LADIES and gentlemen, we have the great pleasure to unveil today a landmark charitable initiative which will assist the underprivileged in their fight for survival.
Many of you will already have heard the vile and heart-wrenching tale of a poor miner under vicious and unconscionable attack. This very week, as his audience laboured away over their filet and shiraz in the Westin Hotel ballroom – mindful of the ever-present dangers of enduring a garment stain from the red wine jus – BHP chairman Jac Nasser revealed how he and his freedom fighters had been ”fighting for our survival” as the government sought to ”nationalise the mining industry” in 2010.
And even now, against a backdrop of waning demand in China, the company remains under squalid attack from the unions and the government. Dear readers, please do not let BHP die. Help in the fight against poverty. Donate today to the ”Save a Scurvy Miner” fund.
It was just after lunch that the real news came. Until then Nasser had been right on message, hammering the unions and government. These lunches often finish with an impromptu ”doorstop” press conference as reporters gather for a few questions. Things were going to script until veteran Reuters reporter Jim Regan chipped in with this little gem: ”Does the BHP board intend to stick with its five-year $80 billion capex program?” Hooley dooley. This was right ”off message”.
His back to the wall, literally and figuratively, the chairman shot Regan the evil eyeball, snapped a terse, ”No,” and turned away to take another question. Regan had an open line to the newsroom. Within seconds the headline was flashing on screens around the world. The world’s biggest miner had jettisoned the world’s biggest capital expenditure program. It was further evidence the biggest boom in history was over.
The political theatre played out all week, culminating in Bill Shorten labelling the chairman of BHP a liar. Yet it is too late for the government anyway, which made Nasser’s publicity campaign such a master stroke: that is, make enough fuss about class warfare to divert attention from the company’s latest strategic failure. They are many.
First came the Rio Tinto takeover, then the $40 billion Potash play in Canada, next the aborted Pilbara iron ore joint venture, the US shale oil debacle and now, the Taj Mahal of capex programs.
Jac Nasser had nothing to lose by whacking a zombie. This government is the walking dead. And the media obliged by going big on the politics and missing the main story.
Canning the $80 billion capex program is a good thing. A handful of BHP’s top shareholders had been agitating for just this: more capital return, less expansion. In short, they didn’t trust BHP to spend the money efficiently.
BHP’s mega-profits had derived entirely from the good fortune of rising commodity prices, not from strategic management. Now, with the real prospect of a glut in commodity supply, it is hardly the time to be spending $80 billion on new projects.
The tickler for Nasser is: how does he handle all the politics such as special dispensations from the South Australian government if, or when, BHP decides to hold off the expansion of Olympic Dam, et cetera?