BHP rejects criminal charges related to Samarco disaster
BHP Billiton last Friday rejected all criminal charges laid by Brazilian authorities over the Samarco dam collapse, while its chairman Jacques Nasser announced that he planned to step down from the world’s biggest mining company.
Shares gained 0.86 percent on Friday to R208.56.
Noting the authorities had filed criminal charges, the company said: “We will defend the charges against the company, and fully support each of the affected individuals in their defence of the charges against them.”
BHP Billiton said it had yet to receive formal notification of the proceedings.
Brazilian prosecutors were reported to have charged 26 people last Thursday, 21 of them for qualified homicide for alleged roles in the collapse of a tailings dam at the mine. Since the accident in November last year, BHP and its partner at the mine, Vale, have faced harsh criticism that they prioritised profits over people.
Nasser told shareholders at the company’s annual meeting in London last week that he would not seek re-election to the board. He had intended to announce his retirement last year, but was persuaded to stay.
“The board believed it was important that I continue on as chairman to provide stability as we responded to Samarco,” Nasser said.
Nasser, a former chief executive of Ford Motor, helped steer BHP through a downturn in commodities sparked by a slowdown in China and a glut in everything from iron ore to copper to coal.
“We had to carefully pivot the company. We had to carefully look for other opportunities in other commodities that would be better represented in a world that was developing at 3 percent, rather than this maybe once-in-a-century boom that China had,” Nasser said.
He pointed to global concern about the impact of climate change during his tenure and the company’s focus on productivity as key areas where he helped shape BHP’s strategy.
“We kept the balance sheet very strong,” Nasser said. “This is a sector where you can blow up the balance sheet very easily and we’ve seen our peers who have done that. We didn’t do that. We didn’t have to issue new shares. We kept a solid A credit rating through the valley of the commodity price death.”
Getting the commodity mix right during the downturn was a key deliberation Nasser and the board faced during his tenure, he said. Back in 2011, BHP spent $20 billion expanding into US shale assets to tap a projected increase in energy demand. The company was later forced to write down the value of the assets as natural gas prices slumped.
‘We will… support each of the affected individuals in their defence of the charges.’
Just a few months into Nasser’s chairmanship in 2010, BHP launched a $39bn hostile takeover offer of Potash of Saskatchewan. The bid was ultimately unsuccessful, but potash would later become a potential “fifth pillar” in BHP’s strategy to focus on just four commodities – iron ore, oil and gas, copper and coal.
It was this four-pillar approach to the portfolio that led BHP to its most significant divestment when it spun off South32 last year. The company is now listed in London, Sydney and Johannesburg.
BHP, which lost about 40 percent of its value during Nasser’s tenure as chairman, hit a 10-year low in January before doubling in London trading this year. Nasser also pushed for greater shareholder returns with the company paying a record dividend last year.
The company’s total return over the past decade was 101 percent, compared with 69 percent for the UK’s benchmark FTSE 100 index, he said. This year, BHP was forced to cut its payment for the first time in 15 years and changed its policy of paying out ever increasing dividends to returning a percentage of profits.
Nasser said succession planning was an “ongoing process” and that he would keep leading the board. Heidrick & Struggles had conducted external searches for BHP board candidates. After the firm announced a workforce gender parity target, Nasser said the board should be open to appointing its first chairwoman, though he would not insist on it.
As to what he would do next, Nasser said he had no desire to chase a new role of a similar standing.
“I’m almost 70 years old, I’m done,” he told reporters. “I’m done in this more structured role. It’s been terrific and I think we leave the company in a very robust position.”