BHP Warns Coal Losing Battle for Investor, Public Support

Coal Industry Facing Downturn With New EPA Rules And Alpha Natural Resources Bankruptcy
Photographer: Luke Sharrett/Bloomberg
  • Weaker coal prices are adding to negative view of industry
  • No signs of any immediate improvements for coking coal prices

BHP Billiton Ltd., the world’s biggest exporter of steelmaking coal, is concerned the industry is losing the public relations battle to the green lobby for the support of investors and the public.

Coal producers are facing opposition including from environmental groups, Norway’s $830 billion sovereign wealth fund and the Church of England, amid a global campaign that’s seen mine projects stalled in court challenges and led investors to cut holdings in some suppliers.

"It would be fair to say that as we stand here today, in the court of public opinion, the ‘no coal’ camp has been more effective," BHP’s coal president Mike Henry said in a prepared text of a speech Friday. "Anti-coal activism has been building momentum over many years."

Weaker returns driven by lower prices are reinforcing an incorrect perception that coal’s outlook is bleak, Henry said in the text of a speech to the American Chamber of Commerce in Brisbane. Research “tells us that the industry suffers from declining perceptions in the broader community, particularly outside its direct areas of operation,” he said.

Melbourne-based BHP’s coal unit had a 3 percent return on capital from its Australian mines last year as the prices of both metallurgical and thermal coal tumbled, and there are "no signs of things getting better in the immediate term," he said.

Engaging Society

"The poor current profitability of the industry only then serves to reinforce the views and arguments of those who wish to paint the industry as being in terminal decline," Henry said in his speech. The industry’s “lack of alignment and coordinated effort has undermined our effectiveness in engaging broader society on the facts,” he said.

Continued growth in China and industrialization across Southeast Asia to the Middle East will support demand growth for metallurgical coal exports over the longer term, according to Henry. While the share of thermal coal required to meet energy needs may decline, demand will be supported for decades, he said. Coal accounted for 14 percent of BHP’s revenue in the year to June 30, according to data compiled by Bloomberg.

Anti-coal activists are "abusing" legal challenges to slow the pace of approvals for mine developments or expansions, Rio Tinto Group’s Australia Managing Director Phil Edmands said last year.

Opposition to coal mining is "far from a mainstream view," Greg Evans, executive director for coal at the Minerals Council of Australia industry group said Friday in an e-mailed statement. The council this month launched television to newspaper advertisements defending the sector’s role.

BHP Billiton Ltd., the world’s biggest exporter of steelmaking coal, is concerned the industry is losing the public relations battle to the green lobby for the support of investors and the public.

Coal producers are facing opposition including from environmental groups, Norway’s $830 billion sovereign wealth fund and the Church of England, amid a global campaign that’s seen mine projects stalled in court challenges and led investors to cut holdings in some suppliers.

"It would be fair to say that as we stand here today, in the court of public opinion, the ‘no coal’ camp has been more effective," BHP’s coal president Mike Henry said in a prepared text of a speech Friday. "Anti-coal activism has been building momentum over many years."

Weaker returns driven by lower prices are reinforcing an incorrect perception that coal’s outlook is bleak, Henry said in the text of a speech to the American Chamber of Commerce in Brisbane. Research “tells us that the industry suffers from declining perceptions in the broader community, particularly outside its direct areas of operation,” he said.

Melbourne-based BHP’s coal unit had a 3 percent return on capital from its Australian mines last year as the prices of both metallurgical and thermal coal tumbled, and there are "no signs of things getting better in the immediate term," he said.

Engaging Society

"The poor current profitability of the industry only then serves to reinforce the views and arguments of those who wish to paint the industry as being in terminal decline," Henry said in his speech. The industry’s “lack of alignment and coordinated effort has undermined our effectiveness in engaging broader society on the facts,” he said.

Continued growth in China and industrialization across Southeast Asia to the Middle East will support demand growth for metallurgical coal exports over the longer term, according to Henry. While the share of thermal coal required to meet energy needs may decline, demand will be supported for decades, he said. Coal accounted for 14 percent of BHP’s revenue in the year to June 30, according to data compiled by Bloomberg.

Anti-coal activists are "abusing" legal challenges to slow the pace of approvals for mine developments or expansions, Rio Tinto Group’s Australia Managing Director Phil Edmands said last year.

Opposition to coal mining is "far from a mainstream view," Greg Evans, executive director for coal at the Minerals Council of Australia industry group said Friday in an e-mailed statement. The council this month launched television to newspaper advertisements defending the sector’s role.

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