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The BHP whistleblower and the secretive plan to turn Hunter Valley coal into lakes

by Michael West | Dec 31, 2024 | Business, Latest Posts

BHP whistleblower James Joseph has come forward with a raft of allegations against the Big Australian, one of which he says exposes clandestine negotiations with former Prime Minister Malcolm Turnbull to turn Hunter Valley coal mines into lakes. Michael West reports.

“I’d be very careful if I was you”. BHP whistleblower James Joseph was warned on the afternoon of June 5, 2024 by a fellow BHP executive about coming forward with allegations against his company, implicating BHP’s most senior executives and directors. 

A year prior, Joseph had come forward with a litany of allegations against The Big Australian; from corporate malfeasance and competition law breaches to the cover-up of investigations, bullying and harassment and failing to report serious injury to the NSW safety regulator in accordance with mining regulations.

This follows news earlier this month of a class action by Jan Saddler’s law firm against BHP and Rio Tinto for widespread sexual harassment in the workplace which alleges the companies used confidentiality agreements to stop female employees from speaking about sexual harassment at work.

Instead of being protected as a whistleblower however, the 39-year old HR executive endured what he describes as “extreme retaliation”: death threats, a break-in at his home, the ‘cold shoulder’ at work, a large number of job declines for lesser positions, withholding of urgent medical care and relentless workplace and legal bullying. It is the sort of payback familiar to other whistleblowers who have chosen to come forward.

There is no allegation here that BHP itself was specifically involved in these acts. The ecosystem of Big Coal is expansive, embracing a satellite of corporations, unions, lobby groups, labour hire companies and insurers. And at a time when the coal sector is in the twilight of its existence, the vested interests are as powerful as ever.

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In his last 6 months of employment, James Joseph was even instructed to only speak to BHP legal representatives (Herbert Smith Freehills), who took over the handling of the ‘Ethics Point Investigation’ into his allegations. 

“It was a completely unheard of approach,” he says. As an HR boss himself, the most senior in NSW, Joseph was well acquainted with the tactics of corporations managing prickly situations with employees. “I had led 200 investigations himself in various roles with BHP”. 

He had recorded, and agonised over reporting the myriad of breaches as a whistleblower for some time but it was a private visit to the Mt Arthur mine site by former prime minister Malcolm Turnbull in December 2022 which he says was the final straw.

The Turnbull visit

“The straw that broke the camel’s back was the Turnbull visit. Alarm bells started going off. Confidential visits on a mine site do not exist; everything needs to be logged in the operational visitor log book. I realised it was untoward when a fellow colleague expressed their concern about knowledge of the visit ever ‘getting out’.”

There is no allegation here of wrongdoing by Turnbull. He is a private citizen, an investor pursuing a corporate deal with BHP. Rather, it was the failure by the mining giant to adhere to its own safety regulations which concerned Joseph.

Malcolm Turnbull with BHP executive Sarah Bailey - Manager Approvals, Land, Access, Heritage & Environment

Malcolm Turnbull at Balmoral House with BHP executive Sarah Bailey – Manager Approvals, Land, Access, Heritage & Environment

Mining companies take safety seriously. “They are strict,” he told MWM. “If there is an explosion, a wall collapse, fire, flooding or any type of accident at a mine site, the company is accountable. It has to account for everybody on site. So the concept of an undisclosed visit … we should never have them”.

From conversations with his peers, Joseph subsequently became aware that BHP was in negotiations with Turnbull over a plan for energy transition at Mt Arthur, one of the largest coal mines in the country. At that time the modification was yet to be submitted to the NSW Planning Dept. 

Mt Arthur and Hunter Lakes

The mooted project is vast, a plan to turn the mine into lakes and deploy pumped hydro along with solar and wind farms to transition the coal mine into an enormous renewable energy hub. If it proceeds, it may be the biggest infrastructure in Australian history. The secrecy worried Joseph too. Malcolm Turnbull has a property in the vicinity but BHP does not own the land; it is a mining lease, and there is no talk of a tender.

Located just south of Muswellbrook in the Hunter Valley, Mt Arthur is the biggest coal mine in NSW, stretching 7,000 hectares, churning out some $2B a year in income from thermal coal alone. 

BHP whistleblower James Joseph

BHP whistleblower James Joseph

Due to close in 2030, the BHP board and management have been deliberating about the future of the site, as has the entire industry, amid the inexorable transition to renewables. This is no secret, but what is a secret is the actual plan for the multi-billion-dollar mine site rehabilitation.

The pumped hydro plan has been mooted to the local community, that is to turn the Hunter into lakes, and fill the residual mining voids with water. But it is not just about renewable energy. The lakes could be recreational too, a tourist attraction with water skiing and boating.

It is a similar project to what is happening in East Germany where old coal district of north-eastern Saxony is becoming the largest chain of artificial lakes in Europe.

Why the secrecy?

But the issue according to Joseph is the secrecy, planning sequencing and suspiciously termed ‘community consultation’. There is no tender, no modification approval (yet), no finalised public proposal. But apparently there is a lot going on behind the scenes. And here is the rub.

Concerned about proper process, Joseph came forward with his allegations. “And what happened? I went home for the weekend and spoke to my wife about it, and others. And I knew that if I didn’t blow the whistle, I was as bad as them. I just thought it was shady”.

He believes the board of BHP must have approved the plan. “We can’t prove that but it is in their Risk & Audit Committee charter [approving site visits] who, would you believe it, is also the same committee that overseas Whistleblower reports. 

Even a colleague who shared the office next to Joseph urged him to inform her if he blew the whistle saying “James if you do report it, let me know, there are a few ‘higher ups’ I will need to inform”. Joseph never spoke to this colleague again (and now is forbidden to) under legal instruction.

“A BHP Asset President would never bring a VIP like Turnbull onto site without higher ranking executives being aware because it would constitute a breach of conflict of interest (policy). The Board would probably be involved,” he says.

BHP’s Beijing scandal

“Why Board level? In 2015, we got done for corrupt dealings in regard to our foreign government dealings, associated with the 2008 Beijing Olympics. [It was a breach of] the US Foreign Corrupt Practices Act.”

The Beijing saga was a global embarrassment for the mining giant. The company was hit with a $US25m fine by the Securities and Exchange Commission. The bribery scandal occurred under then chief executive Marius Kloppers. BHP had treated 60 government officials and their spouses to luxury hotel accommodation at the Beijing Olympics – most of them from Asia and Africa – in an attempt to entice foreign government and regulatory approval for mining projects.   

Kloppers’ successor Andrew Mackenzie had to clean up the mess and expressed deep regret. “That was 7 years later,” says Joseph. And the aftermath left BHP scarred, and particularly sensitive to reputation damage.

“[As a result] they set up the Risk & Audit Committee specifically to deal with these matters – to demonstrate to the market that they were on top of it. The committee has experienced almost complete turnover over the course of Joseph’s internal investigation, and is now chaired by former KPMG Audit executive, Michelle Hinchliffe. 

Joseph claims the investigation has not been properly executed. “Key witnesses were never interviewed”, he says. “It was a cover-up”.

“BHP’s charter says any government official or VIP must be approved for site visits. At the time Turnbull was also a board member at Andrew Forrest’s Fortescue Future Industries, he was later appointed chair of International Hydropower Association and is a former Prime Minister, indeed the political architect of the troubled Snowy Hydro 2.0 project. He clearly should have been approved for a site visit”.

Turnbull stepped down from the board of the Fortescue subsidiary in January 2023. Did Fortescue chairman Andrew Forrest know of the BHP visit? This is unclear. And if so, was Fortescue involved in the BHP plan for this new energy transition? 

Did they know a whistleblower might come forward? Joseph had come forward internally  prior to the community engagement sessions, prior to the modification application (submitted 14 months later), and only three weeks after a visit of NSW Minister Courtney Houssos to Mt Arthur. 

Biggest project in Australia’s history?

The sheer scale of the proposed transition deal makes it a sensitive issue. If you use Snowy Hydro as an example, that’s already at $12B from original price estimates of $2B.

Then there is the immense regulatory challenge; the environmental and First Nations’ approvals which would be required to flood the area, potentially putting indigenous heritage under water. The community engagement feedback seems to be a mixed bag. 

James Joseph knew in April 2023 that confidential pumped hydro talks were underway. “I was accountable for shaping the NSW workforce strategy as HR manager and I was kept in the dark. Now I know why they never wanted to have this conversation or share the information with myself and other managers, because what they were doing was questionable – amounting potentially to competition breaches.”

Then there is the political sensitivity. China is at the vanguard of pumped hydro technology yet the political implications of doing such a large deal with the Chinese, let alone any foreign group, are significant. China already has its foot on a lot of assets in the Hunter Valley including mining and wineries.

BHP has significant sway with the Coalition and Turnbull has cultivated strong ties with Labor and is a major new energy investor so a joint venture is plausible.

But for expert opinion

Ecologist and water scientist Peter Hughes says the Lakes proposal is a pipe-dream, at least the recreational part. 

“With the Lakes proposal and the use of the mine voids, I’ve reviewed at least 4 proposals and every few years the NSW Minerals Council does a report. There is no new data. I’ve seen proposals that all of the mine voids can be used. It’s not viable for any recreational use and never will be.

“The groundwater in the Hunter is highly saline and very high in heavy metals. It’s highly toxic for animals. I’ve written letters to them explaining this to them. In Germany it is different. The groundwater must be much cleaner, and there’s high rainfall.

Hughes, who worked 25 years with the NSW EPA and done Environmental Impact assessments on every coal mine in the Hunter Valley and written most of the Environment Protection Licences.

“There is potential for pumped hydro. There was a CSIRO report into the potential for pumped hydro which found it plausible. All you need is a hill more than 100m high. We’ve put the kibosh on the recreational proposal at least four times. Pumped hydro is potentially viable but they have a major problem with it – the water quality. The water is highly corrosive which would clog up the machinery. So technically I think it is unlikely.

“I would say they are trying it on again. They have probably submitted again to the EPA but it’s a dog with fleas.”

To ever get it approved, says Hughes, they would have to get DA consent under EP&A Act, an Environment Protection Licence from the EPA, Water Access Licenses under Water Management Act, and possibly Aboriginal relic destruction licences from NPWS.

To make the water quality viable, what they would have to do is put it through a purification plant before they pump it back up the hill to the turbine. We are talking about a reverse osmosis desalination plant which is extremely expensive and power hungry. It could eat up the majority of the power which the pumped hydro plant is producing.

It’s an uphill battle. And not just for BHP but all the Hunter Valley mines. “This is why they have been quietly trying to sell their mines,” says Peter Hughes. “The license says that they have to return the land to its pre-mining state. This is an enormous impediment; it involves billions in rehabilitation costs.

“This is why they keep running it up the flagpole”. It allows them to go into negotiations with buyers and say we have got all the NSW ministers on board. This guy (James Joseph), it’s no wonder they didn’t want him around”.

Michael West headshot

Michael West established Michael West Media in 2016 to focus on journalism of high public interest, particularly the rising power of corporations over democracy. West was formerly a journalist and editor with Fairfax newspapers, a columnist for News Corp and even, once, a stockbroker.

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