Rising market intervention and resources nationalism by governments globally was an understandable trend in times of uncertainty, BHP Billiton chairman Jac Nasser said today.
Rising market intervention and resources nationalism by governments globally was an understandable trend in times of uncertainty, BHP Billiton chairman Jac Nasser said today.
Speaking to reporters after BHP's annual meeting in Perth, the former Ford chief said government intervention in major transactions was clearly on the rise around the globe, and was increasingly complicating the environment for deal-making.
BHP this week terminated its $40 billion bid for Canadian fertiliser giant Potash Corp after the Canadian government said the deal was not in Canada's interests. The knockback came just a month after BHP was forced to abandon its $116 billion iron ore joint venture with Rio Tinto because of international regulators' concerns about reduced competition.
And earlier this year, BHP led the mining industry's opposition to the then Rudd government's initial plans for an industry-wide tax on Australian mining and oil profits that many critics labelled a pseudo-nationalisation of the industry.
Mr Nasser said signs of increasing government intervention in commercial activities globally were to be expected in the uncertain economic environment, and meant it was up to companies such as BHP to demonstrate the value they could bring to local communities and economies.
"The world is changing, and whether you want to call it protectionism or nationalism, there is certainly a trend towards a more difficult process when you are looking at larger, cross-border transactions," he said.
"I don't think its just resource nationalism ... it is beyond resources, and I think it's a natural reaction that governments and societies will have when times are difficult.
"For me the real question is, is this a phase that will last for a year, or five years or 30 years? And I don't think anyone really knows the answer to that.
"Part of our responsibility is to make sure we are communicating with governments around the world, so that they can understand the value of a company such as BHP being involved in their country, in their industry, and in their communities, because I think we have a lot to offer.
"And that's the counter argument to the protectionists that you make."
Mr Nasser said rather than nationalism, the trend was better depicted as "a positive attitude in terms of making sure there is value to society with these transactions".
He said the next few months and years would be critical in determining whether the trend was a short term reaction to economic uncertainty or a fundamental structural change.
"I would hope, and I think, that it is probably the former, rather than the latter, but we don't know."
Government intervention is not the only controversial issue in which BHP has been a major player this year, with the company's proactive views on climate change also attracting global headlines.
At today's meeting, Mr Nasser reiterated his view that it would be to Australia's advantage to "act now on climate change" and work on ways to reduce its carbon footprint. His comments follow those of BHP chief Marius Kloppers earlier this year broadly supporting the establishment of a pricing mechanism for carbon.
"Economies that defer action are likely to face higher long term costs as global investment is redirected to early movers," Mr Nasser told the 700 shareholders at the meeting.
"As one of the most carbon intense economies, if Australia acts strongly to reduce its carbon footprint, its emissions-intensive sectors are likely to maintain or improve their competitiveness in a low emissions world."
Asked later whether the views of BHP, one of the world's biggest coal producers, was out of step with those of its peers, Mr Nasser said it was vital to start a real debate if progress was to ever be achieved.
"It isn't easy, and the way you tackle those kinds of questions ... and make progress on them, is you get them out in the open and you start a dialogue," he said.
"That's what we try to do. Everyone you talk to about climate change has different views, so for us, there was value in getting out there and have people at least talking about what the alternatives are."
Echoing Mr Nasser's remarks, Mr Kloppers said while his own views had attracted widespread attention because of BHP's prominence, he did not believe they were overly dissimilar from many in key industries, including the coal and energy sectors.
"If I actually read the comments by other players in those two industries, I don't see much daylight between where we are," he said. "My sense is that there is some common principles arising which will form the basis of some of the debate as we go forward."
Despite BHP's strong support of early action on climate change, the company still found itself under heavy attack from conservationists and anti-mining activists.
More than half of the 3½ hour meeting was devoted to questions from shareholders, but ordinary investors barely got a look in as session was hijacked by representatives of various activist groups.
In particular, BHP's board were repeatedly questioned over its plans to develop the Yeelirrie uranium mine near Wiluna, and treble uranium output at the massive Olympic Dam mine in South Australia by anti-uranium activists.
Its involvement in the James Price Point gas hub was also raised, as was its treatment of workers at its Cerrajon coal mine in Colombia.
But the activists' efforts drew only limited obvious support from most shareholders, who were more interested in whether BHP planned a buy-back of its Australian-listed shares.
Their cause was further undermined when one environmentalist wrongly insisted that BHP was a 44 per cent partner in the Macondo oil disaster in the Gulf of Mexico. BHP has no interest in Macondo, which is actually controlled by British giant BP.
BHP's failed tilt at Potash and inability to complete the Rio iron ore joint venture, transactions which cost the company over $700 million in costs, also had shareholders questioning whether the company now needed to change its acquisition strategy.
But Mr Nasser insisted that BHP would never change its focus on acquiring "Tier One, long life world class assets" and that shareholders expected it to identify and pursue such assets where the prize was worth it.
"No pain, no gain is fundamental to the way we do business," he said, later adding "the juice was worth the squeeze on every one of those", referring to the potentially company changing deals which were unable to proceed.
