Essays on Economics of Climate Change - BHP Billiton Case Study

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The paper "Economics of Climate Change - BHP Billiton " is a perfect example of a micro and macroeconomic case study.   BHP Billiton is an Australian mining company dealing with petroleum and minerals. It is the leading company in the mining sector of Australia and is headquartered in Melbourne, Victoria. The firm is dual-listed in the United Kingdom as BHP Billiton Plc and in Australia as BHP Billiton Limited. Being in the mining sector, the firm processes and extracts gas, oil and minerals from production operations in Southern Africa, the Americas and Australia.

In 2014, the firm had a heavy presence in 130 locations in 21 countries employing more than 123,800 employees (BHP Billition, 2014). Although the sector is capital intensive will huge entry barriers, it allows for mergers and acquisitions to increase leverage. With $179 billion market capitalization, the firm competes with 16 other major players that are closely followed by Rio Tinto Ltd at market capitalization at $123 billion (BHP Billition, 2014). The firm is trade-exposed with Europe and Asia with a record $67.2 billion revenue and $27 billion contributions to the Australian economy in employment, payments to shareholders, social responsibility and provision of taxes (BHP Billition, 2014). BHP Billiton is subject to a carbon tax in global operations but not in Australia.

However, the firm is trade-exposed and will be affected by carbon tax legislation in South Africa in 2016 and policies on carbon pricing which is part of the reform package in Chile. Some of the major competitors are Rio Tinto, Mitsubishi materials corp, Goldfields and Anglo American. BHP Billiton is enjoying a monopoly market in Australia (Heede, 2014).

Despite the Australian government repealing carbon taxes in 2014, the proposed regulatory mechanisms in operational countries may impact directly or indirectly operations through its customers and suppliers in the introduced Direct Action Plan (Commonwealth of Australia, 2013). Moreover, stiffer regulatory penalties and loss of reputation may result from the breach of governance processes.

Reference

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BHP Billiton, 2014, BHP Billiton Strategic Report 2014. http://www.bhpbilliton.com/~/media/bhp/documents/investors/annual-reports/bhpbillitonannualreport2014.pdf.

Commonwealth of Australia, 2013, Emissions Reduction Fund Green Paper, Department of Environment. http://www.environment.gov.au/system/files/resources/66237232-3042-4cd8-99a3-040705fead3b/files/erf-green-paper_1.pdf.

Heede, R 2014, Tracing anthropogenic carbon dioxide and methane emissions to fossil fuel and cement producers, 1854–2010, in Climatic Change, Vol. 122, No. 1-2, p.229-24.

Hugh, T 2012, Carbon Tax Will Cripple Australian Coal Industry: New Study, Media Release. Institute of Public Affairs.

Marren, S 2015, The government’s direct action plan, Uniting Justice Australia. http://ucaqld.com.au/wp-content/uploads/2012/11/UnitingJustice-DirectActionPlan.pdf

Nelson, J & Schuchard, R 2010, Adapting to climate change: A guide for the mining industry, BSR. http://www.bsr.org/reports/BSR_Climate_Adaptation_Issue_Brief_Mining.pdf.

New South Wales Government, 2015, Current climate change research projects: adaptation, Science and Research.

BHP Billiton, 2014, Climate change: Portfolio analysis, http://www.bhpbilliton.com/~/media/5874999cef0a41a59403d13e3f8de4ee.ashx

Tristan, E 2013, Climate Spectator, 10 July 2013.

Turecek, J 2011, Carbon tax won't kill the economy, The Sydney Morning Herald, Fairfax Media.

Wilson, J & Clark, P 2015, BHP Billiton confident of robust portfolio despite climate change action, Mining, http://www.ft.com/cms/s/0/33eec58a-66ae-11e5-a57f-21b88f7d973f.html#axzz3pkDcARdS

Wright, C 2014, What Does Direct Action on Climate Change Really Look Like? University of Sydney.

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