BHP Billiton's Business Operations and Compliance

This assignment requires a comprehensive analysis of BHP Billiton's business operations, particularly their mining activities in Australia. Students need to examine the company's compliance with competition law, drawing from submissions made to the Competition Policy Review Panel. The analysis should also consider BHP Billiton's environmental impact, referencing agreements and reports on strategic assessments related to iron ore mining in the Pilbara region. Additionally, students are expected to explore other aspects of BHP Billiton's business, such as its divestments and involvement with domestic gas security in Western Australia.

Running head: REGULATORY FRAMEWORK 0
Legal Aspects of International Business and Enterprise

REGULATORY FRAMEWORK 1
Table of Contents
Introduction................................................................................................................................2
BHP Billiton...............................................................................................................................3
Industry of BHP Billiton........................................................................................................3
Number of Staff in Australia and Globally............................................................................3
Location of Global Headquarters...........................................................................................3
Regulatory Framework of BHP Billiton....................................................................................3
Impact of Agreement, Treaties or Conventions on BHP Billiton..............................................5
Conclusion..................................................................................................................................8
References..................................................................................................................................9

REGULATORY FRAMEWORK 2
Introduction
Due to globalisation and digitalisation, it is easier for organisations to expand their
operations over worldwide which increase the number of multinational companies.
International corporations have to comply with domestic and international regulatory
frameworks that are established by the government. A firm can gain competitive advantage
and increase its brand image by effectively comply with its regulatory framework. This report
will analyse the regulatory framework of ‘BHP Billiton’ and evaluate various laws that are
necessary to comply by the corporation while operating its business in Australian market.
‘BHP Billiton’ is a multinational mining, petroleum, and metals company which was founded
in 1885. The firm performs a wide variety of oil and gas, mining and processing producing
operations in more than 25 countries (BHP, 2017). Further, the report will focus on analysing
various treaties, agreements, and conventions that influence the business of ‘BHP Billiton’.

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BHP Billiton
Broken Hill Proprietary Company Limited merged with Billiton PLC in 2001, and the
new corporation was established called BHP Billiton; it is an Anglo-Australian international
metal, petroleum, and mining firm. It is a dual listed company, and it is listed on both London
Stock Exchange and Australian Securities Exchange (BHP, 2017). The corporation focuses
on establishing an utmost level of governance fostering a culture which incorporates
corporate integrity and ethical standards into the business structure of the firm. The company
values sustainable development of its stakeholders and give utmost importance its safety and
health of its employees; the enterprise has prioritised its responsibility towards protecting the
environment, and it contributes towards the development of local communities. According to
Forbes (2017), BHP Billiton is one of the world’s top multinational performer companies
with a market capitalisation of US$98.3 billion.
Industry of BHP Billiton
The corporation operates in metal and mining industry, and it is one of the world’s
largest depositors of uranium, gold, coal, nickel, iron, and copper. The operations of the
company are situated in more than 25 countries, and it is one of the leading resource firms
worldwide. In 2016, the enterprise had revenue of AU$30.9 billion from its operations
worldwide (Owler, 2017).
Number of Staff in Australia and Globally
BHP Billiton is a world-leading resource firm with more than 65,263 employees, and
contractors situate throughout the world. In 2017, the corporation has more than 26,146
employees in Australia which include employees from all subsidiaries; the CEO of the
enterprise is Andrew Mackenzie (IBIS World, 2017).
Location of Global Headquarters
BHP Billiton’s global headquarters is located at 171 Collins Street, Melbourne,
Australia (BHP, 2013). The main operations of the corporations are situated in Australia,
United States, United Kingdom, Brazil, and Canada.

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Regulatory Framework of BHP Billiton
BHP Billiton is a key player in the Australian market, and various provisions
influence its operations. The current Australia regulations require corporations to maintain
transparency in their operations and focus on sustainable development. Following are various
provisions and regulations that influence the operations of BHP Billiton.
The Australian Jobs Act
As per the provisions of Australian Jobs Act, 2013, the developing and manufacturing
firms of major projects and products with a capital expenditure of more than AU$500 million
are compulsorily required by the government to execute and draft an ‘Australian Industry
Participation Plan’ (AIPP). The motive of this plan is to ensure that corporations are
providing “full, reasonable and fair” opportunities to other enterprises while operating in the
industry of Australia relating to supply goods and services (Competition Policy Review,
2014). The intention of government increases the regulatory and administrative burden on
producing corporations such as BHP Billiton. The firm has to claim that it is ethically
complying with various regulations relating to penetration of competition. BHP Billiton has
undermined productivity due to compliance with regulations, and it further increased the
expenses of firm and project delays. The corporation might face detrimental impact because
of disclosing sensitive information to third party suppliers and competitors.
Petroleum Resource Rent Tax and Mineral Resource Rent Tax
The government of Australia has imposed 30 percent tax on mineral resources which
resulted in imposing 22.5 percent additional tax on profits of corporations which deals in coal
and iron ore operations. BHP Billiton’s import and export operations are also affected by
Petroleum resource rent tax (The Australian, 2015).
DomGas Policy
The Australian government has introduced Western Australia’s Domestic Gas Policy,
2006 (DomGas) with the intention of lowering the prices of domestic gas than compared to
free-market equilibrium rates; due to the regulations of policy, the gas supply investment in
Australia has reduced considerably. BHP Billiton is Australia’s largest gas and oil producers,
and its operations are directly affected by the policy (Domgas, 2010). The policy introduces
new economic burden for corporations such as BHP Billiton, which will eventually decrease

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their investment in gas supply and production. Due to this policy, the completion will reduce
in the industry which will negatively influence Australia’s economy.
Australian Shipping Regulations
The Coastal Trading (Revitalising Australian Shipping) Act, 2012 has introduced new
infrastructure for issuing license whereby it is significantly difficult and expensive for non-
Australian vessels to provide intrastate and interstate shipping services. The new regulations
have reduced the competition for BHP Billiton in the industry (Parliament of Australia,
2012). The shipping cost for outside country’s vessels has increased substantially due to this
act which resulted in reducing the competition for Australian products that are transferred
through this form of transportation. Through, the act has a negative impact on the profitability
of BHP Billiton as well because it has surged the coastal shipping costs.
Australian Competition Law
The present competition law of Australia is significantly complex that focuses on
statutory form. The law has negatively influenced the operations of BHP Billiton which
affects its expenses and consistency among international regulations (BHP, 2017).
Impact of Agreement, Treaties or Conventions on BHP Billiton
Agreement on Iron Ore Production Joint Venture between BHP Billiton and Rio Tinto
On 5th June 2005, BHP Billiton entered into an agreement with Rio Tinto for
production joint venture. The agreement focuses the iron ore business of both the
corporations and their assets (BHP, 2009). The agreement provides guidelines for various
current and future assets and liabilities which are relating to iron ore business of both the
firms. Both the enterprises will own similar roles and responsibilities relating to their iron ore
production operations. The agreement assists in developing substantial cooperation between
both the corporations while operating their iron ore business in Western Australia. The main
objective of the agreement is to produce low-cost iron ore. As per the calculations of BHP
Billiton and Rio Tinto, the development and production of their joint venture will result in
generating more than 10 billion dollars for the corporations in the future.
Royalty Amendment Agreement between BHP Billiton and the Government of Western
Australia

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This agreement between the government of Western Australia and BHP Billiton cover
various business operations of the enterprise relating to a royalty payment on iron ore
shipment. The Western Australian Mining Regulations will specify the new rate of royalty for
the iron ore consignment. BHP Billiton and the government of Western Australia have made
amendments to various other documents, such as infrastructure for Rio Tinto’s permit sharing
(IOL, 2010). After its amendment, this agreement will assist BHP Billiton in increasing the
efficiency of its operations. The complexity of regulations will be reduced after this
agreement which is beneficial for the enterprise since it increases its productivity and
performance. The operating capabilities of the firm will be improved with the use of rail and
infrastructure; the corporation will be able to produce more goods in the Australian market
with the help of rail and infrastructure.
Agreement to Undertake a Strategic Assessment on Iron Ore between BHP Billiton and
Australian Government
On 18th September 2012, BHP Billiton has entered into an agreement with Australian
government for development of iron ore mines. The agreement focus on strategically
assessing the planned evaluation of the influence of iron mines development in the future and
analyse how it is associated with the national environmental significance. The agreement was
constructed as per the provisions of the Environment Protection and Biodiversity
Conservation Act 1999. The agreement is based on section 146(1) which provides provisions
that are related to the policies and plans of the corporation and their implementation
(Environment, 2017). In order to increase its effort in the protection of environmental
resources, the enterprise has designed and set up the activities in iron ore operations to
increase their efficiency. The agreement will assist BHP Billiton in strategically identifying
and measuring various possible impacts of its on-going programs related to protection and
management of practices.
The information collected from the strategic measuring will assist the corporation in
developing new plans that will assist in reducing their negative impact on the environment.
These policies will assist the enterprise in maintaining their integrity and reputation in the
industry and provide them various opportunities to enhance their support for developing its
business. Strategic improvement in operation will increase the future business opportunities
for the enterprise and assist them in fulfilling their corporate responsibilities (BHP, 2017).
Therefore, the agreement assists BHP Billiton in developing quality products by improving

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their existing procedures. The corporation can easily provide high-quality products and offer
better services to its customers with the help of this agreement which increases the
profitability of the firm.
Agreement with Banjima People
BHP Billiton has entered into an agreement with Banjima people in Western
Australia. The all-inclusive agreement provides the guidelines for business operations of the
enterprise’s iron ore plant which is situated in Pilbara, and it covers the area of more than
8263 square kilometers. According to BHP Billiton, the agreement will assist in increasing
the uniqueness and transparency in engaging with local indigenous communities. Due to this
agreement, the Banjima people will get good opportunities to improve their future with the
help of various projects and programs of the corporation (Shepherd, 2015). The programs
assist in overall development of the indigenous people and improve various social, health and
economic issue. The mining process will be done in areas which are selected by BHP Billiton
which result in increasing the productivity of iron ore. Due to this agreement, the products of
BHP Billiton will be easily available in the market at considerably low cost.
Agreement between BHP Billiton and PT Alam Tri Abadi (Adaro) for Selling Interest
in IndoMet Coal
In, 2016, BHP Billiton contracted with its equity partner PT Alam Tri Abadi (Adaro)
to sell 75 percent of its interest in IndoMet Coal (Hobbs, 2016). Although IndoMet Coal
could support a large-scale development, BHP Billiton has various other growth options that
are more attractive for its future investment. IndoMet Coal comprises seven leading coal
contracts of work situated in Central and Eastern Kalimantan, Indonesia. The agreement was
initiated to increase company’s focus on the crucial area of business. The agreement will
assist in bringing more future investment for the corporation that will influence the
productivity and performance of the business. After this agreement, the enterprise is focusing
on other future investment that will assist them in increasing their market share and sustain
their future development.

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Conclusion
Conclusively, multinational corporations deal with various regulatory frameworks
which influence their business operations. BHP Billiton is one of the leading companies in
diversified metal and mining industry. The firm’s operations are affected by the regulatory
framework which is provided by the government of Australia. Effective compliance with
regulatory framework ensures that corporations are complying with necessary legal
requirements, and they are performing their duties ethically. The regulatory framework of
BHP Billiton in Australia includes the Australian Jobs Act, the Coastal Trading (Revitalising
Australian Shipping) Act, Western Australia’s Domestic Gas (DomGas) Policy, Australian
Competition Law and many others. BHP Billiton has entered into various agreements which
influence their business such as an agreement with the government of Western Australia, PT
Alam Tri Abadi, Banjima People, Rio Tinto and many others. BHP Billiton should
effectively comply with its regulatory framework since it results in increasing brand image
and sustainable future development.

REGULATORY FRAMEWORK 9
References
BHP. (2009). BHP Billiton and Rio Tinto sign binding agreements on Iron Ore Production
Joint Venture. Retrieved from https://www.bhp.com/media-and-insights/news-
releases/2009/12/bhp-billiton-and-rio-tinto-sign-binding-agreements-on-iron-ore-
production-joint-venture
BHP. (2013). BHP Billiton Opens New Global Head Office. Retrieved from
https://www.bhp.com/media-and-insights/news-releases/2013/11/bhp-billiton-opens-
new-global-head-office
BHP. (2017). About Us. Retrieved from
https://www.bhp.com/our-approach/our-company/about-us
BHP. (2017). BHP Billiton Iron Ore Pilbara Strategic Assessment. Retrieved from
https://www.bhp.com/-/media/bhp/regulatory-information-media/iron-ore/western-
australia-iron-ore/0000/western-australia-iron-ore-pilbara-strategic-assessment-
commonwealth/bhp-billiton-pilbara-strategic-assessment-program-final-4-may-
20171.pdf
BHP. (2017). Competition law compliance. Retrieved from https://www.bhp.com/our-
approach/operating-with-integrity/competition-law-compliance
BHP. (2017). Minerals Australia. Retrieved from
https://www.bhp.com/our-businesses/minerals-australia
Competition Policy Review. (2014). BHP Billiton submission to the Competition Policy
Review Panel. Retrieved from
http://competitionpolicyreview.gov.au/files/2014/06/BHP_Billiton.pdf
Domgas. (2010). Western Australia’s Domestic Gas Security. Retrieved from
http://www.domgas.com.au/pdf/Other_reports/DomGas_Report_2010.pdf
Environment. (2017). Agreement to undertake a strategic assessment of the impacts of a Plan
for mining iron ore in the Pilbara region, Western Australia. Retrieved from
https://www.environment.gov.au/system/files/pages/c59ed6a7-e955-4df9-a8da-
156ddd76e0eb/files/bhpbio-strategic-assessment-agreement.pdf

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Forbes. (2017). Top Multinational Performers. Retrieved from
https://www.forbes.com/companies/bhp-billiton/
Hobbs, H. (2016). BHP selling its interest in IndoMet Coal. Retrieved from
https://www.worldcoal.com/coal/07062016/bhp-selling-its-interest-in-indomet-coal-
913/
IBIS World. (2017). BHP Billiton Limited - Premium Company Report Australia. Retrieved
from https://www.ibisworld.com.au/australian-company-research-reports/mining/bhp-
billiton-limited-company.html
IOL. (2010). BHP in deal with Australian government. Retrieved from
https://www.iol.co.za/business-report/international/bhp-in-deal-with-australian-
government-804125
Owler. (2017). BHP Billiton. Retrieved from https://www.owler.com/iaApp/12105325/bhp-
billiton-company-profile
Parliament of Australia. (2012). Coastal Trading (Revitalising Australian Shipping) Bill 2012
[and] Coastal Trading (Revitalising Australian Shipping) (Consequential
Amendments and Transitional Provisions) Bill 2012. Retrieved from
https://www.aph.gov.au/Parliamentary_Business/Bills_Legislation/bd/bd1112a/
12bd151
Shepherd, B. (2015). Banjima people celebrate after Pilbara native title deal signed in Kings
Park ceremony. Retrieved from http://www.abc.net.au/news/2015-11-04/bhp-billiton-
and-banjima-people-sign-pilbara-native-title-deal/6913522
The Australian. (2015). Minerals Resources Rent Tax raised more than expected. Retrieved
from https://myaccount.news.com.au/sites/theaustralian/subscribe.html?
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