Climate Impact Prompts BHP to Cap Spending on Energy-Coal Assets
BHP Billiton Ltd. (BHP) is limiting expenditure on growing its thermal coal assets as the world’s biggest mining company grapples with the environmental impact of burning the fuel to produce energy.
“Developing countries want low-cost energy but you can’t deal with the carbon consequences over the long term,” Marcus Randolph, chief executive officer at the Melbourne-based company’s iron ore and coal unit, said today on a call with reporters. “Our response has been that the amount of dollars that we direct to our energy-coal growth has been quite low and we’ve actually not had substantial growth,” in the business.
Greenhouse gas levels in the atmosphere touched an all-time high in 2011, according to the World Meteorological Organization. That will make the weather more volatile, the United Nations said last month. Hurricane Sandy caused at least $25 billion of damage when it struck New Jersey and New York in October.
“The issue with greenhouse gas has sort of fallen off the agenda as economic conditions have gotten tighter globally,” Randolph said. “The amount of progress that the world has shown in the last couple of years in dealing with climate change is, frankly, inadequate.”
BHP earned 8.4 percent of its revenue from thermal coal in the year ended June 30, 2012. It produced 71 million metric tons from mines in Australia, Colombia and South Africa during the period, compared with 70 million tons a year earlier, according to company reports. BHP is also the world’s biggest exporter of steelmaking coal.
‘Off the Agenda’
The price of thermal coal fell to a three-year year low last month, prompting companies including Xstrata Plc (XTA) to cut production and staff.
Economic turmoil in Europe is restricting global efforts to cut fossil-fuel emissions and curb pollution as climate change policy is “sliding off the agenda,” International Energy Agency Chief Economist Fatih Birol said in an interview before the UN’s annual meeting on the subject. The talks are currently on in Doha, the capital of Qatar.
“We have good assets in the business but we’re very aware of the environmental implications,” said Randolph. “It’s a routine discussion for management generally.”
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