BHP’s Active Betrayal Of Australia
by David Archibald
22 May 2021
One of BHP’s former Managing Directors is legendary: Essington Lewis. He tirelessly visited the company’s operations around the country. A visit to Japan in 1934 convinced him of the inevitability of a war with Japan, in which Australia would be inextricably involved. Upon his return he began the active promotion of BHP’s involvement in a range of defense initiatives, which were to culminate in his appointment as director-general of munitions in 1940.
These days you don’t have to visit China to figure out that the Chicoms are set upon starting a war in which a lot of Australians will be killed, maimed, and wounded. All you have to do is read what the Chicoms say they are going to do. Or read about their killing of Indian soldiers and threats against Japan, Taiwan, Philippines, Australia, India, Bangladesh, Russia and the United States.
Ideally, all Australian companies should be led by the likes of Essington Lewis, who would be preparing for the existential war coming. Instead we have the wilfully blind and yet worse, active white-anters such as Mike Henry, the current managing director of BHP. Mr Henry had Edgar Basto — the head of BHP Minerals Australia — make a statement that Australia should improve its relations with the Chicoms because BHP was missing out on the coking coal price.
To put that into context, last October the Chicoms banned the import of Australian coal, barley, wine, crayfish, timber, cotton and beef. These are things they thought would do the most harm to Australia without it costing them too much.
They didn’t ban iron ore because the market is too tight — there are no other suppliers that could fill the gap if iron ore from Australian was banned. Similarly, China is the biggest sheep meat producer and consumer on the planet, at 5.0 mtpa and 5.5 mtpa respectively. There aren’t that many sheep meat exporters at scale — just New Zealand, Australia and Paraguay in that order. If the Chicoms banned Australian lamb there would be no other supplier to fill the gap.
Mr Basto’s complaint is that foreign coking coal producers are getting 50% more for their coking coal than BHP is. The opposite is true. BHP is getting much the same price for its coking coal as it was last October when the ban started. The Chicoms are having to pay 50% more to get coking coal from the east coast of the United States in order to get any supply at all. That American coal would have normally gone to Europe. The European steel mills are now buying more of their coal from Australia. All the Chicoms have done is to distort normal trade routes, and they are paying for it. Consider the evidence provided by this graph based on data from Platts to 25th March:
The orange line is the hard coking coal price at the port in Australia. The blue line is the landed price of hard coking coal in China. The initial gap in October 2020 is the cost of freight from Australia to China. The differential now is approaching US$100 per tonne. That will collapse back to near zero once the ban is over so Mr Basto’s loss is illusory — BHP is never going to get the price that US producers are now achieving.
With a gap of US$100/tonne and Chicom coking coal imports running at 60 mtpa, the Chicoms are paying US$6,000 million annualised to punish Australia for not kowtowing to them. This is what they are paying to distort the market. BHP is still getting the same margin it was before the ban was put in place. That US$6,000 million annually is a sign that they really do hate us.
The damage has been done. BHP has added its voice to those who want to sellout the country for a mess of pottage. At some stage there will be no market in China because we will be at war with them.
David Archibald is the author of The Anticancer Garden in Australia.