Discuss about the Legal Aspect of International Trade & Enterprises.
BHP Billiton is the largest global resources company in the nation is also a global leader. It is amongst the largest producers globally for the key commodities like uranium, silver, nickel, copper, aluminum, manganese, iron order, energy and coal. The company also has substantial interests in gas and oil. The company is a global organization in true sense as it has presence of over hundred locations across the globe and employees over 100,000 individuals as contractors and employees, who contribute to the success of the company (Business Review Australia, 2013).
The company has an unrivalled portfolio which contains a number of high quality growth opportunities, which helps in making sure that the company is able to meet the changing needs, in constant manner, which are put forward by the consumers. Moreover, this approach also helps in meeting the resources which are demanded by the growing economies at each and every stage of their growth (Business Review Australia, 2013).
The company is an Anglo-Australian multinational petroleum, mining and metals company (Mining Global, 2015). And it was founded in the secluded mining town located in New South Wales, by the name of Broken Hill. In 2001, BHP Billiton was formulated by a merged of the Anglo- Dutch Billiton plc with the Australian Broken Hill Proprietary Company Limited (Thompson and Macklin, 2010). The merger of Billiton with BHP gave it its current identity. This is also the reason why the company is a dual-listed company. The part of the company which is Australian registered and has an equal financial share in BHP Billiton and has primary listing on the ASX, i.e., the Australian Securities Exchange (Dick and Merrett, 2007). When measured by market capitalization, it is amongst the largest in the nation. The primary listing of the UK registered BHP Billiton is on LSE, i.e., the London Stock Exchange and constitutes as a part of the FTSE 100 Index (FTSE, 2015).
The company operates in the metals and mining industry. BHP Billiton had, in 2016, 26,827 employees, in Australia alone, and this figure includes the employees from the various subsidiaries of the company, which are under its control (IBIS, 2016). As of June 30th 2016, the company had a workforce of 65,000 globally, which includes both employees and contractors (BHP Billiton, 2017). The global headquarter of the company is located in Melbourne and the full address of this location is 171 Collins St, Melbourne CBD, Australia (Norman Disney & Young, 2013). The production operations of the company are located majorly in America and Australia. The products of the company are globally sold and the sales and marketing is led primarily through Singapore and Houston in United States (BHP Billiton, 2017a).
The strategy of the company is to both own, as well as, operate expandable, large, upstream, long-life and low-cost assets, which would be diversified by the market, commodity and the geography. The company believes that the reason of its success is its distinctive attributes and uniqueness, followed by proven and consistent strategies (BHP Billiton, 2016a).
BHP Billiton has its base of operations in Australia and so, a number of regulatory frameworks and legislations are applicable on the company. For instance, for the local companies, who work in globally scenario, they have to pay a corporate tax to the rate of 30 percent. There are many more of such frameworks applicable on BHP Billion and these have been summarized below,
The first and foremost in this regard is the Corporations Act, 2001. This act provides the various provisions which have to be followed by a company in Australia, from the formation of its memorandum, to the initiation of the winding up process (Federal Register of Legislation, 2013). This act governs each and every aspect of a company in the nation. The company also has to make numerous disclosures in its Annual Report as provided under this act. For instance, in 2016 Annual Report of the company, it had to show that no proceedings had been brought by the company or on its behalf as per section 237 of this act. Another example of this, is the declaration which the company made, regarding the fine levied on it, as per section 299(1) (f) of the Act to the amount of US $60,609 (BHP Billiton, 2016b).
Having such a wide ambit of workers, makes it necessary for the company, to ensure the health and safety of its workers. And so, BHP Billiton has to follow a number of legislations in this regard. These include the Occupational Health and Safety Act 2004, which is a Victorian Act, the Occupational Health and Safety Regulations 2007, which is the regulation in this regard for the territory of Victoria, the code in the form of Vic Compliance Codes and the regulator of these is Work Safe Australia. And, on the basis of changes in the regions, like New South Wales or Australian Capital Territory, the acts change. However, all such acts, as applicable, have to be adhered to (Business, 2017a).
As the company operates in mining industry, BHP Billiton has to conform to a range of environment related rules and legislations. So, the company has to abide by legislations like the Environment Protection Act 1970 and Environment Protection and Biodiversity Conservation Act 1999 (Business, 2017b). In addition to this, the company is required to abide by the mining acts, based on regions. For instance, the mining act in Victoria is Mineral Resources Development Act 1990 and in New South Wales, it is Mining Act 1992 and the Petroleum (Onshore) Act 1991 (Chambers, 2013).
Based on the applicability of such acts, BHP Billiton is required to obtain different mining licences and leases. These include the prospecting licence, general purpose lease, mining lease, exploration licence, retention licence and the miscellaneous licences. Moreover, states like Western Australia mandate it for the company to register its licenses. Mining licenses and leases only deal with the separate phases of the project and so, to cover the entire project, beginning from exploration to the mining operations, the company has to enter into a State Agreement (Chambers, 2013).
The company works in a global environment and so, a number of international laws, treaties, agreements and conventions are applicable on BHP Billion. Some of these have been stated below.
Each and every company has to realize and respect the human rights, as the people are what form the business, for the ones the business is done and by the ones who carry out the same. Taking upon the human rights obligations in a serious manner, BHP Billiton operates as per the Universal Declaration of Human Rights put forward by the United Nations, along with the 10 UN Global Compact principles and the UN Guiding Principles on Business and Human Rights. The company has formulated these commitments through its Code of Business. The human rights performance of the company is monitored or over-sighted by the Sustainability Committee Board, as per the mandate for monitoring the HSEC, i.e., the health safety environment and community, related performance (BHP Billiton, 2016b).
In February 2002, the company exited OTML, i.e., Ok Tedi Mining Limited. This exit arrangement included the transfer of shares of the company in OTML to PNGSDP, i.e., PNG Sustainable Development Program Limited. This was in addition to the statutory undertaking, which protected the company from environmental claims of the PNG, i.e., the Papua New Guinea Parliament. Upon the acquisition of PNGSDP’s share in OTML by the PNG, in September 2013, the exit arrangements were changed and the granted protection was repealed. Upon challenging the validity of these actions, the indemnity was secured. The company also had to commit for making certain that the long term funds held by PNGSDP are well governed for the PNG people. The entire process cost a lot of amount for BHP Billiton, which could have been otherwise deployed for the operations in Australia (BHP Billiton, 2016b).
The company has had to face heat due to its mining operations and their impact over the environment constantly. And this has crossed over to the international boundaries. A R$20 billion claim was filed by the Minas Gerais, Federal Government of Brazil, and the states of Espírito Santo and certain other public authorities (Brazilian Authorities) in December 2015 against the company along with two other participants. As a result of this, the company entered an agreement with the authorities for restoration of both the environment and the affected communities as a result of the failure of the dam (BHP Billiton, 2016b).
At the United Nations Framework Convention on Climate Change (UNFCCC) 21st Conference of the Parties (COP21), the company, in September 2015, called out for positive outcome and signed the CEO Statement on Business, Climate Change and the Paris Negotiations. This has increased the regulations applicable on the company, pertaining to climate, by changing the energy system of the company. During the financial year 2016, the company upgraded its approach for addressing the changes in climate, which included the strategies and mitigation for supporting RED++. This was coupled by upgraded approaches on the outcomes of the twenty-first conference of the parties to the UN Framework Convention on Climate Change, which took place in 2015 December and low emissions technology (BHP Billiton, 2016b).
The international agreement forged at UNFCCC at COP21, surprised a number of individuals, for both its substance and ambition. The reason for the same is that this agreement has spurred the renewed efforts for reduction in the emissions, which includes the same by nations like China and United Nations, where China is considered as the largest greenhouse gas emitter in the world. These nations have formally become the parties to the Paris Agreement and this in turn has led to the strengthening both regional and domestic policies. Hence, the conformity to such agreements has enabled the company in lowering its risk factors, when it comes to environmental degradation, owing to emissions (Wild, 2016).
The company has signed the Australian Tax Treaty, which is a tax convention amongst the United States and Australia, and it deals with the avoidance of double taxation. This treaty, by being applicable over the United States, helps in avoiding the otherwise applicable tax at the rate of 30% (BHP Billiton, 2016b).
The Australian Government controls the use and export of AONM, i.e., Australian Obligated Nuclear Material, in a strict manner and it is only sold to the parties to the NPT, i.e., Non-proliferation of Nuclear Weapons, or where the AONM is subjected to a bilateral safeguards agreement. For the exporting of copper concentrate by BHP Billiton, a new bilateral agreement would be needed, as the copper concentrate contains uranium. The rationale behind this is to ensure that the uranium recovered was subjected to the general and accounting requirements of BHP Billiton. This new bilateral agreement would allow the company to export the copper contrite which contains uranium, for the purpose of processing in China (BHP Billiton, 2011).
With regards to the uranium stewardship which is still under development, the company is required to undertake a number of interim measures which reflect the national and international regulation. The former in terms of HSEC standards and the latter in terms of the Sustainable Development Principles of the International Council of Mining and Metals and the Enduring Value framework of the Minerals Council of Australia, regarding sustainable development (BHP Billiton, 2011).
At a ceremony held in Singapore on 20th January, 2017, Mitsui O.S.K. Lines, Ltd made an announcement regarding an international agreement for launching a joint study on LNG, i.e., liquefied natural gas, with five companies, one of which was BHP Billion. This joint research project was undertaken in advance of the international treaties calling for stringent standards regarding emissions. These were in line with the International Convention for the Prevention of Pollution from Ships (MARPOL) Treaty (MOL, 2017).
BHP Billion is also a signatory to the Bali agreement and has highlighted its need by stating that in case the same is not implemented, the entire multilateral global trade agenda could be jeopardized. The company has aimed that its implementation could be a boost for it personally and also for the trade as the same would be raised by $3 trillion, and it would also result in creation of over 50 million jobs (Maher, 2014).
References
BHP Billiton. (2011) 27 Product Stewardship and the Nuclear Fuel Cycle. [Online] BHP Billiton. Available from: https://www.bhpbilliton.com/-/media/bhp/regulatory-information-media/copper/olympic-dam/0000/supplementary-eis-main-report/chapter-27-product-stewardship-and-the-nuclear-fuel-cycle.pdf [Accessed on: 13/04/17]
BHP Billiton. (2016a) Annual Report 2016. [Online] BHP Billiton. Available from: https://www.bhpbilliton.com/investor-centre/annual-reporting-2016/annual-report [Accessed on: 13/04/17]
BHP Billiton. (2016b) Integrity Resilience Growth Annual Report 2016. [Online] BHP Billiton. Available from: https://www.bhpbilliton.com/-/media/bhp/documents/investors/annual-reports/2016/bhpbillitonannualreport2016_interactive.pdf?la=en [Accessed on: 13/04/17]
BHP Billiton. (2017) About us. [Online] BHP Billiton. Available from: https://www.bhpbilliton.com/our-approach/our-company/about-us [Accessed on: 13/04/17]
Business Review Australia. (2013) Australia’s Largest Companies 2013. [Online] Business Review Australia. Available from: https://www.businessreviewaustralia.com/top10/1166/Australia%27s-Largest-Companies-2013 [Accessed on: 13/04/17]
Business. (2017a) WHS/OH&S acts, regulations and codes of practice. [Online] Australian Government. Available from: https://www.business.gov.au/info/run/workplace-health-and-safety/whs-oh-and-s-acts-regulations-and-codes-of-practice [Accessed on: 13/04/17]
Business. (2017b) Environmental legislation. [Online] Australian Government. Available from: https://www.business.gov.au/info/run/environmental-management/environmental-legislation [Accessed on: 13/04/17]
Chambers, R.H. (2013) An Overview of the Australian Legal Framework for Mining Projects in Australia. [Online] Chambers & Company. Available from: https://www.chamberslawyers.com/wp-content/uploads/downloads/2013/10/060518-Presentation-Eng.pdf [Accessed on: 13/04/17]
Dick, H., and Merrett, D. (2007) The Internationalisation Strategies of Small-country Firms: The Australian Experience of Globalisation. Northampton: Edward Elgar Publishing, pp. 258- 262.
Federal Register of Legislation. (2013) Corporations Act 2001. [Online] Australian Government. Available from: https://www.legislation.gov.au/Details/C2013C00605 [Accessed on: 13/04/17]
FTSE. (2015) BHP Billiton PLC (UK) and BHP Billiton Ltd (Australia): Demerger of South32 Ltd. [Online] FTSE. Available from: https://www.ftse.com/products/index-notices/home/getnotice/?id=1357423 [Accessed on: 13/04/17]
IBIS. (2017) BHP Billiton Limited – Premium Company Report Australia. [Online] IBIS. Available from: https://www.ibisworld.com.au/australian-company-research-reports/mining/bhp-billiton-limited-company.html [Accessed on: 13/04/17]
Maher, S. (2014) Bali trade treaty ‘must be signed’, says BHP Billiton chief executive Andrew Mackenzie. [Online] The Australian. Available from: https://www.theaustralian.com.au/national-affairs/bali-trade-treaty-must-be-signed-says-bhp-billiton-chief-executive-andrew-mackenzie/news-story/2b6fa58df7b77937a8065039aa66c837 [Accessed on: 13/04/17]
Mining Global. (2015) 2015 Edition: Best Mining Companies to Work for in Australia. [Online] Mining Global. Available from: https://www.miningglobal.com/top10/1364/2015-Edition:-Best-Mining-Companies-to-Work-for-in-Australia [Accessed on: 13/04/17]
MOL. (2017) MOL Teams up with BHP Billiton/DNV GL/Rio Tinto/SDARI/Woodside on Joint Study of LNG-fueled Capesize Bulker – Initiative on Environmental Protection Ahead of International Rules. [Online] MOL. Available from: https://www.mol.co.jp/en/pr/2017/17004.html [Accessed on: 13/04/17]
Norman Disney & Young. (2013) BHP Billiton Global Headquarters. [Online] Norman Disney & Young. Available from: https://www.ndy.com/project/bhp-billiton-global-headquarters-171-collins-street-melbourne [Accessed on: 13/04/17]
Thompson, P., and Macklin, R. (2010) The Big Fella: The Rise and Rise of BHP Billiton. Melbourne: Random House Australia.
Wild, F. (2016) Views after Paris. [Online] BHP Billiton. Available from: https://www.bhpbilliton.com/media-and-insights/prospects/2016/10/views-after-paris [Accessed on: 13/04/17]
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