Friends in Australia tackled Rio Tinto’s board on numerous issues at the company’s 5 May AGM, building on the interactions at the London AGM on 8 April. The company’s responses were similarly unimpressive.
Notes were taken of the Question and Answer session. The account below includes some, but not all, of the issues raised. It is interesting to compare these with our report on the London AGM.
Oyu Tolgoi, Mongolia
Katherine Tu asked a question on behalf of Mongolian NGO Oyu Tolgoi Watch, or OT Watch. Oyu Tolgoi is the subsidiary majority-owned by, and copper mining project operated by, Rio Tinto in the South Gobi province in Mongolia.
She said that major unforeseen changes since 2012 provide a basis for supplementing the old out of date ESIA (Environmental and Social Impact Assessment).
First, the underground operation went through a multiyear delay due to poorly described ground instability problems that required a multibillion dollar design change. Secondly, the tailings from the operation will go in a completely different type of disposal facility – a dam with downstream raises – using a technology rejected in the 2012 ESIA. Both the underground mine and future tailings facilities will extend beyond the current licence area; and thirdly, the 2017 Independent Expert Panel assessment of Oyu Tolgoi’s impact on herder waters identified the need for the improved baseline to address defects in the information used in 2012.
This expansion beyond the present mine licence area and larger than expected subsidence zones affect active pastures presently used by nomadic herders. The substandard social impact assessment resulted in an inadequate and poorly managed resettlement programme causing the affected herders to file complaints with the Compliance Advisory Ombudsman (or CAO) office in relation to IFC and MIGA participation. The 5-year mediation of claims of potential loss of nomadic livelihoods through Oyu Tolgoi’s use of land and water resulted in the 2017 Independent Expert Panel and MDT reports which recommend individual and community compensation for damages caused to their traditional resources. The Complaint Resolution Agreement for the past damages has not been fully implemented.
On behalf of complainant herders, OT Watch asks Rio Tinto to:
- Expand the scope of its proposed supplemental ESIA for Oyu Tolgoi to address the full range of surface and subsurface operations and associated permanent impacts, environmental and human, of future operations integral to and co-ordinated with the planned block cave; and
- Establish a collaborative team including nomadic pastoralists and investors to generate an appropriately broad scope for the proposed supplemental ESIA.
What will Rio Tinto do in response to the herders’ demands?
Rio Tinto Chief Executive Jakob Stausholm replied that this is one of the world’s largest mining projects, in a very remote place in the South Gobi desert, a very pristine area where things have to be handled very carefully. He said he was there in late January when the underground mine was opened. It is a tremendous industrial development. He said that the question was quite a complex one and he needed to work further on it. He was going to spend a full week in the area in July meeting communities and herders to hear all aspects. This is a mine for the next 100 years, he said, and Rio Tinto needs to understand how to work with communities. He said he felt good about the technologies being used and proud that the company had managed to get a high degree of circularity of the water. “The only thing I can do is talk to the people. We will listen carefully to people and act according to our ESG credentials,” he said.
Outgoing company Chair Simon Thompson added that Katherine had referred to the herder complaint to the CAO. As a result of this complaint, Rio Tinto had set up a tripartite commission that includes elected herder representatives as well as representatives of OT and the Khanbogd soum administration. That is the multi-stakeholder group overseeing compensation permits. He said that the company’s understanding is that all those compensation payments have been resolved (if not all settled). 60 wells have been restored – 23 with solar powered pumps. That may be the appropriate framework to address the issues raised. [He did not address the issue of the extent to which the tripartite commission had become dominated by pro-corporate organisations who do not represent herders’ interests, an issue which has been raised repeatedly with the company.]
Scope 3 carbon emissions
Will Van der Pol, of Market Forces, asked about the company’s Climate change report. He mentioned expectations for increasing ambition around bringing down Rio Tinto’s Scope 3 emissions. Has that been part of the discussion with institutional investors and proxy advisors in trying to get support for climate report?
Simon Thompson said Rio Tinto had set clear and ambitious targets to bring down scope 1 and 2 emissions. Scope 3 emissions are clearly more challenging as they are not in Rio Tinto’s direct control. The control the company had over those scope 3 emissions varies. With suppliers the company had more leverage – it can tell CAT and Komatsu that it will not buy diesel trucks by 2030. The level of influence the company has with its customers is significantly less. When selling iron ore to steel mills it can set up partnerships to reduce their footprint but the speed of implementing is out of Rio Tinto’s control. 70% of its customers are now in countries that have a net zero commitment. 23% of its steel customers have set scope 1 and scope 2 targets, which are Rio Tinto’s scope 3 emissions. The company was going to engage with all its customers and encourage them to start setting out climate change policies. Rio Tinto has now put in its climate change report projections for how the steel industry might decarbonise. It wants to have a similar projection for the aluminium industry. Feedback from shareholders has recognised those challenges. The level of disclosure this year is significantly more than last year. He said he awaited the outcome of the vote on the climate action plan. The majority of shareholders support the climate action team that Jakob and the team have proposed, he said.
A little later, Market Forces asked another question: “Given there is rapid change in green steel tech, will Rio commit to updating the ambition and the detail of its scope 3 emissions?”
Simon Thompson said the company is continually updating its detail on scope 3 emissions as it meets with partners. It is also seeing more coming from partners. The reason for a 3-year cycle for advisory votes on the climate action plan is that this is a strategy, and a strategy should not change every year. Rio Tinto will be pursuing and reporting on progress on its targets annually. If however there is a material change in its climate change strategy it will come back to shareholders and seek endorsement via an advisory resolution.
Later again, another questioner from Market Forces noted that the IPCC 6th assessment report gave more insight into the dire state of the climate and the emissions reductions required. Rio Tinto’s annual Scope 3 emissions are larger than Australia’s domestic emissions. UN Secretary General Guterres has said that some businesses are doing one thing and saying another. Rio Tinto has improved itscScope 1 and 2 targets but still has no clear and measurable targets to reduce scope 3 emissions. How can the public tell if Rio Tinto is lying?
Simon Thompson said he did not accept that the company was lying. Rio Tinto has not set scope 3 targets because it cannot control the rate at which its customers take action. It wants to set ambitious targets for what it can do and work hard with its customers and suppliers to do the same. It is not appropriate to set targets if it does not have the influence to ensure the targets are met. It is important to distinguish between influence over suppliers and influence over the people you purchase from. Rio Tinto works with its customers to enable them to decarbonise. It is being very transparent and honest about what it can do.
Dave Sweeney, representing the Australian Conservation Foundation (ACF) and many civil society groups that have a keen interest in rehabilitation of the Ranger uranium mine at in Kakadu, Australia, said he acknowledged and appreciated the commitment Jakob Stausholm had mentioned to full rehabilitation and the consent of the Aboriginal Mirarr people for any future operations at Jabiluka.
He said: “My question to the CEO/ Chairman refers to Rio Tinto’s 86.33% controlling interest in Energy Resources of Australia (ERA) In ERA’s recent annual statements repeated mention is made of the controversial Jabiluka deposit as an Undeveloped Property of significant potential either through, and I quote, ‘successful development or sale’. Are you prepared today to unequivocally re-affirm our company’s commitment to support the longstanding public position of the Mirarr that Jabiluka never be mined but incorporated into Kakadu National Park?
“Without Jabiluka, ERA currently has no income generating activity and has announced a significant cost and schedule overrun for rehabilitation at Ranger. ERA’s future as trading company is obviously in doubt. . I note that ERA’s tenure at Ranger expires without option of renewal on 9 January 2026 and any future arrangement for rehabilitation is open for negotiation with Rio Tinto. Can Rio Tinto provide a commitment to ensure the full rehabilitation of Ranger even if ERA is no longer operating?”
Simon Thompson said that he could give an absolute commitment that Jabiluka would not be developed without consent of the Mirarr people and that he was aware that their position is that their consent will not be given. Director Ben Wyatt had recently visited ERA and reiterated that commitment to the Mirarr people.
On rehabilitation, Simon Thompson said he was disappointed by significant cost overruns from ERA. He gave Rio Tinto’s commitment to ensure that rehabilitation is done to the appropriate standard. ERA is a separate listed company, he said. It is unlikely that rehabilitation will be achieved by 2026. An amendment to the law is needed. Everyone including the Mirarr people wants that to happen.
He reiterated that he could give an assurance on both the two points.
Jadar lithium project in Serbia
Peter Forsyth asked why the government of Serbia had stopped Rio Tinto’s Jadar lithium mine project and whether it might be reactivated.
Simon Thompson said that the company was disappointed by the decision of the Government of Serbia to revoke the licences. Rio Tinto had always worked in accordance with Serbian law and continues to meet its responsibilities to employees. The project was stopped because of concerns about the environmental impact on the local community. The project was designed to the highest environmental standards. Under Serbian law, the company was not allowed to publish its Environmental and Social Impact Assessment (ESIA) until it had been approved by the government. The inability to publish the full ESIA, including extensive consultation, created a vacuum which gave rise to misinformation circulating in the run-up to the recent election in Serbia. The company’s belief is that environmental concerns are largely addressed by the ESIA. Lithium is essential for the energy transition. Jadar is also an important project for Serbia as it will add 4% to its GDP and open opportunities for downstream green tech businesses. It is important for all kinds of reasons. He said he hoped Rio Tinto would will be able to discuss all the options with the Government of Serbia now that elections are out the way.
Aboriginal sacred sites in Australia
Another question was, what measures are in place to support Aboriginal rock art and sacred sites and how is Rio Tinto working with Indigenous people in Australia?
Jakob Stausholm said it was very important to build relationships. It is a matter of understanding how traditional owners look at cultural heritage. Rio Tinto has significantly increased its engagement. It has built a new Indigenous affairs organisation to support the line management. It has provided a great deal of training in this area. It has put in place a number of procedures and structural controls. The biggest issue is to engage and create relationships.
The Newcastle mine, New South Wales, Australia
Joy Llewellyn Smith said that it was disappointing to have Rio Tinto get the concept plan approval at Newcastle with all the conditions of consent to then sell on to Yancoal. It would not even give local people a bigger buffer between the highway and the clear felled residential site. Correspondence between local people and the company ended with a letter from the company saying not to write to them any more as they had sold on to Yancoal. The people they sold to have pushed the boundaries beyond the initial memo of understanding. Rio Tinto in negotiations agreed in camera with Aboriginal people to 100 metres from the foreshore, but did not buy back the over 20 metres of crown road. And now the new owners have acquired and reduced the small public park down by 20 metres.
Simon Thompson said he had a vague recollection of this issue, but Rio Tinto had sold all its fossil fuel assets in 2018 and he had no knowledge of the subject Joy was talking about. He said he was sure that Yancoal is subject to the same environmental consents and approvals that Rio Tinto was.
QMM mineral sands, Madagascar
Yvonne Orengo, of Andrew Lees Trust, asked questions via audio link.
Recent events in Anosy have seen hundreds of villagers protesting against QMM and legitimate grievances from 3500 villagers following a mine tailings dam failure, which resulted in hundreds of dead fish floating in the local lake where local people fish and draw their drinking water. The ensuing fishing ban left villagers deprived of food and livelihoods for two months leading to conflict – and has brought to a head Rio/ QMM’s failure to deal respectfully with local communities concerns for decades – including:
1. Failure to compensate fisherfolk for direct losses to subsistence fisheries as a direct result of the QMM weir construction (over ten years+)
2. Failure to compensate fully for land loss and impacted livelihoods
3. Failure to deliver coherent monitoring and trusted reporting of its environmental impacts – especially on water quality.
4. A Failed water management system
5. Failure to ensure mine process waters are compliant with Malagasy regulatory limits
6. Failure to contain its mine process waters in heavy rains – multiple spills
7. Failure to respect the mine boundaries e.g., breach of environmental buffer zone by more than 100m
8. A failed grievance procedure (e.g., QMM cannot evidence compensation given, eg how much, when etc, and has over 300 villager complaints outstanding etc).
9. Failure to consult with villagers/communities
10. Failed communications for over two decades
All of which have resulted in a deficit of trust locally with local communities.
1) Since QMM is already expected under the provisions of its agreement with the Govt of Madagascar to take responsibility for the impacts of the QMM weir on local communities, when will Rio Tinto disclose its plan to address substantively the community’s losses?
2) On wider environmental issues – since all trust in QMM has been lost – will Rio Tinto commit to an independent verification by process on QMM’s:
1. Dam safety
2. Water quality
3. Fish deaths
4. incremental exposure levels to radioactivity
5. Community grievances?
Simon Thompson replied that these questions followed three similar questions at the London AGM. By way of background for the audience here, he said, the mine is a mineral sands mine on the south coast of Madagascar. The mine was always designed to release water into the environment when there was heavy rain. Water released is always sampled to make sure it does not exceed WHO health standards. In the past QMM had some exceedances of aluminium and cadmium and as a result decided to build a water treatment plant. That plant is in construction. While that plant is being constructed the company took a decision not to release water into the environment if possible. Up until February it had not released water into the environment.
However, after a drought, Madagascar experienced a series of cyclones in February. Those storms flooded the mine and the company was obliged to release some water into the surrounding environment. It sought permission from the minister and regulator. The regulator was present as QMM was releasing the water, as were representatives of the community. After this there were reports of some fish deaths and naturally the company investigated those to see if they were connected to releases from the mine. All of the sampling that it took and that the regulator took confirmed that there were no exceedances and the volume of water released into the environment probably constituted 0.01 percent of the water flowing down the water channel. But as a precautionary measure the company provided drinking water to the communities near the water course so they would not be obliged to take water from the sediment-laden water coming down the water channel. The government, because of the fish deaths, imposed a fishing ban. It said it would compensate the fishing community for their inability to fish in the lake. That compensation was delayed and resulted in a protest taking place at a government office. This was dispersed and the demonstrators then went to the mine and put a roadblock in place to pursue compensation demands. It is a difficult situation for the fishing community, he said. The company has provided foodstuffs to them. It is working to get the fishing ban lifted as there is no scientific basis for it.
He said that the question referred to a loss of trust between QMM and the community. There is some truth in that, he said. The company needs to work even harder at building relationships with the local community. It has done a lot of work and needs to do still more.
He said that Madagascar is one of the poorest countries in the world. It has a very high birth rate and the population doubles every 25 years. The population round the mine has more than doubled – there has been in-migration because of the jobs that Rio Tinto has created – 2000 jobs on the mine and multipliers of jobs for businesses supplying. The town is wealthier than it was before the mine was developed. This huge population growth plus in-migration has put huge pressure on the environment. As children grow up and seek work they do subsistence farming – slash and burn agriculture that damages the environment and causes deforestation.
So what is Rio Tinto doing? It is temporarily providing fresh drinking water. It will also develop permanent water supplies. It will supply power to the town of Fort Dauphin. It will be linking communities closest to the mine to renewable energy giving an additional source of power than firewood. It has provided 7000 scholarships and entrepreneurial training opportunities. When Simon Thompson visited Madagascar he had a roundtable to talk about how the company can stimulate alternative livelihoods around the mine. It is creating well paid jobs through its presence there but cannot solve all of the problems of Madagascar.
There was a good meeting yesterday with the representatives of the protestors using a well-established grievance mechanism. There were constructive discussions. It is a complex situation. The solution to Madagascar’s problems is not less industry, it is more development, he said.
Rio Tinto’s work culture
Another question was, “How was poor behaviour overlooked to the degree that you needed to make a shift to culture?”
Simon Thompson replied that he wanted to make it clear there is no place for racism, sexism or bullying at Rio Tinto and he apologised to victims of the appalling conduct revealed by the Everyday Respect Taskforce.
Jakob Stausholm said that he was grateful for Liz Broderick, writer of the recent report on the working culture at Rio Tinto, as she had been able to get people into a safe environment to speak up on these topics. He said his focus is 100% on Rio Tinto but there are wider societal issues here. He said he was proud that Rio Tinto as an organisation is going to look into this and bring it forward. It is an important learning journey to find out what it really takes. There is a lot of stuff the company has not understood. Rio Tinto as an organisation has come a long way now – it has started on a very important journey – a safety journey which starts with recognising the importance of the topic, recognising we need to talk about things. “When you start talking about the journey people get the self confidence to interact. If something isn’t safe you stop the plant – anyone has the right to do so. We’ll implement the 26 action points but also change the culture.” he was impressed with how much people are taking it seriously. It is only a couple of months since the report was published, and the company is not going to change the culture in one day, but he is very encouraged with how staff have come forward.
Gumala Aboriginal Corporation
Justin Du asked a question on behalf of Gumala Aboriginal Corporation.
He said that this year the Gumala Aboriginal Corporation had completed 25 years of the agreement with Rio Tinto. Why, two years after Juukan Gorge, has Rio not made any significant progress in building relationships with traditional owners of the land where its mining takes place? Among other things, there was the issue of disputed underpayments.
Jakob Stausholm said that it was a groundbreaking agreement Rio Tinto made with the Gumala people 25 years ago but there is a need to renew it. It is a top priority to build and deepen relationships with the Gumala people and all the traditional owners in the Pilbara. He would be going back to Perth that night and had offered to meet with Gumala elders in the next couple of days. There is nothing Rio Tinto would like more than to make a new agreement. The company is aware there are some payments outstanding that are regrettable. The most key thing is that when the right relationship is found these problems can be overcome. Rio Tinto is doing everything it can to rebuild these and get agreements in place. He remained hopeful and hoped there would be an opportunity to meet in the not too distant future and celebrate a new agreement.
Moving head office to Australia
Steven Maine asked, given the Juukan Gorge fiasco, why Rio Tinto does not move its head office to Australia and have majority Australian directors?
Simon Thompson said tat the dual listed company structure has worked for Rio Tinto. 73% of its shareholders are in London. It is important to Rio Tinto that it has primary listings in both countries. It maintains close ties to Australia. It is proud of the investments it has made and of the taxes paid in Australia. It has always had a significant number of Australian directors.
New Chair Dominic Barton said that he is Canadian but has two sets of connections to Australia – one is his professional, formative career years in Australia and many visits to the country. His wife is Australian and two of their four children are Australian, and one of the attractions of joining the company is the Australian connection.
Simon Thompson noted that Canada is Rio Tinto’s second most important country of operation and that it is excellent that Dominic brings that connection with him.
High level plans for the next 30 years
Another shareholder asked, what is the company’s plan for the next 30 years at a very high level?
Jakob Stausholm replied that by 2052 Rio Tinto would be net zero and engaged in the circular economy. It will excel in development and be able to grow its business. It will have a strong social licence and be recognised as the miner and processor of choice. By then, he said, he would have certainly either have been fired or resigned. But he hoped to be a happy retired person who is happily looking back at Rio Tinto and receiving a lot of dividends from its shares.
How long will iron ore deposits last?
Another shareholder asked how long iron ore deposits in Western Australia were expected to last and when can shareholders expect an increase in iron ore production?
Jakob Stausholm replied that Rio Tinto had not had very strong first quarter production because it is in the middle of implementing the biggest renewal of its iron ore work in the Pilbara. There are four projects. Production will go up in the second half of the year. The company does have a unique set of reserves of iron ore. It is working on maturing opportunities in the next five, ten, fifteen years. It is progressing development of the Simandou resource. Perhaps the largest resource is in Canada where the resource life is close to a hundred years.
Supporting China’s military machine
Another shareholder asked at what point Rio Tinto would stop selling iron ore to China’s military machine? Would it stop selling iron ore to China?
Simon Thompson said that Rio Tinto’s relationship with China is extremely important and is multifaceted. China is an important supplier. It is also important to Australia and Western Australia in particular that those trading relationships continue. When company representatives talk to its largest shareholder, Chinese company Chinalco, they talk about how we can work together for the benefit of both companies.