a frequent target of criticism over its treatment of communities displaced or otherwise affected by its mining operations. For example, in 2005 Survival International accused the company of exploring for diamonds in the Gana and Gwi Bushmen’s reserve in Botswana without their consent. In 2007 a complaint was filed with the Organization for Economic Cooperation and Development accusing BHP of using forced eviction and destruction of a town in Colombia to provide land for the company’s Cerrejon open-cut coal mine. To resolve the dispute, the company agreed to consult more closely with local communities and to spend more on local sustainability projects.

A 2007 report by the London-based anti-poverty group War on Want included BHP among the British mining companies it charged with violating human rights in their operations in developing countries. In the case of BHP, the report cites the Ok Tedi case in Papua New Guinea as well as other situations such as an exploration project in Surinam (where the company is said to have failed to conduct environmental and social impact assessments) and mines in South Africa (where workers suffering from manganese poisoning were said to have been denied compensation).

In 2008 another British anti-poverty group, the Catholic Agency for Overseas Development (CAFOD), issued a report accusing BHP Billiton and its affiliate AMCOR of imposing its Hallmark nickel mining project on the people of the Philippine island of Mindanao against their wishes, in part by bribing local officials. The company subsequently exited from the project.

 

Antitrust

In October 2010 BHP and Rio Tinto abandoned plans to create a $16 billion iron ore joint venture after regulators in Australia and other countries indicated they would block the deal as anti-competitive. (Two years earlier, the two companies had abandoned a plan to merge completely.)

In November 2010 BHP gave up on its effort to acquire fertilizer giant Potash Corp. of Saskatchewan after the Canadian government rejected the deal.

 

Watchdog Groups and Campaigns 


BHP Billiton Watch

CAFOD

ICEM (International Federation of Chemical, Energy, Mine and General Workers’ Unions)

International Metalworkers Federation

Independent Environmental Monitoring Agency

London Mining Network

Total Environment Centre

War on Want

 

Key Reports and Books

BHP Billiton Dirty Energy: Alternative Annual Report 2011by the London Mining Network et al.

Silver, Sin, and Sixpenny Ale: A Social History of Broken Hill, 1883-1921 by Brian Kennedy (Melbourne University Press, 1978).

The Rush that Never Ended: A History of Australian Mining by Geoffrey Blainey (Melbourne University Press, 3rd ed. 1978).

 

Note: This page draws from a corporate profile originally prepared by the author for the Crocodyl website in November 2008.

Last updated September 8, 2012.