05 November 2021
Speech - Mike Henry, CEO, BHP at CIIE Hongqiao International Economic Forum 2021
It’s my great pleasure to be part of this year’s Hongqiao International Economic and Trade Forum.
A special thank you to Mr WANG for chairing this session, and also to all the fellow speakers.
My name is Mike Henry and I’m the Chief Executive Officer at BHP, a world-leading multi-national resources company.
We produce minerals and metals commodities such as iron ore, metallurgical coal, copper, nickel, and potash, and we have operations and offices on all six continents.
BHP was founded in 1885, and we’ve been building relationships with our customers and partners in China for nearly 130 years.
Today, Chinese companies are our most important trade partners and some of the most important suppliers of goods and services to BHP. Overall, China is our largest single market.
As a responsible company and one that’s focused on the needs of its customers and the world, we must understand how green development and decarbonisation will shape future global trade.
The outlook for China’s ongoing development is positive. It is clear China is central to the world’s ability to meet its climate ambitions, and the country’s continuing growth will come with a falling environmental footprint.
Electrification will accelerate, the power mix will shift from one dominated by coal to low-carbon sources.
Building, transportation and industry sectors will also need to transform on the path to lower emissions.
These are very important developments. BHP is working with Chinese customers and suppliers to play a role in supporting this direction.
We’re also well positioned to supply, in a sustainable way, the commodities required for ongoing growth and decarbonisation for decades to come.
Under BHP’s Paris Agreement-aligned scenario, where the increase in global temperatures would be limited to 1.5 degrees Celsius above pre-industrial levels, the world would need more than double the amount of copper and nearly quadruple the amount of nickel over the next 30 years, as was produced during the last 30 years.
Iron ore and metallurgical coal will also be needed to forge the steel to build new urban infrastructure and renewable energy systems, and potash will be vital for more efficient and environmentally sustainable farming.
All of these commodities are essential to support decarbonisation - in China and around the world - and BHP is shaping its portfolio to meet these growing needs.
However, green development affects trade in ways beyond simply product demand.
Companies must work within the whole ecosystem to help build resilience and sustainability in their value chains, and foster multi-faceted and impactful partnerships driven by areas of common strategic interest.
Our value chain approach includes partnerships to reduce Scope 3 emissions with our customers, joint research projects to help future-proof their business and ours, and strategic sector alliances where we can share our learning and expertise.
We are supporting the steel industry to identify pathways and develop technologies to reduce emissions intensity in the steel making process.
BHP has partnered with steel makers China Baowu and HBIS to invest up to $50 million collectively in low emission technologies.
We plan to make this technology available to the broader market to support the reduction of emissions from the steel making industry.
We’re also working with Automotive Data of China Company to better understand what shapes the outlook for the fast growing electric vehicle market, including how improved battery efficiency and new products impact demand. We expect these research findings to help drive electrification in the Chinese transport sector.
In September, BHP partnered with the Centre for International Knowledge Development to research China’s Strategy and Global Outlook on the Carbon Emission Peak and Carbon Neutrality. This work brings together global companies, Chinese SOEs and private firms to identify effective pathways for China’s overall energy transition and emissions reduction in the building, transportation and industry sectors.
We also support the digitalisation of commodity trading, including eDocumentation and blockchain trade.
In August, we piloted the first blockchain trade in copper concentrates with China Minmetals. Blockchain is being used to improve efficiency and security in the settlement process, and bring greater transparency over shipped product quality by digitalising the certification process.
In the future, this technology could also be used for product based sustainability reporting between customers and suppliers.
These important partnerships with Chinese customers, enterprises and researchers are part of the shared strategic shift to make our value chains greener, and international trade more sustainable.
At BHP, we consider our contribution to this challenge in three key dimensions - many of which I have touched on today:
Firstly, through responsible sourcing; this includes the integration of sustainability considerations into procurement and logistics in our inbound and outbound supply chains, including shipping.
Secondly, process stewardship, where we strive to meet the responsible sourcing expectations of the market in how we extract our products at our operations.
And thirdly, product stewardship, where we work to support the sustainability performance of our customers.
We’re committed to partnering with customers and supply partners with similar approaches and shared values in working to achieve greenhouse gas emissions reductions in line with the goals of the Paris Agreement.
In essence, the question quickly becomes not how green development and decarbonisation impacts trade, but how can global organisations maximise the impact of green development on trade at every opportunity?
At BHP, we are eager to continue to work with our customers and partners in China to help find the solutions to this important global challenge.
Today, trade and trading relationships cannot be viewed through a single transactional lens. All emitters, resource companies, customers, suppliers and consumers must play their part. This is essential. It’s a key competitive advantage for business and it will become increasingly important for us to address climate change together.