11 October 2022
Our CEO Mike Henry spoke at the Annual Australia Japan Joint Business Conference on the topic of "Designing a new future":
The focus of this conference is “Designing a new future”, and it is one that is of great relevance to us all. The world is in flux, be it in geopolitics, financial markets, or the pressing challenge of addressing climate change, with the associated implications for energy producers and suppliers of critical minerals.
As has been the case over time with gatherings of the Annual Australia Japan Joint Business Conference, I hope that our discussions allow for the deepening of understanding, the strengthening of relationships and the generation of new ideas, that allow for the building of a better future, together.
The Australia Japan Joint business conference has a proud history of being a forum for sharing perspectives and working towards the shared interests of Japan and Australia.
The importance of this partnership has never been more relevant.
In considering the future, I do want to touch briefly on the past. These meetings have always been about more than just the short-term. From day one, this bilateral forum has always been about the big picture – about encouraging and enabling long-term economic co-operation and progress.
That’s why it should come as no surprise that this conference is discussing everything from the energy transition to new business opportunities in a post-COVID world. One might ask why the remit of this forum is broader than just commercial self -interest.
Much of this enlightened perspective and approach is owed to the foresight of Nagano Shigeo, the former Chairman of Nippon Steel Corporation. Nagano-san belonged to a post-War generation of Japanese and Australian business leaders who believed that social and economic progress were not just connected – they were interdependent.
In 1953, he travelled to Paris where he met with one of the architects of the European Union, Robert Schuman. It was Schuman, as French Foreign Minister, who encouraged Europe’s resources and manufacturing sectors to pool coal and steel production – and, in the process, established the industrial foundations of what became the European Union. This is how Schuman explained his thinking to Nagano-san:
‘How much have rivers or mountains as invisible borders obstructed human freedom, happiness and cultural development? … I hope to create happiness and prosperity regardless of borders.’
Nagano-san was inspired by Schuman and his views. Working in partnership with Australian businessmen such as R.W.C. Anderson, he set about using this joint forum to create prosperity across the Asia-Pacific.
Given, the challenges we collectively face, it’s incumbent upon us to learn from and carry forward the spirit of that generation of business leaders. One of the key challenges we need to overcome is the threat posed by climate change and the need for decarbonisation.
The resources sector will be central to the world’s decarbonisation effort:
- be it through the energy transition and its implications for energy producers
- or through the producers and consumers of the steel, copper, nickel, lithium and other critical minerals required for electrification, batteries and decarbonisation infrastructure.
We will be central to decarbonisation because the world will need a secure, timely and economic supply of minerals to successfully navigate the transition. The resources sector must be at the vanguard of the drive to decarbonise and together we must lead.
To meet the aims of the Paris Agreement the world needs a staggering amount of key commodities. Based on BHP’s analysis, to cap the increase in global average temperature to 1.5 degrees.
Over the next 30 years compared to the last 30 years, the world will need to:
- double copper production and increase nickel production almost four-fold;
- both of which will require a commensurate lift in secure, reliable smelting and refining capacity;
- and the world will need almost twice as much steel over the same period.
The challenge is made more significant by the fact that the resources required to meet these demands are smaller, lower grade, deeper, and faced with an increasing number of other challenges and expectations. The value chains for these commodities and their end products must also be decarbonized, requiring technological innovation and further investment. We must seek out opportunities to work together to make the world safer, cleaner and ultimately more secure.
This has been the spirit in which BHP has sought out these opportunities in recent years. For instance, we are working with Prime Planet Energy and Solutions and Toyota Tsusho Corporation to create a Green Energy Vehicle ecosystem that enhances sustainability, recyclability and traceability. This partnership – which we announced at last year’s forum – is making great progress. We’re encouraged by its potential to promote and progress the energy transition.
I want to also say that when I met with PPES in July I came away so impressed and encouraged by the way in which government, through METI, and Japanese industry have come together to collaborate on a nationally significant effort. BHP is also collaborating with existing partners to decarbonise our shared value chains.
Take steel for example. To decarbonize, the world needs almost twice as much steel – but steelmaking is very emissions-intensive. The world needs to boost steel production while at the same time driving down carbon emissions. We are working with others to support the effort to solve that conundrum. One example of this is our partnership with JFE Steel, a long standing, valued partner to BHP, to support the development of technologies and pathways that can cut emissions by 30 per cent during the steelmaking process. BHP is also investing in early-stage breakthrough zero-carbon steel making processes which, if successful, may have relevance to the Japanese steel industry.
Finally, BHP is doing what it does best. We are finding and developing the mineral resources required to meet the world’s decarbonization imperative.
Many of these efforts are in collaboration with long-standing Japanese partners:
- Mitsubishi Corporation in the BMA steel making coal joint venture in Queensland;
- Mitsui Bussan and Itochu in our Western Australian iron ore business;
- Mitsubishi Corporation, Nippon Mining and Metals, and Mitsubishi Materials in our Escondida copper mine in Chile; and
- NYK to progress shipping decarbonization across our shared supply chain.
Importantly, we are seeking to lead in producing these critical minerals in the most sustainable way possible. We have made significant inroads in moving to renewable electricity supply to our operations, including roughly half of the electricity being supplied to our Olympic Dam copper operation by 2025 in the Premier’s state of South Australia.
We’ve ceased the use of water from a number of Andean aquifers and now only use desalinated water at our two largest Chilean copper operations, Escondida and our Spence Concentrator, including one with a desalination plant owned and operated 50 per cent by Mitsui, and we are supporting an important desalination project that the South Australian government is progressing.
The world must address head on the threat posed by climate change. That’s going to require minerals. It is essential that those minerals are produced in a sustainable way, and that their associated value chains are stable, reliable and also progressing towards being carbon free.
This need has seen us deepen our levels of collaboration with Japanese partners to levels not seen for many decades. And we continue to explore opportunities to do more together, faster.
This is a challenge though that obviously goes beyond the capacity of businesses alone. We need support and cooperation at a regional and global level. We need governments to develop and implement policies – like the Schuman Declaration – that support investment and the energy transition.
For companies, the partnerships we create must transcend the short-term financial opportunity and focus as well on long-term sustainability. For both business and governments, to paraphrase Schuman, we must focus on creating happiness and prosperity regardless of borders.
In conclusion, decarbonisation is a possibility that must become a reality.
And in some respects, this forum embodies the spirit that will be required of us all to achieve that aim.