The past decade has seen multi-national mining giant BHP expand its presence within the Caribbean in a big way. In doing so, the company has not only brought new investment to the region and wider Latin America, but further diversified its own commercial pursuits beyond its native Australia. This expansion helped BHP win the title of the biggest mining company in the world, with its 2019 market capitalisation of US$ 120bn making it almost a full third larger than its nearest competitor, Rio Tinto (which holds a market cap of US$ 83bn).
The size and scope of BHP’s operations affirm it’s a colossal force within the commercial space. But alongside the many achievements locally and globally, in recent years it has encountered numerous speed bumps in a variety of areas. So will BHP’s performance continue to be one of seemingly unstoppable momentum, or will the Caribbean business community perhaps see its pace stagger as we head into a new year and new decade?
BHP’s Latin American Aspiration
BHP has built up a sophisticated and diverse operation across Latin America, having established operations in Brazil, Chile, Colombia and Peru, yet its ventures in Trinidad and Tobago have arguably won the greatest attention in this region.
BHP began this century with assets in T&T, and in 2014 it acquired a 70% stake in two deepwater blocks. Although few expect a repeat of the blockbuster headlines delivered by Guyana surrounding its resources discoveries, BHP has announced the discovery of hydrocarbons within T&T waters. It successfully completed the addition of three wells to the waters in 2019.
Unquestionably BHP remains a must-watch business story within the region but what could stall the company’s momentum going forward?
Digging Up Trouble
The strength of BHP as a commercial force is undisputed. The challenge for BHP is that the benefits that come with being a global business can also pose threats. In its native Australia, a push for higher mining taxation could eat away at its profits if such an issue makes a return to the national agenda.
The resistance to higher taxation on major mining companies was held as a key reason for the downfall of the Rudd government in 2010. A watered down tax was subsequently passed by the next prime minister but claims have since emerged that a mining tax deal with the former Rudd government was imminent, promising an extra AU$ 200bn in revenue for national infrastructure.
It is unimaginable that any current or future leader would relish a fight with the powerful industry, but all leaders would salivate at the prospect of billions extra to spend on capital works that entice voters. That 2018 saw BHP settle a longstanding dispute with the Australian tax authorities (while being labelled “one of Australia’s largest tax evaders” by former treasurer Wayne Swan), suggests the domestic climate in its native nation remains chilly and could yet turn combative again under a different government.
The Difficult Choice for Two Futures
All things being equal, it’s likely that BHP will navigate a change in political headwinds domestically, just as it has done successfully in recent years. Nonetheless, Australian politics has encountered the same shades of upheaval and unpredictability that have been seen in the US and UK, so any Australian business gambling that it would encounter a near future similar to the recent past, would be making a big bet indeed.
For Caribbean nations, the expansion of mining activities in the region will commonly bring mixed feelings. This is in no small part because such an occurrence will be, by default, a clash of competing priorities. With many countries battling unemployment, and governments longing for a big, new project that would create jobs and grow the economy, a new energy initiative – even if lacking green credentials – likely wouldn’t be denied by a host nation’s leadership.
But such new ventures can undermine the quest of regional nations to go green, and push others globally to do the same, to the detriment of the Caribbean’s future viability – something that is inexorably tied to the successful combatting of climate change. But even if the Caribbean region ceased all emissions overnight, the problem of climate change would still exist if the world’s biggest emitters take no action.
Balancing BHP’s Goals in the Region
BHP will not be seen as an obvious partner by sustainability activists in the region anytime soon, but the company should not be decried by default, or altogether uncredited for all it has done. In mid-2019 BHP announced it would begin to reduce its thermal coal output, cutting it by as much as 18% in the year ahead. It is also planning a pivot towards supplying resources for the growing electric car industry.
For those who maintain the view that emissions must be stopped today then little to nothing BHP does will satisfy. But for those who anguish over the persistent problems of unemployment and poverty alongside climate change, the current presence and potential expansion of BHP in the region should not be denounced. With rising temperatures and sea levels, the decade ahead will surely help speed the decision about precisely what balance Caribbean nations wish to strike between environmental sustainability and mining profitability.
