M. Nazmul Amin Majumdar
BRACU Business School
Shiab Khan (13164039)
Sanzida Parvin (13164025)
Tanzir Islam (13164087)
SK Yaishi Binte Zaman (12264035)
Date of Submission: April 2, 2015
BHP Billiton Limited
BHP Billiton is world’s largest diversified natural resources company. The company was created by the merger of two companies, BHP Ltd (An Australian mining company) and Billiton PLC (An UK based Company). BHP Billiton has created long time share holder value through the discovery, acquisition and development of natural resources. In the last few years, BHP Billiton has faced some governance challenges in conducting their business around …show more content…
Political factors can have a big impact on the company’s stated key drivers: license to operate, project pipeline, growth options and world class assets.
BHP has committed capital to exploration and development projects in countries where there is the risk of political instability: Democratic Republic of Congo, Western Africa, Mongolia, and Kazakhstan. The stated political risk factors of operating in emerging markets include: civil unrest, terrorism, nationalization, changes in government policy and nullification of existing contracts, lease agreements or permits.
BHP mining operations in South Africa have undergone adjustment due to the passage of the Mineral and Petroleum Resources Development Act of 2002 which took effect in 2004. This means that under the new act and mining charter, BHP will be mandated to restructure an eventual 26% percent of the ownership rights in the mining properties and offer these disadvantaged South Africans.
Governments have the ability to increase taxes which can adversely affect operations. Chile introduced a new 5% mining tax “royalty” which applies to operating taxable income from mining. BHP owns and operates the Escondida cooper mine in Chile, which the company states is the largest source of cooper in the world. The mandated tax adds uncertainty to profit projections for the base metals product division of the company.