China Development Forum: BHP’s Mike Henry warns against government intervention in critical minerals

BHP boss Mike Henry has warned against government intervention to stimulate new supply of critical minerals as countries race to find materials to power the energy transition, saying it risks killing investment in the long-run. Mr Henry was among 100 global business leaders to speak at a major development conference in Beijing over the weekend — the first high-profile corporate summit in China since borders reopened following three years of isolation. Described as President Xi Jinping’s version of Davos, the three-day China Development Forum highlights opportunities in the Chinese market, the stabilisation of industrial supply chains and the green transition. Mr Henry said the race to secure critical minerals such as copper and nickel had brought with it not only greater government interest “but also greater government intervention”. He pointed out the world would need two times as much copper, four times as much nickel and two times as much steel in the next 30 years as the last 30 to limit global warming to 1.5C. China consumes almost half of the world’s annual copper production for use in electricity transmission, wiring and wind turbines. “Herein lies the dangerous paradox: competitive efforts to secure supply of these minerals run the risk of undermining the exact outcome they are intended to achieve — more efficient, cost effective, sustainable and reliable supply of key metals, with reduced market volatility,” Mr Henry told the forum on Saturday. He said the “temptation” for governments to intervene to stimulate new supply or to secure access to sources of critical minerals would “at best provide temporary relief”. “We believe that the resultant market distortions will increase risk and reduce returns — both of which are capital investment killers — and will make for less efficient, higher cost long-run markets,” he added while underscoring the need for policymakers to support open, liquid markets with price transparency. Supply chain risks posed by poor environmental, sustainability and governance practices also need monitoring, Mr Henry said. “If left unchecked, the quantum of new mining activity required and amount of capital which must flow into the industry, will mean some of this capital will go to companies and locations which do not uphold the (ESG) standards,” he said. “BHP has been long-term proponents of open, transparent markets and high ESG standards, and we work hand in glove with our Chinese customers in support of their leadership on decarbonisation.” Rio Tinto chief executive Jakob Stausholm told the forum he believed China would continue to share its development opportunities with the world in its journey to modernisation. “Ever since China’s reform and opening up, it has achieved one of the greatest modernisations in history,” Mr Stausholm said in a video message ahead of the forum. “Multinational companies like ours have shared in China’s rapid development, both benefiting greatly and contributing to it.” Mr Stausholm said Rio had shared joint venture partnerships for almost 40 years, including a new agreement with China’s biggest steelmaker Baowu to invest $US2 billion to develop the Western Range iron ore project in WA. The invitation of Australian business leaders to the forum is further evidence of improving relations between Canberra and Beijing despite fresh security tensions following Australia’s AUKUS submarine plan. The participant list — with the exception of Apple’s Tim Cook and Pfizer’s Albert Bourla — was light on US companies.