Extraction of raw materials leads to problems for the environment and people

These include soil and water pollution due to the use of chemicals, such as acids and heavy metals, in the processing of ores and minerals. Air pollution can occur due to the use of explosives and the combustion of fossil fuels for electricity production, and these activities are also associated with a higher-than-average rate of accidents causing injuries.

Massive changes in the landscape are another possible consequence, due to the extraction of underground resources and construction of the necessary infrastructure, such as roads and mine facilities. This habitat destruction and the related displacement of indigenous populations and plant and animal species has clearly negative impacts on biodiversity. Mining activities also entail higher-than-average risks for mine workers and the surrounding population, as they often come into contact with poisonous substances and dust particles.

BHP (Billiton): one of Australia’s largest companies and a global market leader, is active in this complex and challenging field.

In 1883, Charles Rasp, an Australian of German descent, who was knowledgeable of minerals, identified rocks containing lead and silver ore in the course of his work as a “boundary rider” on a sheep farm in the far western reaches of Australia. He immediately recognised the region’s potential for mining.

Together with some partners, he formed a syndicate, leased the land, and founded The Broken Hill Proprietary Company, or BHP for short. The company initially specialised in mining silver, lead, and zinc. Over time, BHP expanded its activities and began mining iron ore, coal, copper, and other commodities.

The Billiton mine was discovered in Indonesia in the mid-19th century and turned out to be rich in tin. The Billiton Company was founded in 1860 and was active in mining tin, copper, coal, and aluminium. Over time, the company expanded its operations to other countries and over the course of many decades it grew to become an important player in the global mining business.

Merger of BHP and Billiton

BHP and Billiton then ultimately merged in 2001 to form the company BHP Billiton. This merger created what was then one of the largest mining groups in the world, with a broad portfolio of commodities and mining activities. For instance, the company is active in the extraction of commodities, such as iron ore, copper, coal, crude oil, and other minerals, as well as the lithium mentioned above. BHP operates mines, foundries, and other plants in various countries, including Australia, Chile, the USA, Canada, and many more. As a result, it plays a key role in global commodity supplies and is extremely important for the economies in many countries, in particular in the global growth markets. At present, a workforce of more than 83,000 is employed in BHP plants and the company has a stock market valuation of almost EUR 150 billion (as of May 2024).

Good things come in threes?

In November 2007, BHP made a takeover bid for the Rio Tinto Group, which envisaged exchanging one share in Rio Tinto for three in BHP Billiton. Rio Tinto initially rejected the offer. After the bid was raised a few times, the total value of the offer was almost USD 148 billion. Had the takeover been successful, it would have led to the creation of a gigantic company with an estimated market value of USD 350 billion. It would have been the second largest takeover ever, coming in behind the acquisition of Mannesmann by Vodafone in 2000. In November 2008, however, the company announced that the deal had failed due to the declines in commodity prices as a result of the financial crisis that was taking place.

The next attempt was made in 2010, when BHP launched a hostile takeover bid for the Canadian potash and fertiliser producer Potash Corporation, which controlled more than 25% of the global supply of potash fertilisers at that time. This takeover bid, however, was blocked by the Canadian government.

At present, BHP is trying to take over its competitor Anglo American. If this third attempt at a takeover or merger is successful, it would lead to a new market leader in the commodities sector, with a far higher market capitalisation than the currently first-placed company, Rio Tinto.

Disaster strikes

In November 2015, one of the worst-ever environmental disasters occurred in Brazil: the Bento Rodrigues dam collapse. When the dam operated by the mining company Samarco (a joint venture of BHP and the Brazilian mining company Vale) burst, it triggered a massive flood that wiped out entire villages and cities. The flood consisted of mud, water, and poisonous chemicals from the mine. The results were devastating: 19 people were killed, hundreds injured and thousands lost their homes. The environment suffered even greater damage, as rivers and soils were contaminated, living organisms were decimated, and entire communities were destroyed.

Brazil’s government and Samarco were criticised for their lack of precaution and inadequate safety measures. It was found that the dam had not been properly maintained and checked due to the costs involved. The mining industry in Brazil was subject to public scrutiny and there were calls for stricter environmental regulations and checks.

The clean-up work last for years and cost billions of dollars. The communities affected are still struggling with the consequences of the catastrophe today. Many people’s livelihoods were ruined, as agriculture and fishing is no longer possible in the region. The health of the impacted population is also at risk, as people were exposed to toxic mud.

Samarco undertook to pay compensation and to mitigate the damages. There were claims, however that the compensation was not enough and that the process was too slow. The communities impacted demanded comprehensive compensation and the quick restoration of living conditions.

In April 2024, Vale and BHP announced that the clean-up was proceeding well, with an independent report estimating that water quality along a 120-km long river section was as good as it was prior to the disaster. According to BHP, thousands of Samarco personnel were involved in intensive cleaning, reconstruction, and restoration measures, which concentrated on the stabilisation, reconstruction, and monitoring of the dam. Above and beyond this, BHP explained that it had initiated a wide-ranging set of reconstruction and compensation measures, by way of an agreement reached with the Brazilian authorities in March 2016. These programmes envisage restoring the communities and environment impacted by the dam disaster, or appropriate compensation of the parties affected. Altogether, these measures will cost more than USD 25 billion.

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Corporate voices on the subject of marine pollution by mining companies

According to BHP Billiton, the company has become a pioneer in its sector in relation to sustainability and environmental protection. The company has undertaken to conduct its mining activities in a responsible manner and to concentrate on environmental protection, social responsibility, and good corporate governance.