Break On Through — CEO of BHP Group Redefines Concepts on Future-Facing Commodities With the Company’s Sustainability Strategy

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Concept: The World Needs More Copper, Nickel and Potash

To understand the concept and purpose of transitioning to future-facing commodities, it’s right to introduce one of the CEOs leading this transition: Mike Henry of BHP Group. There are certain CEOs leading in one or more aspects of the transition to Future Facing Commodities — known as copper, nickel and potash — for which the world is going to need according to mega-trends.

Mike Henry is the CEO of BHP Group, the world’s largest miner. BHP Group hasn’t been shy about the company’s push for future facing commodities on the frontlines of Environment, Social, Governance (ESG) frameworks.

Henry shared insights about the company’s ESG strategy at the 2021 Fidelity Sustainable World Summit, including the impact on the communities and stakeholders, managing the trade-offs between production and supply and maintaining their ESG standards throughout the entire value chain.

This means that BHP Group plans to intensify its metals mining while taking a more sustainable and environmental focus on their operations globally.

• Mike Henry, CEO of BHP Group — “We’ve needed to demonstrate ESG leadership over time. Not only do we need to be aware of what the needs of today are; we need to be able to look into the future and gauge how societal expectations are likely to change.” (Source: 2021 Fidelity Sustainable World Summit)

Mike Henry was officially transitioned into CEO of BHP Group in November 2019 when it was announced that he would succeed then-CEO Andrew Mackenzie. It should be pointed out that Mr. Henry had already been working for BHP in a variety of roles since 2003. .

There was high speculation among reporting agencies and commodity analysts about a Nutrien Ltd.-BHP Group partnership for the development of a potash mine in Jansen, Saskatchewan, Canada. It’s true that BHP has been divesting its oil and gas assets for “future facing commodities” such as potash. In a statement to The Financial Post the company said “Potash provides BHP with increased leverage to key global mega-trends, including rising population, changing diets, decarbonization and improving environmental stewardship.”

However, most of the talk about a proposed partnership or joint-venture has died down since sanctions were targeted at Belarus’ potash industry in December 2021.

• Mike Henry, CEO of BHP Group— “The reality of our industry is that you can’t sacrifice one E, S and G, for another, we need to hold high standards across all three of those dimensions…as the world seeks to de-carbonize, the act of de-carbonization is going to be incredibly metals-intensive.” (Source: 2021 Fidelity Sustainable World Summit)

Mike Henry assumed the role of CEO on Janurary 1, 2020, as the former CEO of BHP told the public on his way out the door, “Fresh leadership will deliver an acceleration…that will come from BHP’s next wave of transformation. Choosing the right time to retire has not been an easy decision, however the Company is in a good position. I am confident Mike and BHP will seize the many opportunities that lie ahead.”

Little did anyone know what really lied ahead for the company: the global COVID-19 pandemic.

But before the global pandemic it was becoming well known to the public that Mr. Henry was “fully committed” to BHP’s climate change action plan and sustainability strategy. This was indicated by merger talks with Australia’s Woodside Petroleum for BHP’s oil and gas assets in the Gulf of Mexico and Western Australia.

Not only is this about lowering the company’s GHG emissions and carbon footprint, as the name of the game since the Financial Times Mining Summit on October 8, 2021, has been about the company’s push to explore and produce future facing commodities.

• Mike Henry, CEO of BHP Group— “We will be led by what’s happening in the world around us.” (Source: 2021 Fidelity Sustainable World Summit)

Concept: Decarbonization and Geopolitical Trends Are Not Mutually Exclusive

No wonder CEO Mike Henry has treaded carefully when discussing the nature of the company’s expansion into future facing commodities. The concept is still new to most people.

It has already become synonomous in business news with global commodities in “tougher jurisdictions” that are associated with geopolitical tredns within the larger context of the global economy. Nevertheless, Henry told the FT Mining Summit in 2021 that BHP Group wants half of its revenues to come from the production and exports of these future facing commodities by 2030.

This implies that that the company will have to venture out to new areas containing the copper, nickel and potash production capabilities desired for such results.

It’s already known that the company has valuable production assets in Chile and Ecuador. So what’s uncertain at this point is how the company plans to expand into other places, for instance the Democratic Republic of Congo (DRC), where some of the world’s largest copper mines are available.

• Mike Henry, CEO of BHP Group — For the world to de-carbonize it’s going to need a lot more metals, so something like two-times as much copper in the next thirty years…four-times as much nickel…two-times as much steel, and I think that’s an underappreciated fact.” (Source: 2021 Fidelity Sustainable World Summit)

BHP Group intends to produce more metals while adhering to ESG practices and GHG emissions reductions. That’s why the company believes producing future facing commodities is not only a more profitable venture but also a sustainable option going forward.

In an interview with CNBC’s David Faber on March 4, 2021, CEO Mike Henry elaborated on the company’s climate investment program established in 2019, which he claimed gave the company “the lowest emissions intensity footprint of any of the major mining companies…in terms of Scope 1 and Scope 2 emissions…with a $400 million climate investment program” to reach Net Zero by 2050.

Watch the full 20-minute interview on CNBC: https://www.cnbc.com/2021/03/04/bhp-ceo-mike-henry-economic-outlook-stronger-than-we-were-expecting.html

Along with the company’s ambitions to be more sustainable, however, comes with an increase in mining activity that was aided by a sharp demand for commodities around the world in 2021–2022.

In early 2022, it was reported that BHP Group profits would increase to $9.72 billon for the first half of 2022, compared to $6.20 billion in the first half of 2021. This is mostly attributed to a booming global demand for metals, iron ore and renewable energy products.

• Mike Henry, CEO of BHP Group — “I believe a comprehensive focus on ESG is actually going to play to BHP’s advantage.” (Source: 2021 Fidelity Sustainable World Summit)

Concept: Future-Facing Commodities Are Needed In Reponse To Global Mega-Trends

What all three of these future facing commodities — copper, nickel, potash — have in common are their connections to the Energy Transition, with a growing demand for Clean Energy Technologies and Electric Vehicles (EV).

Nickel is a critical battery material. Copper conducts the electricity for a wide-range of nascent industrial products. Potash is one of the main fertilizers that can be mined and produced throughout areas of the world and that do not need to be combined with natural gas.

In BHP’s 2022 economic and commodity outlook report it was stated clearly that: “Longer–term, we see potash as a future–facing commodity with attractive fundamentals. Demand for potash stands to benefit from the intersection of a number of global megatrends: rising population,changing diets and the need for the sustainable intensification of agriculture.”

This reveals the essence of BHP’s push to lead in the future facing commodities space.

Potash production forms a vital source of fertilizer for food production and agriculture products all over the world, which is also a completely new segment for the world’s largest metal miner to undertake.

With the global mega-trends listed above, it’s not hard to comprehend that BHP Group’s strategy to search for future facing commodities is not only redefining the concept about mining and environment, it’s also the focal point of the company’s sustainablity strategy going foward.

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