Former Shell, Anglo bosses back conflict resolution group

Hello and welcome back to Energy Source, coming to you from New York, where investors are watching how BP responds to news that activist hedge fund Elliott Management is targeting the oil major.

BP, which reported a steep fall in profits this morning, could be forced to change its management, list in the US or even break itself up, according to some of the company’s largest shareholders. Chief executive Murray Auchincloss has said he is ready for a “fundamental reset”.

“Radical options will now be on the table, and perhaps even likely,” said David Cumming, head of UK equities at Newton Investment Management, in an interview with the Financial Times.

Elliott has a strong record of forcing change on poorly performing companies, including most recently successfully advocating for the break- up of Honeywell, the US industrial conglomerate.

Elliott has not revealed the size of its stake in BP but the hedge fund’s interest in the company will heap pressure on Auchincloss as he tries to turn around the oil major’s fortunes.

In today’s newsletter, our commodities correspondent Camilla Hodgson reports on a new initiative in the critical minerals sector, which is aimed at helping mediate disputes in an increasingly divided and dangerous world.

Thanks for reading, Jamie

Mediators step into the fractious world of critical minerals

A new conflict resolution group focused on the energy and mining sectors is in talks to land its inaugural project as it looks to make a name for itself as the critical minerals space becomes increasingly geopolitically fraught. 

Resource Resolutions, backed by former Shell chair Chad Holliday and former Anglo American chief executive Mark Cutifani, aims to help facilitate dialogue between warring parties to help resolve resource-related conflicts. 

Disputes in the sectors were “growing” and “likely to get more intense in the years and decades ahead”, said co-founder Daniel Litvin. “We’ve had a growing set of very positive conversations with potential funding organisations regarding live situations.”

Governments worldwide are becoming increasingly conscious of the need to secure access to the critical metals and minerals needed for everything from the energy transition to consumer electronics and Big Tech data centres.

But mining and energy projects can come into conflict with the wishes and priorities of communities and indigenous groups, or pose environmental risks that draw local opposition.

First Quantum Minerals’ huge copper mine in Panama was abruptly shuttered in 2023 amid anti-mining protests, while Rio Tinto has sought to counter broad public opposition in Serbia to its proposal for what would be Europe’s biggest lithium mine. 

“Resource nationalism ebbs and flows,” said Cutifani, and was at present being fuelled by a period of “geopolitical change and complexity”.

Resource Resolutions wants to help mediate such disputes and could be hired by companies, governments or local communities, though it is not aiming to provide legal services. The group says it will not take the side of the party paying for its services. 

“It’s not taking sides . . . Any group that hires us is not hiring us to win their case,” said Litvin. 

Instead, Resource Resolutions will work on a phased basis, doing an initial assessment of a project before deciding whether potential “win wins” and positive outcomes could be achieved for all relevant stakeholder groups, not just the miner, and if so, helping broker talks about the scheme. 

Some projects “shouldn’t progress” since they might be, for example, environmentally damaging, said Litvin. “The value we can bring long term is our independence. So it’s very important to be able to walk away.” 

Hugely expensive energy and mining schemes were “fertile ground” for conflicts that might “arise over the life of a project as political power shifts and social and environmental concerns take root”, said Christopher Garvey, founder of litigation finance adviser Sachenga & Co.

“This offers enormous opportunity for those who are able to mediate in those disputes, which requires a complex blend of political, social and financial expertise,” said Garvey. However, it was “dangerous terrain . . . Getting paid hourly, that’s one thing, but being paid on results is very different.” 

Resource Resolutions has not disclosed how its fees will be structured or calculated. Holliday and Cutifani have not disclosed the sizes of their investments in the group. 

Companies and investors can also turn to international arbitration to seek damages in disputes over corporate assets. 

Barrick Gold and Orano are among the miners that have recently launched arbitration claims against the west African governments of Mali and Niger, respectively, as military juntas in the Sahel region have imposed dramatic changes to mining codes and demanded higher tax payments.

When relations soured in natural resources projects, arbitration was often the “preferred dispute mechanism”, said Hugo Corden-Lloyd, a senior associate at consultancy The Risk Advisory Group. “The private nature of arbitration, which is one of the reasons it is a favoured concept, makes it difficult to know the full scale of ongoing investor-state disputes.”

Arbitration can be hugely expensive, take years and the details of cases, or even their existence, are often confidential. 

Companies in the sector were working in an “increasingly fractious operating environment”, said Corden-Lloyd, adding that some governments were now treating miners as a means to “quickly raise cash and legitimise their own position”. (Camilla Hodgson)

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Energy Source is written and edited by Jamie Smyth, Myles McCormick, Amanda Chu, Tom Wilson and Malcolm Moore, with support from the FT’s global team of reporters. Reach us at energy.source@ft.com and follow us on X at @FTEnergy. Catch up on past editions of the newsletter here.