Recognising that the supply chain can make a significant contribution to sustainability, BHP Billiton encourages and supports its suppliers and contractors to meet the requirements of its Sustainable Development Policy.

In managing health, safety, environment and community (HSEC) aspects within the supply chain, BHP Billiton seeks to ensure that “the contracting of services, the purchase, hire or lease of equipment and materials, and activities with partners are carried out so as to minimise any adverse HSEC consequences and, where possible, to enhance community development opportunities”.

Fostering local suppliers

BHP Billiton seeks to enable socio-economic sustainability in the areas in which it operates by encouraging the development of, and creating opportunities for, local businesses to work with the company. Across the organisation, the distribution of spend with local suppliers is increasing and in 2006 it was around 28%.

The company recognises site and region-specific procurement needs and adapts accordingly. This is exemplified by the company’s Black Economic Empowerment (BEE) Procurement Policy in South Africa that identifies, develops and promotes the sustainability of BEE businesses through procurement.

In November 2005, the company created the Supply Optimisation in Emerging Markets (SOiEM) Team to take up the challenge of sourcing from emerging markets, such as China and India.T

he SOiEM Team’s focus is to identify suppliers with the potential to deliver cost-effective supply chain solutions in a manner consistent with the company’s Sustainable Development Policy and and HSEC Management Standards. A key task is to develop resources, systems and processes that will enhance the company’s ability to screen the sustainability performance of potential suppliers.

The company is also developing its approach to business conduct and human rights screening of suppliers in emerging markets.

Safety in the supply chain

A key focus area for BHP Billiton is contractor safety; approximately 60% of its workforce are contractors. The company works closely with its contractors to ensure their safety management systems are in alignment and that they incorporate the BHP Billiton Fatal Risk Control Protocols. The aim is to work as a team towards sustainability.

The company has developed a strategic framework to reinforce efforts to achieve zero fatalities in contractor activities. The initiative has realised a number of benefits, including improved integration of contractors into the HSEC management systems of the company’s operations.

The strategic framework has been designed to ensure that the company’s expectations for contractors’ HSEC performance are clearly identified and that all contractors are aware of their contribution to the overall health, safety and environmental performance on site.

The strategic framework is divided into two risk profiles – risk profiling and risk management – which ensure a single point of accountability, safe work execution and stable industrial relation climates and at the same time promote lower turnover of vendors and lower risk vendor selection. The entire framework underpins the development of long-term relationships andfacilitates the sharing of learnings and completion of projects.

Prior to working at a BHP Billiton plant, each prospective contractor employee is required to undergo a medical examination to ascertain their fitness for work. All contractor employees are also integrated into the company’s training systems.

Safety management in offshore operations 

An example of contractor safety management is in the company’s offshore oil and gas operations. In such operations, most personnel are employed by the drilling contractor.

At the oil and gas operations in the Gulf of Mexico, the company’s drilling contractor, GlobalSantaFe (GSF) was awarded the 2005 Safety Award for Excellence by the Minerals Management Service (MMS) of the US Department of the Interior. GSF’s ultra-deepwater drillship, the C R Luigs, has been operating under contract to BHP Billiton since April 2000.

Major factors in the excellent safety and operational performance of the C R Luigs are that:

• GSF has a dedicated HSEC management system
• The BHP Billiton Fatal Risk Control Protocols have been incorporated into their system
• The company works with GSF to eliminate high-risk activities covered in the protocols
• Frequent audits of HSEC procedures on the rig are conducted

A further example of sustainability being built into the supply chain is a Strategic Alliance that BHP Billiton formed in 2003 with Caterpillar, its major supplier of earthmoving equipment. One of the alliance aims is to better understand technologies that could address BHP Billiton’s long-term needs through an increasingly integrated research and development program.

The two companies have been involved in a project aimed at improving the level of compliance with BHP Billiton’s Fatal Risk Control Protocols on Caterpillar equipment. Key areas of focus include:

• Safe access and egress for operators
• Reducing greenhouse gas emissions
• Developing fatigue management technologies

A Fatigue Technology Forum has been formed and a Caterpillar research and development team is conducting a review of available fatigue management technologies.

David Hudson, HSE Manager for Caterpillar Global Mining, says: “The Alliance’s Fatigue Technology Forum is a great example of cross-functional, cross-asset and cross-organisation teamwork developing solutions to our common sustainability challenges.We’re in this together – developing technologies that help keep people safe is important to all of us.”

Adhering to supplier contractual agreements

Prior to entering a particular market or region, BHP Billiton makes a broad assessment of supplier capability and performance standards, including sustainability performance. Based on this assessment, contractual agreements with suppliers require them to adhere to all applicable laws, regulations and industrial awards and agreements, including all applicable health, safety, environment and community laws and regulations.

Before work commences, suppliers and contractors are also provided with the company’s HSEC Management Standards, with the expectation that the standards will be met and key HSEC compliance requirements noted in contractual agreements. The standards require contracted suppliers to adhere to a specific standard on business conduct, human rights and community development, including specific requirements to demonstrate compliance with the Universal Declaration of Human Rights and the BHP Billiton Guide to Business Conduct.

Contact: Global Supply Department
Telephone: +61 1300 554 757
Website: www.bhpbilliton.com

BHP Billiton Sustainability Report: http://sustainability.bhpbilliton.com/2006/