Confrontation at AGM of Ken MacKenzie’s BHP shows mining still has an image problem

Yet he and CEO Mike Henry still had to politely listen to longstanding accusations from several members of Brazil’s indigenous communities that they were lying or inexcusably ignorant of the inadequacy of the company’s response to “the world’s biggest environmental crime.”

It is a spectacular example of the global commercial and reputational reverberations of any environmental failures by the mining sector and, increasingly, any local indigenous community or social conflict.

The group of Brazilians traveled to Adelaide to confront BHP’s board and management, eight years after the collapse of the Fundao iron ore tailings dam, which killed 19 people and sent polluted water and sludge flowing over hundreds of kilometers of waterways.

Many indigenous leaders are also becoming more assertive, including in court, by arguing that their rights, involvement and interests are still not sufficiently taken into account.

The dam was owned and operated by Samarco, a mining company jointly owned by Brazil’s Vale and BHP. BHP was not the operator, but they and Vale both set up the Renova Foundation to oversee damage repairs, rebuilding communities and payment of compensation.

To date, Renova has paid out US$3 billion ($4.7 billion) to 430,000 individuals and US$250 million to four indigenous communities. MacKenzie admitted that the complex compensation process had taken too long for some claimants who were still waiting.

But he insisted the river water quality had been independently assessed as a return to historic standards and was being improved by new water treatment plants, with much of the problem due to raw sewage rather than tailings. A new lengthy lawsuit, backed by Brazil’s state and federal governments, is underway.

None of this has stopped BHP from having to defend a long-running class action lawsuit filed in Britain, involving 700,000 indigenous claimants and funded by global hedge funds and litigation funds. The trial is set to take place in October next year, with class action lawyers saying damages could amount to tens of billions of dollars. An extensive PR campaign, orchestrated around the AGM, is only part of the effort to convince ordinary Australians of BHP’s culpability.

As well as billboards in Adelaide, there were also advertisements complaining about ‘no justice’ in the country eight years after the devastation. The Australian Financial Review.

Reputation repair

Despite BHP’s detailed explanation of what it has done to make up for the disaster, the PR campaign aims to highlight a chilling message to more people: mining is destructive to environmental and social value.

Even though the industry, especially the large companies, has been working for years to restore their reputation among the wider public by continuously demonstrating better environmental and social performance. Yet they still suffer from a huge image problem, which only seems to be getting worse. It is the ES part of ESG.

Having never been near a mine, most city residents are left disconnected from the new reality of mining and their daily dependence on mining products. Many indigenous leaders are also becoming more assertive, including in court, by arguing that their rights, involvement and interests are not being sufficiently taken into account.

The shocked reaction to Rio Tinto’s explosion of the Juukan Gorge caves shows the dire consequences for the entire industry when one company seriously gets the balance wrong.

Mining towards net zero

It seems unlikely that such a debacle will ever be repeated.

But now urgent calls about the need to speed up the approval of new projects to meet rising demand for crucial minerals are likely to be met with both broader community skepticism about mining and local or indigenous communities’ insistence on greater consultation, involvement and rights. There is a lack of trust.

Resources Minister Madeleine King told the International Mining and Resources Conference on Wednesday that achieving net zero will require more mining, not less.

She pointed out that indigenous people enjoyed enormous benefits in the form of royalties and infrastructure, as well as local recruitment, training and special procurement programs. But she notes that genuine engagement, partnerships and collaboration with Aboriginal and Torres Strait Islander people are essential.

It is clear that there is pressure on the sector to achieve even more of this.

Christina Coleman, First Nations talent acquisition manager at EY, warned that Indigenous people are still underrepresented in the mining sector.

“When things go wrong between indigenous communities and the mining sector, things can really go wrong,” she told the conference. “Disruptions in communications can be disastrous and a failure to understand each party’s concerns can have a long-term detrimental effect on our people.

“What we need is not fluffy, feel-good conversations, but real discussions and immediate action to better integrate First Nations people into the sector.”

Mining companies such as BHP claim this is indeed happening.

BHP’s head of global Indigenous Procurement, Chris Cowan, said the company was not just sitting at a boardroom table “thinking up what sounds like a good strategy to guide our engagement with First Nations people”.

“We go out into communities and have genuine and empathetic conversations with Aboriginal communities to ensure that what we plan to put into practice will actually work,” he said.

Such conversations must now also convince a broader audience.