BHP set to leave World Coal Association, threatens Minerals Council withdrawal

Australian mining giant BHP is set to pull out of the World Coal Association and is threatening to leave the Minerals Council of Australia over differences on climate change policy.

Key points:

  • BHP plans to leave World Coal Association at the end of March 2018
  • Company will review membership of Minerals Council within a year if MCA keeps lobbying for coal-fired power
  • Shareholder activists cautiously welcome the move after pushing for BHP to quit the MCA

The company has published a 22-page report outlining key climate and energy policy differences between it and several of the lobby groups it is a member of.

The review has found material differences between BHP's position and the position of the Minerals Council of Australia (MCA), the US Chamber of Commerce and the World Coal Association (WCA).

BHP said it has reached a preliminary view to exit the WCA, with a final decision due by the end of March.

The company said it is also considering its future as part of the US Chamber of Commerce, again with a decision due by the end of March.

BHP has indicated its desire to remain part of the MCA "given the high level of benefit BHP derives from membership", but the company has said it will request the MCA refrain from policy activity and advocacy in these areas of difference on climate and energy policy.

The company said it will review its membership of the MCA if the organisation has not stopped such activity within the next 12 months.

BHP disagrees with Minerals Council coal-power lobbying

BHP has identified two main differences with the MCA on climate and energy policy.

The first is the MCA's argument that energy policy should prioritise reliability and affordability over other policy goals — BHP said it believes climate and energy policy are "inextricably linked" and "should be considered on an integrated basis".

The second major difference is the MCA's advocacy for policy changes that would favour so-called High-Efficiency Low-Emissions (HELE) coal power stations and a new coal-fired power plant in the La Trobe Valley.

Such a move would be a massive blow to Australia's peak mining lobby group — not only would it lose credibility if the nation's, and world's, biggest miner pulled out, but BHP's annual subscription fee of $1.86 million accounted for around 17 per cent of the MCA's revenue last year.

The "high level of benefit" BHP obtains from the MCA includes the lobby group's highly effective campaign against the Resource Super Profits Tax (RSPT) in 2010 that ultimately contributed to the Labor Party ousting Kevin Rudd as its leader and prime minister and installing Julia Gillard, who subsequently negotiated the watered-down Minerals Resource Rent Tax (MRRT) with the big miners.

One of the organisations that had pushed BHP to ditch its MCA membership over climate issues, the Australasian Centre for Corporate Responsibility, said it welcomed the company's "extraordinary" decision to leave the WCA, but feels it could have gone further.

"This is a message that even organisations, like BHP, with large coal assets, do not value aggressive anti-climate lobbying," ACCR executive director Brynn O'Brien said.

"However, BHP's equivocation in relation to membership of the MCA, in giving the MCA another 12 months to change its tune on coal, points to the highly-charged environment in which climate policy is made in Australia.

"We also have concerns about the review's failure to evaluate, in detail, the activities of other organisations, for example, the NSW Minerals Council, and Queensland Resources Council, who in some ways take positions even more at odds with BHP's than those taken by the MCA.

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