Government Must Help Mining Sector: Bhp
October 25th, 2012
BHP Billiton has called for government collaboration in a bid to ease regulatory pressure on the mining sector amid continued volatile global markets.
While the dual-listed Anglo-Australian company, the world's biggest miner, remains "robust", its chief Marius Kloppers says there is a role for lawmakers to play to maintain commercial viability.
"Governments must ... play their part in ensuring that those elements of the cost environment they control provide a competitive framework within which future investment is encouraged. This extends to royalties, taxes, regulatory burdens and productivity-related policies," Mr Kloppers told a meeting of shareholders in London on Thursday.
In Australia, Mr Kloppers said meeting such commitments is currently stripping close to half the company's profit from domestic operations.
BHP made a net profit of $US15.4 billion ($A14.9 billion) in 2011/12, down 35 per cent from the previous year.
"Today we pay a far higher tax rate than we paid before and we pay a higher tax rate because the royalties in NSW have gone up, the royalties in Queensland have gone up, and the royalties in Western Australia have gone up ... the royalties in the Northern Territory on manganese have gone up," he told reporters after Thursday's meeting.
"On average it equates to something like 45 cents out of every dollar of profit goes into royalties and tax.
"Collaboration between industry and government is critical to restoring cost competitiveness in our sector."
Looking forward, the company forecasts further volatility in European and Chinese markets for the short term, as the eurozone continues its currency battle and China's projected GDP growth in coming years remains in single figures.
Amid delayed projects and scaled-back expansions, Mr Kloppers championed the company's diversification into long-life, low-cost assets across a range of commodities, markets and countries, enabling it to remain competitive.
"Our diversification strategy reduces our exposure to any one commodity or currency ... no other peer company has the mix of minerals and oil and gas within their portfolios as we do, and the value of this level of diversification is particularly evident during times of significant market volatility," he said.
But in seeking regulatory assistance, Mr Kloppers added that BHP "cannot do this heavy lifting on competitiveness alone".
"It is important for governments to provide strong, stable, predictable policy regimes in our key operating jurisdictions that support our own efforts to reduce costs."
Mr Kloppers has not been immune from the softening markets and increasing demands, with his CEO remuneration reported to have been slashed by 15 per cent to $US9.8 million for the latest financial year.
Shareholders on Thursday were presented with a brief summary of the company's "executive compensation", including its support for the Australian government's move to boost transparency and investor involvement in management pay levels.
"We link pay to the well-being of the company in the shorter term," chairman Jac Nasser said.
"This means we take into account both the financial and non-financial effect senior executives have on BHP Billiton and our stakeholders. These factors include health, safety, environment, and community relationships, as well as business performance and capital investments."
Thursday's meeting, which attracted a small contingent of protesters - waving banners including "dirty energy" and "BHP Billiton, stop destroying communities, lives and land for coal" - came ahead of the company's Sydney AGM on November 29.