BHP Billiton embraces “globally consistent” regulatory disclosure framework
Oxfam America welcomed today’s voluntarily produced report by BHP Billiton, the world’s largest mining company and an important oil and gas producer, publicly disclosing its tax and other payments to governments in its previous fiscal year. Oxfam America welcomes the company’s commitment to be “a leader in further enhancing disclosure and transparency” and its effort to implement the global standard of payment transparency for oil and mining projects in advance of binding legal requirements applying to reporting by BHP Billiton and companies next year.
“We commend BHP Billiton for this effort. This is a critically important step to inform communities in Australia, Brazil, Peru, the US and other regions, about how much BHP’s operations generate for governments,” said Ian Gary, Senior Policy Manager for Extractive Industries, “BHP Billiton’s commitment to be a leader on transparency is very welcome, as such transparency is critical for investors to assess risk and for communities to ensure that the funds used for poverty reduction.”
BHP is required under EU and UK requirements to report payments to governments for each of its projects starting in 2016. BHP Billiton will also be subject to the US oil and mining transparency law, Section 1504 of the Dodd-Frank Act, although the law, passed in 2010, is still awaiting implementing rules. Oxfam America won its lawsuit this month to compel the Securities and Exchange Commission (SEC) to hasten the release of the rule. A Federal court has mandated that the SEC provide an expedited rulemaking schedule for the final transparency rule by October 2.
Oxfam America and its partners in the Publish What You Pay coalition have called on the SEC to align its reporting requirements with those already in force in Europe, Canada and Norway. BHP Billiton, a member of the American Petroleum Institute, said in the report released today that the company supports “the establishment of a globally consistent disclosure framework that includes formal equivalency agreements between jurisdictions.”
“We welcome BHP Billiton’s attempt to meet its future reporting requirements and the information needs of communities impacted by its projects,” said Gary. “This report provides a practical basis for the public to analyze and discuss these financial flows. We look forward to engaging with BHP Billiton to strengthen the disclosures and tackle important data gaps to ensure that the company fully meets its legal requirements.”
Oxfam cautioned that significant projects are missing from the report. These are projects where BHP is a joint venture or equity partner, including two of the largest mines in the world, the Cerrejon Coal project in Colombia and the Antamina project in Peru. Oxfam America is also analyzing BHP’s interpretation of project reporting requirements to judge whether they can be considered in line with project reporting definitions in the European laws. For example, BHP groups all Gulf of Mexico licenses as one project. In Australia, it groups all Western Australia iron ore operations as one project.
In a future iteration of its report, Oxfam America urges BHP Billiton to break out its tax disclosures into more detail and also disclose subsidies and government incentives. In Australia, for example, BHP Billiton receives significant government subsidies, and deducts its costs for fuel and research and development from its payments to government. It is critical that these be disclosed so that citizens have an accurate picture of BHP Billiton’s contribution.
“While project-by-project payment reporting is mandatory in the EU, Canada, the US and Norway, Australia does not yet have the same transparency requirements. Such requirements would help companies meet global commitments and ensure Australian citizens have an accurate understanding of the economic contribution of the mining sector,” said Serena Lillywhite, Oxfam Australia Mining Advocacy Adviser.
In addition to its transparency practices, Oxfam America urges BHP Billiton to fully embrace the principle of Free, Prior and Informed Consent (FPIC) for all communities affected by its mining, oil and gas projects. While BHP has adopted an FPIC policy it has not said that it would withdraw from projects where community consent is not obtained.
“BHP joins a growing number of companies including Statoil, Kosmos Energy and Tullow Oil, which have been showing payment transparency leadership. This report is a welcome and critical first step,” said Gary. “While there are important areas to be strengthened to meet the needs of communities in countries such as Australia, Colombia and Peru, where BHP projects have an impact, we are heartened by this effort and encourage other companies to follow suit.”