A report on Rio Tinto’s 2016 Annual General meeting by Richard Solly, Co-ordinator, London Mining Network (LMN)
If you are a parent and your children find it difficult to go off to sleep at night, you may consider asking Sam Walsh to read them a bedtime story. A few paragraphs would surely suffice to send them into a deep sleep. Never mind that he might be reading them some traditional fairy story with a horrendously amoral story line full of self-interest and destruction – there is something soporific in the quality of his delivery. (It was much the same at last year’s AGM.)
And there is a close parallel between the subject matter of traditional fairy tales and the things he told us about at Rio Tinto’s London AGM today: accounts of operations full of environmental destruction and potential destruction, full of social dislocation and community anger. But he told us in such a soothing manner!
And as it was his farewell message to shareholders – he is retiring as Rio Tinto’s Chief Executive Officer (CEO) on 1 July – in a sense he was indeed saying goodnight to the children.
Sam and Chairman Jan du Plessis were joined this year by Sam’s heir apparent, Jean-Sebastien Jacques, who will exercise all our powers of concentration next year, as he tends to speak quickly, quietly and at times indistinctly, so that we had to ask him to speak up. Perhaps we’re just getting old.
After the predictable lengthy contributions from the Chairman and CEO and the less predictable and less lengthy contribution from JS Jacques, all telling us how wonderful the company is, we heard a number of speakers supporting Resolution 17, calling for the company to report more fully on: operational carbon emissions management; asset portfolio resilience given various probable climate change outcomes; low carbon research, development and investment; relevant key performance indicators and executive incentives; and public policy positions relating to climate change. This was a worthy, if rather limited, resolution, supported by the Board itself. Unfortunately, so many people spoke about it that it meant that we ran out of time to raise a number of the questions that we had hoped to raise.
Nonetheless, Richard Harkinson from LMN and our friend Sukhgerel Dugersuren from Oyu Tolgoi Watch did manage to grill the company about the destructive impacts of the Oyu Tolgoi copper and gold project in Mongolia on local nomadic herders and water availability, and challenged it over its decision to use coal to produce power for the project.
Andrew Hickman from LMN brought a number of demands from communities in Kalimantan, Indonesia, suffering from the legacy of the now-closed Kelian gold mine.
Our friend Sreedhar Ramamurthi from Indian organisation Mines, Minerals and People, and mining researcher Roger Moody, spoke about the company’s planned Bunder diamond project in India, which would destroy forest and affect tiger habitat and is strongly opposed by local communities. Roger demanded to know why the company had still not responded to the points made in the report that he and Sreedhar had published in 2013, despite promises made in 2014 and 2015 that a response would be made.
Our friend Roger Featherstone of the Arizona Mining Reform Coalition voiced opposition to the planned Resolution Copper project in the USA, which would violate land sacred to the San Carlos Apache and is opposed by many conservationists and other local people. He invited the Board to sign a legal letter accepting full responsibility for any damage done to local people’s homes and businesses, but unsurprisingly none of them was willing to sign it.
Our friend Mamy Rakotondrainibe of the Collective for the Defence of Malagasy lands pointed out that the company’s biodiversity offsetting operations in Madagascar, supposed to protect land that might otherwise be destroyed and leading to a net gain in local biodiversity, were in fact destroying local people’s ability to make a living from their land and making their situation even more precarious than it was before.
The company’s answers to all these points, and many others made by shareholders, struck us as inadequate and evasive. You can judge for yourself from the report below.
Meanwhile, the mining machine rolls ever onwards and the struggle of workers and communities for justice and environmental protection continues.
Rio Tinto AGM 14 April 2016
A full webcast of the meeting is available at http://edge.media-server.com/m/p/8w3apqed (requires registration). Other company documentation about the AGM is available at http://www.riotinto.com/investors/agm-5314.aspx.
Shareholder questions, and the company’s responses, are reported after the initial reports from Chairman, CEO and Deputy CEO.
Company Chairman Jan du Plessis began by saying that the company had continued to deliver shareholder returns despite difficulties in the industry and had delivered tangible social and economic benefits to host communities and countries.
He said that safety is of paramount importance to Rio Tinto. Each daily shift starts with a safety briefing for every worker.
He welcomed Deputy Chief Executive Jean Sebastien Jacques who will take over from Sam Walsh in July.
He said that there had been great volatility and a sharp deterioration in commodity prices. Nonetheless Rio Tinto had delivered a solid financial performance through productivity improvements and cost cuts. The full year 2015 dividend was in line with the 2014 dividend. But profitability across the sector has been affected by the downturn in commodity prices. So the Board had decided to replace its progressive dividend policy with a more flexible policy, enabling a bigger dividend to be paid when commodity prices are high. He said that this is a prudent response. The full year dividend this year will be not less than 110 cents per share.
He said that the Board make site visits to the company’s operations. In 2015 they visited the smelter at Kitimat and the bauxite operations at Weipa in Australia. Kitimat is very green because of the use of hydro power, and he claimed that Weipa shows how to recover and build trust with indigenous communities.
He said that Rio Tinto leads the industry in its commitment to tax transparency, showing the economic value it generates.
He said that Rio Tinto had signed the pledge for action on climate change at the COP 21 talks in Paris. It had set a goal of lowering emissions by 24% by 2020 and had already lowered them 21% from the baseline. The company had engaged with the Aiming for A coalition and supported the resolution being put by the coalition to the AGM. It was open to considering new ways to enhance what its activities.
He said that the company’s focus must remain on safety, cutting costs and growing its business. The trend to urbanisation will continue to increase demand for the metals and minerals Rio Tinto produces for many years to come.
He said that Sam Walsh would be retiring on 1 July. Sam had transformed the leadership of Rio Tinto. He had taken over in difficult circumstances. The company was now safer and more confident. Sam had removed significant costs and strengthened the balance sheet. Jean Sebastien Jacques would take over on 2 July. His performance as chief executive of the copper group had been outstanding.
Sam Walsh repeated the Chairman’s assertion that safety was the company’s number one priority. In recent years it had made great strides in improving safety but must do better. Injury rates had been reduced but the focus on reducing injury does not predict catastrophic events. Four people had died at or around the company’s operations in 2015. To help eliminate fatalities the company is rolling out a critical risk management programme. This is not a magic formula but an important tool to help eliminate accidents.
He said that Rio Tinto is the world’s most profitable mining company by underlying earnings. It is only investing in the highest earning projects. Over the next two years it will cut operating costs further by two billion dollars. Pilbara iron ore operations rely on a fleet of driverless trucks. Oyu Tolgoi has been assured of four billion dollars to develop its underground project. With the finance package now in place the company is working towards the necessary approvals.
He said that there had been strong growth in indigenous employment in Australia and that Rio Tinto is one of largest employers of indigenous Australians.
Jean Sebastien Jacques added that Rio Tinto workers are united by a strong corporate culture and commitment to safety. Health and safety are to be above everything else, the number one priority.
Director John Varley, from the Remuneration Committee, then gave a long talk about why Rio Tinto executives are paid so much.
Jan du Plessis then asked those supporting Resolution 17 to speak about it.
Resolution 17 was a special resolution which read as follows:
Strategic resilience for 2035 and beyond
That in order to address our interest in the longer term success of the Company, given the recognised risks and opportunities associated with climate change, we as shareholders of the Company direct that routine annual reporting from 2017 includes further information about:
1) ongoing operational emissions management;
2) asset portfolio resilience to the International Energy Agency’s (IEA’s) scenarios;
3) low-carbon energy research and development (R&D) and investment strategies;
4) relevant strategic key performance indicators (KPIs) and executive incentives; and
5) public policy positions relating to climate change.
This additional ongoing annual reporting could build on the disclosures already made to CDP (formerly the Carbon Disclosure Project) and/or those already made within the Company’s Annual Report and Sustainable Development Report.
A spokesperson for the Aiming for A coalition said that it was evident that the company had already put a lot of thought into how to fulfil Resolution 17 and he welcomed the Board’s support for the resolution. A low carbon economy may present risks to business but significant opportunities are presented by the make-up of the company’s commodities portfolio, and the company can thrive in a low carbon economy.
Jan du Plessis replied that the Board wanted to work with the Aiming for A coalition to see how the company can do things better. Vast companies like Rio Tinto are not uncomfortable dealing with climate change issues, he asserted, and Rio Tinto has been working on this for years. As an example, 80% of the energy for its aluminium operations comes from hydro power generation. The use of aluminium in vehicles increases fuel efficiency as it is light. Copper is a critical component in various green technologies. Borates are used in insulating buildings, which lowers energy use. Uranium is a reliable source of alternative energy without the carbon consequences of fossil fuels (he did not mention the problem of nuclear waste, of course).
Bruce Duguid from Hermes – part of the Aiming for A coalition – welcomed the commitment to reducing carbon emissions. He wanted to see a greater focus on energy efficiency. He said that this could future-proof the business against the rising cost of carbon. Could the company provide further details in its standard reporting on greenhouse gas emissions and on targets and strategies for achieving them?
Jan du Plessis said that the company will work with the coalition on this. An example of its commitment to this was its decision not to fly directors from Australia to the London AGM but having them join by video conferencing. Further progress can be made. (He did not suggest that progress against climate change might perhaps involve deciding not to mine coal.)
A spokesperson for Rathbone Greenbank Investments, part of the Aiming for A coalition, said that a core concern of long-term shareholders was that the opportunities and challenges of climate change be included in the company’s executive remuneration strategy. Would the company do this?
Jan du Plessis replied that the Board had discussed this from time to time. The climate change challenge is a long-term challenge, and to try to measure performance in a short-term bonus plan does not make sense. They would give it further thought. He noted that a group of inst shareholders is also working for massive simplification of remuneration schemes as they are so complex. Jan du Plessis said he supported this. It is important to make sure that climate issues do not make the remuneration scheme even more complex.
Jennifer Anderson of the Pensions Trust said that the oil and gas industry had called for a meaningful price on carbon. What did Rio Tinto think of this and did it intend to review its climate policy?
Jan du Plessis said that the company always used carbon pricing assumptions in its long term projects. In the case of the aluminium industry, a global price on carbon would be helpful because of the fact that 80% of its energy came from hydro power. The qualification is that it is asking too much for the world to agree quickly how to manage carbon. The world needs to arrive at a broad understanding of the cost of carbon. If some governments impose a substantial carbon cost on their industries prematurely, the communities relying on them will pay a price if they rely on energy-intensive industries, as these may migrate to jurisdictions with lower carbon costs.
Shareholder Robert Muriel said that Rio Tinto and BHP Billiton had been producing more iron ore in the last three years than in the past on the assumption that it would keep competitors out, but it also lowers the price. He said there was a parallel with Saudi Arabia and oil. He also said that the purchase of Alcan hurt investors badly and commented on the falling dividend.
Jan du Plessis said that the decision on the dividend had been difficult. The Board realised that many private shareholders live off their dividends. Many mining companies are not paying any dividend. On iron ore pricing, he said that the idea that Rio Tinto and BHP Billiton were trying to interfere with the iron ore market was nonsense. There was no intention of squeezing anyone out of the market and they were not flooding the market. He said that buying Alcan had not been Rio Tinto’s proudest moment. Nonetheless, it had brought the company good assets. As carbon becomes bigger issue, these assets would help them.
Another shareholder pointed out that, earlier in the week, US coal mining company Peabody had filed for bankruptcy. She said that China was cutting bank on its coal imports and that Rio Tinto had sold several coal assets. Would Rio Tinto sell its remaining coal assets before the mines were no longer worth anything?
Jan du Plessis replied that the company had sold some of its Australian coal assets for a good value. Its coal assets in Australia now are tier 1 assets, high class. If ever the company were to sell them it would sell for good value. He said that using coal has carbon consequences but he asserted that for many years to come, especially in poor developing economies, coal would be the energy source of choice. The world, he said, would be coal dependent for a long time, so these are still good assets and play a key role in our portfolio. (He did not speak about what shape the company would be in in the world of climate apocalypse guaranteed by continuing to use coal.)
Shareholder John Farmer complained about the failure of the company’s online voting system. He also complained of the clash of the Rio Tinto and BP AGMs and asked that such clashes be avoided in future. And he complained about the company’s use of two billion dollars in a share buy back, given its losses. He said that both the share price and the dividend had gone down.
Jan du Plessis agreed that online voting had had problems. The clash of AGMs was an old topic. The reality is that all organisations have their own rhythms and commitments and venues are hard to come by, booked up two or three years in advance. He said that this is going to continue to happen. He said that share buybacks are widely used by companies though they are controversial.
Shareholder Victor Anderson, referring to Resolution 17, asked what would be the be impact on company if global average temperature rises were to go above two degrees. Did the company have plans for responses to different scenarios?
Jan du Plessis replied that the company would do a lot of work in the next year with people like Mr Anderson to conclude how it should proceed.
Richard Harkinson of London Mining Network introduced Sukhgerel Dugersuren, Executive Director of Oyu Tolgoi Watch in Mongolia. He said that the Chairman had spoken of coal as a ‘fuel of choice’ in countries like Mongolia. He said that in Mongolia the choice is Rio Tinto’s. He suggested that the choice of coal to fulfil the Oyu Tolgoi mine’s huge energy needs was taken because of the fact that Rio Tinto had acquired the assets of Ivanhoe, including South Gobi Resources, which has coal. He said that the Oyu Tolgoi mine’s power plant could be supplied at less cost with wind power. He also noted, as a parallel, that despite the Chairman’s reference to aluminium as a green metal, the company’s mining of the aluminium ore bauxite in Queensland involved massive deforestation and transportation of large quantities of ore around the coast, past the Great Barrier Reef, to the Gladstone refinery. He said that the refined product would then be shipped to China. He concluded that it is good to have broad brush climate polices but that the company needed to look rigorously project by project.
Sam Walsh replied that twelve of the 22 million tonnes of ore mined at the company’s Queensland operations would be transported to the alumina refinery at Gladstone, which feeds aluminium assets in Australia. The plan is not to export to China. But there is a plan to export ten million tonnes of additional capacity. He said there is a rigorous reforestation plan at Weipa. Trees growing back at different heights reflect years of replanting. Weipa created a solar power station to assist with power needs there. It was a world class project.
Sukhgerel Dugersuren of Oyu Tolgoi Watch said that one billion dollars is being loaned by Rio Tinto subsidiary Turquoise Hill for the construction of the coal-fired power plant. She said that she had a message from the nomadic herders of Khanbogd, affected by the Oyu Tolgoi project. The first phase of the mine had affected 300 nomadic households in that area by taking away their pasture and water resources. The complaints of herders had not been satisfied. An audit report had been completed in 2013 and was supposed to take Rio Tinto towards compliance with the appropriate standards on community engagement and information disclosure. Stakeholder engagement on water diversion had been closed without sufficient justification. Oyu Tolgoi Watch had been told that the company’s technical feasibility study had not changed to the extent that a new Environmental and Social Impact Assessment (ESIA) was needed, but critics could not check that assertion as the study had not been disclosed. When would an ESIA be done and when would herders be told how much more pasture the company would take away from them? They want the study disclosed so they can get independent advice. Right now they are losing an important amenity. They cannot move and herd and sustain their livelihood. One herder living near the mine has invited Rio Tinto’s incoming CEO, Jean Sebastien Jacques, to visit him and see for himself. He has high hopes that if the CEO from Ulaanbaatar will not come, then top level people from the company’s headquarters in London could come and effect change for their livelihood. When would the feasibility study be disclosed?
Jean Sebastien Jacques said that phase 1 of the mine is under way and that it receives energy from China. The investment agreement with the Mongolian government says that at some point in time the mine needs a local source of energy. If the company invests in phase 2, it needs a local source of energy. Rio Tinto signed an agreement with the government to study and assess options. If the Board agrees to phase 2, the mine will need 300,000 megawatts per year and will need to build a power station with capacity of 450,000 megawatts. Work is under way with the government. No decision has been made yet.
On herders, Jean Sebastien Jacques said that at the start of the project 89 herders were identified as being affected. All 89 have signed agreements in relation to Oyu Tolgoi. Rio Tinto had put in place 4.4. billion dollars of finance. All the funding institutions had been through a thorough due diligence process and the project had been audited by them. Jean Sebastien Jacques said he was comfortable with the work Rio Tinto is doing and that is why it got project finance. It is audited by external parties and they think what it is doing keeps their strict standards. He said that local management may not have met all the herders and he would follow up on this. On the feasibility study, it had been updated under Mongolian law and submitted to the government and approved by the Mongolian authority in charge of reviewing documents. On disclosure, he said that technical updates were disclosed regularly and the company would disclose the latest in due course.
Andrew Hickman of London Mining Network spoke about the Kelian mine in Indonesia. The mine had closed several years ago. Earlier in the AGM there had been talk of rehabilitation at Weipa in Australia. The common issue is the legacy of Rio Tinto. The company’s licence to operate depends on its ability to be able to say that land and communities are rehabilitated at the end of a project. Andrew had received a communication from Pak Pius, a community leader at Kelian. Local communities are still asking about legacy. They have specific demands: 444 heads of families in Tutung village want to know when 25.4 hectares of land will be released to them as promised by Rio Tinto and its joint venture partner PT Kem when the community was forcibly resettled. At Gah Donggo village, 98 heads of families want rights to adequate land for building and crop growing. PT Kem must ensure that these outstanding issues are resolved by the mine closure committee. There must be an immediate audit for the 60 billion rupiah rehabilitation project. Outstanding human rights violations committed during the project and since must be investigated and resolved including a shooting at the Kelian site in 2008. Communities are still asking for justice and for restitution. Will Rio Tinto commit to establishing an independent audit for these communities?
Jan du Plessis replied that it would be better to raise such complex issues privately with the company rather than in an AGM. Sam Walsh said he was unable to comment on all the issues raised. Kelian closed seven years ago. Rio Tinto is proud of its rehabilitation. It won an Indonesian government award for forest reclamation. Monitoring and closure compliance issues are tracked. The company is in discussion with the Indonesian government about completing the work and handing the area back to the government. He did not know exactly what the status of the operation was but it may resolve some of the questions about access to land, as the Indonesian government also recognised the claims made. Rio Tinto has set up funds to assist the community.
Diane Boyles from ShareAction said that Rio Tinto affirmed on page 12 of its annual report that much of its competitive advantage comes from its people. But the company needs better workforce reporting. Its statistics are confusing: the numbers reported as contractors are lower than numbers reported by the unions.
Jan du Plessis replied that company reports already include a lot of detail and he was concerned that they would become unreadably long. Sam Walsh said he was not aware that workforce reporting was an issue. The company does need to have an accurate count of its employees and contractors. Rio Tinto has 55000 employees across 40 countries. He suggested speaking about this after the meeting.
Aislinn Lambert, also of ShareAction, said that she was happy that Rio Tinto is open to new ways to respond to climate change. But the company’s record on lobbying against climate legislation is a bad one. The company plays a leading role in shaping the policies of trade bodies in Australia that take obstructive positions on environmental and climate matters, including carbon taxes.
Jan du Plessis said that Rio Tinto understands that the world needs a broad consensus on the price of carbon but that it opposed plans in Australia as it is pointless imposing a tax on relatively clean coal from Australia, forcing people who need coal to seek dirtier alternatives.
Sam Walsh said that Rio Tinto’s policies on climate change and greenhouse gases are on its website and that the company does recognise the human origin of the problem. The company’s preference is for global market-based mechanism rather than moving country by country, as this would just move greenhouse gas emissions from one country to another, perhaps to countries which have weaker policies. On renewable energy targets, the company has a solar power station at Weipa and wind power in Western Australia. 65% of Rio Tinto’s energy comes from hydro and wind. The company has reduced its greenhouse gas emissions by 21% since 2008 through a lot of work on energy efficiency, technology and innovation, and by the closure of businesses. The company is actively working to improve its environmental performance. On renewables targets in Australia, the company’s Tasmanian operations are driven by hydro power and it needs to purchase renewable energy certificates for that. He asked, if you are already buying hydro power why do you need certificates? Trade associations in Australia represent a broad spectrum of people. Rio Tinto makes its point of view known. There are some areas of disagreement but the majority carries the day. Rio Tinto takes environmental impacts seriously. The support which the Board has given to Resolution 17 is evidence of our attitude.
Sreedhar Ramamurthi, of Indian organisation Mines, Minerals and People, said that despite the assertion that Rio Tinto’s operations were ‘world class’, its diamond exploration project in India is certainly not ‘world class’. There had been violations in the exploration stage and much opposition in the public hearing. Two years ago, Sreedhar and mining researcher Roger Moody had published a report on the project and had expected some response from the company. No response had come from the local or global company management about violations taking place during the exploration stage. Why set up this disastrous project in a drought-prone area, threatening a corridor between the best tiger habitats?
Sam Walsh said that the Bunder diamond project is an exploration project. Rio Tinto had done a lot of work and invested 90 million dollars. It had been waiting for eleven years for various approvals to come through. It is the first diamond pipe discovered in India and is physically quite prospective. Rio Tinto had not cut down any trees since 2007 and had been initiating biodiversity studies with a team in the villages around the project. There was also a water delivery and nutrition project. Sam Walsh was not hopeful that the project would be approved in the near term. It is currently going through the permitting procedure with public comment, which will be useful if it decides to take project the forward. Sam Walsh had discussed the project with the Prime Minister of India, Narendra Modi, whom he said he deeply respects. Rio Tinto needs to continue to work through the processes until it reaches the stage of having approvals.
Roger Moody asked why there had been no response from the company to the 2013 report concerning the treatment of women, the corporate social responsibility programme, schooling and water. There had been no response despite two promises being made on two separate occasions that there would be one.
Sam Walsh said that Roger made it sound as though the project were physically up and running. It is in limbo, has been in limbo for five or more years as the company has waited for guidance on approvals.
Roger replied that the project may or may not be in limbo but that the company was awaiting a lot of information, and surely it needed the kind of information that Sreedhar and he been providing for three years and that it had not responded to? Alan Davies, Rio Tinto’s Chief Executive of Diamonds and Minerals, had assured Roger in 2015 that the report would be taken seriously and a response given, but it had not been given.
Another shareholder spoke about the Samarco tailings dam collapse in Brazil last November. She asked whether Rio Tinto had had experts going round its tailings ponds checking them out to make sure they are safe.
Jan du Plessis said that the company did exactly that after the Samacro disaster and spent a lot of time on the Board discussing the types of tailings facilities that Rio Tinto has.
Sam Walsh said that Rio Tinto has 35 tailings dams across the organisation and has a standard saying how dams should be constructed, audited and operated. Following the Mt Polley failure in Canada, Rio Tinto revived and updated the standard. Following the Samarco failure, Rio Tinto had every managing director of a tailings dam operation go to check and assure the Board that all standards were being carried out. Dams are independently audited on rotation depending on the commodity and geo-technical issues. Work that came back from the managing directors confirmed that all dams are up to the company’s standard. The ICMM (International Council on Mining and Minerals) has initiated an independent review of tailings dams and procedures connected with them. Rio Tinto is are co-operating with that.
Roger Featherstone, Director of the Arizona Mining Reform Coalition, said that he continued to be troubled by the activities of Rio Tinto at Oak Flat, which is sacred and ecologically priceless public land.
“First I will note that on March 5 of this year, the US National Park Service determined that Oak Flat is a Traditional Cultural Property and placed Oak Flat (under its Apache name Chi’chil Bildagoteel) on the Nation’s list of Historic Places. It was very disappointing that Rio Tinto worked hard to scuttle the designation. This doesn’t fit with Rio Tinto’s policies on human rights.
“Secondly, Rio Tinto’s plans to dispose of a mountain of toxic tailings on US public land using the very methods that experts have strongly cautioned mines not to use in light of recent tailings failures worldwide. Residents of the town of Queen Valley are terrified. Not only are they being asked to live with the knowledge that if the tailings dam fails, they would have five minutes to evacuate before their homes would be destroyed, they risk the contamination of their water supply. They have asked me to read to you the following short letter:
“Dear Rio Tinto Board Members:
“My name is John Krieg, and I’m the Chairperson of Save Tonto National Forest. Save Tonto National Forest members live in Queen Creek and work to protect recreational access and the sustainability of the Tonto National Forest. I have a home in Queen Valley, Arizona, as do many of our members. One of your subsidiaries, Resolution Copper Company, has proposed putting a tailings pile 3 1/2 miles upstream from the community of Queen Valley. The tailings pile would be over 500 feet tall, the tallest in the world, and contain approximately 1.5 billion tons of tailings material and will be located next to Queen Creek. The residents of Queen Valley rely on the water from the Queen Creek drainage for drinking and to supply the surface water to our community. This tailings pile would cover up many square miles of our watershed and recreational trails in the Tonto National Forest. Resolution Copper executives have promised that their project would not harm Queen Valley. We ask you to be liable for damages to the residents, businesses, utilities, and the golf course in Queen Valley, Arizona, resulting from the Resolution Copper mine project, as any responsible mining company would. Thank you for your consideration, as we are very concerned about the health and welfare of our community. Please sign the accompanying document assuming liability. John Krieg, Chairperson, Save Tonto National Forest.”
“So,” concluded Roger, “my question is, which one of you wants to sign this agreement?”
There was some amusement at this question.
Jean Sebastien Jacques said that he had had a good conversation with Roger the day before and had covered lots of ground. The permitting process for the potential mine had started. It is called a NEEPA process. It is very comprehensive and can take several years. It started four or five weeks ago. It is led and managed by the US Forest Service. Rio Tinto has nothing to hide with regard to permitting. Rio Tinto will not make any comment on whether the land is sacred as it cannot make this determination, as the company relies on the US authorities to make this determination. If Roger has specific issues to raise he would be happy to put him in touch with the team on the ground.
(After the AGM, Roger handed over the proposed agreement to Jean Sebastien Jacques, who declined to sign it. It is appended below.)
Mamy Rakotondrainibe of the Collective for the Defence of Malagasy Lands said:
“Rio Tinto and its partners from the conservation sector claim that the company’s biodiversity conservation strategy will not only compensate for biodiversity loss caused by the destruction of a unique forest in south-eastern Madagascar but that mining for ilmenite at Fort Dauphin will even have a “Net Positive Impact” on biodiversity in the end.
“A report is being released today. Colleagues from World Rainforest Movement and Re:common performed a visit in the field and their report shows that communities at least at one of the biodiversity offset locations, the Bemangidy-Ivohibe offset site, were prohibited from planting their staple food, manioc, at the edge of the forest because the forest is now a biodiversity offset for Rio Tinto QMM. The only place left for villagers to grow their staple food, manioc, are the sand dunes, and they do not know now how to feed their families. So the villagers whose subsistence livelihoods were already precarious before the biodiversity offset are made even more precarious. Income-generating alternatives to alleviate the loss of access to the forest had been promised but have not yet been materialized, while severe restrictions on community forest use are already in place.
“The Rio Tinto biodiversity offset project at Bemangidy-Ivohibe and the other conservation measures at the QMM Fort Dauphin ilmenite mine do not compensate for the destruction of 1,600 hectares of a forest that was very rich in plant and animal species found only in this type of endangered coastal forest in Madagascar.
“Worse, the families at the village of Antsotso face food shortages of their staple food, manioc, because of the Bemangidy-Ivohibe biodiversity offset.
“My two questions are:
“What will Rio Tinto do to ensure families at Antsotso do not have to go poorer and hungry as a result of the company’s biodiversity offset project?
“On what basis does Rio Tinto claim that the destruction of 1,600 hectares of forests at the ilmenite mine will have a “Net Positive Impact” on biodiversity?”
Sam Walsh said that this was a complex issue. The company had agreed the biodiversity offsets with the government as a way of meeting their requirements. The company is working in conjunction with the government. In March this year, after two years of work, the company had signed the country’s first land access agreement. It is working hard to meet all demands. This was the first time he had heard comments about the problems caused by biodiversity offsets.
Jan du Plessis said that Sam Walsh and he were always available to discuss these points.
And with that he brought the long meeting to an end.
AGREEMENT TO INDEMNIFY AND HOLD HARMLESS
RESOLUTION COPPER MINING, LLC
And the residents of QUEEN VALLEY
This Agreement (“Agreement”) is entered into by and between Rio Tinto, a British Australian corporation, the parent corporation of Resolution Copper Mining Company, a Delaware limited liability company, including any successor, assign, affiliate, member, or joint venture of Resolution Copper Mining, LLC (as defined by P.L. 113-291, § 3003) or any contractor retained by Rio Tinto or Resolution Copper Mining, LLC, and the town of Queen Valley, a census-designated place located in Pinal County, Arizona and its residents, utilities and other entities as defined herein (“Queen Valley”)(collectively “Parties”).
Section 1: Recitals
The Parties hereby agree as follows:
1.1. This Agreement shall apply to and govern any and all of Rio Tinto’s intended land exchange activities codified at P.L. 113-291, § 3003 and Mine related activities as defined herein.
1.2. Rio Tinto agrees to and assumes full liability for any and all damages to the residents of Queen Valley, the businesses of Queen Valley, the utilities of Queen Valley, and the Queen Valley Golf Course as a result of land exchange and any and all Mine related activities. Rio Tinto shall defend, hold harmless and indemnify Queen Valley from any and all liabilities, losses, damages, suits, claims, judgments, fines, penalties, demands or expenses, including, but not limited to, as may be reasonably determined to be necessary by Queen Valley (a) all reasonable costs to investigate, correct, clean up or mitigate any harms of any type experienced by Queen Valley due to the legislated land exchange or any Mine related activities; and (b) all attorney’s fees, court costs, expert fees, and consultant expenses incurred by or on behalf of Queen Valley as the result of the land exchange codified at P.L. 113-291 § 3003 and/or any of the Mine related activities performed by Rio Tinto or its contractors.
1.3. Regardless of any provision of State or Federal law, Rio Tinto shall not interfere with or injure the water rights, physical water supply or the water quality of water relied upon by Queen Valley (whether surface or groundwater) for any purpose. Rio Tinto expressly assumes full liability for such injuries in accordance with Section 1.2 of this Agreement.
Section 2: Definitions
2.1. “Queen Valley” means the town of Queen Valley, the individual residents of Queen Valley, the businesses of Queen Valley, the utilities of Queen Valley, and the Queen Valley Golf Course.
2.3. “Mining related activities” means those activities outlined in P.L. 113-291 § 3003, and all activities outlined for the proposed mine described in the General Plan of Operations, Resolution Copper Mining (“Mining Plan”), initially submitted on November 15, 2013 and subsequently amended or supplemented, and any other mine related actions of any kind, including, but not limited to, the “granting of any permits, rights-of-way, or approvals for the construction of associated power, water, transportation, processing, tailings, waste disposal, or other ancillary facilities” as described in P.L. 113-291 § 3003.
Section 3: Miscellaneous Provisions
3.1. Parties agree that the terms of this Agreement shall be immediately binding, and shall be retroactively effective to the date of the passage of P.L. 113-291 § 3003 (December 19, 2014). Any future agreements entered between Parties shall be memorialized by adopting an Addendum to this Agreement.
3.2. If any provision of this Agreement is held to be invalid or unenforceable, the remaining provisions shall continue to be valid and enforceable to the full extend permitted by law. If any such provision or part is stricken in accordance with this Section, the stricken provision or part will be replaced by such trier of fact, to the extent reasonably possible, with a legal, enforceable and valid provision that preserves the intent of the Parties reflected in this Agreement, and comes close to expressing the intent of the stricken provision or part.
3.3. This Agreement shall be governed under Arizona Law.
Rio Tinto Group
Authorized Official, DATE
Queen Valley, Arizona
Appendix 2: Questions we did not get time to ask
On uranium exports to India
I see that Rio Tinto considers uranium to be an opportunity with regard to alternative energy resources. But uranium is associated with nuclear weapons as well as nuclear power. The two go hand in hand. Are you not concerned about selling uranium to India, considering that it has never signed the nuclear non proliferation treaty and, together with its neighbour Pakistan, is increasing its nuclear missile arsenal?
On worker fatalities
Health and safety performance is of critical significance to both Rio Tinto workers and shareholders. Rio Tinto says that health and safety is a core priority for the company and claims that its health and safety performance has improved dramatically in recent years.
It is difficult to understand how that could be the case given that worker deaths at Rio Tinto continue. Rio Tinto says it has a “zero fatalities” policy. However in 2015 the company had at least 7 fatalities in 6 different countries at worksites it either operates or at which it has significant investment and considerable influence.
My question is, how does Rio Tinto explain the disjuncture between a zero fatalities policy and ongoing deaths in so many places around the world? Second, as at least 3 of the 7 workers fatally injured at Rio Tinto worksites in 2015 were contract workers, has the company investigated whether there’s a relationship between contracting practices and health and safety performance?
On bauxite mining at Weipa in Australia
Mr Chairman, my questions relate to bauxite mining, especially at Weipa in northern Queensland. In the light of expansion plans for the mine, it is worth recalling how in 1957 the Queensland government sequestered over 2000 square miles of Aboriginal lands for bauxite mining. Regarding this, the well respected campaigning journalist Jan Roberts (who sadly died earlier this year) quoted in her book ‘Massacres to Mining’ a report from 1963 that “people were forcibly removed and their settlement burnt down”. In 1976, it was reported in the Melbourne Age, “acres of dead craters unrelieved by a single living thing … traditions have disappeared and alcohol has wreaked havoc … The Weipa operations have caused alarm in every Aboriginal community throughout the north of Australia.”
Following the approval for expansion of the Weipa mine in November 2015, within a week ABC News reported on the destruction of trees in the area: “for four years the traditional Wik land owners have fought the company to stop it burning …” and “Cape York traditional owners urge Rio Tinto to prevent ‘heart-breaking waste’ of timber.”
These reports run counter to the assurances proffered by the Chairman and Chief Executive in their opening and subsequent remarks.
So my questions Mr Chairman are:
– what plans does the company have for reparations to indigenous peoples?
– can you or the Chief Executive quantify the number of trees planted at Weipa for each of the previous five years, and how many mature trees have been or will be burnt as part of yours planned extension?
On Bougainville Copper Limited and the Panguna Mine
I’d like to ask 3 questions seeking to clarify Rio’s position with respect to its majority shareholding in Bougainville Copper Limited and with respect to Rio’s intention to re-open or not re-open the Panguna Mine on Bougainville.
By way of context, in August 2014 Rio announced a review into its investment in BCL, but as of today has not yet completed or reported on that review.
My own review, with colleagues, of publically available information, as well as the findings reported by other analysts, suggests that the re-opening of the Panguna Mine has no strong business case.
Furthermore, well researched reports published by civil society show wide-spread opposition to a re-opening of the mine.
President of the Autonomous Bougainville Government, John Momis, has clearly stated the ABG position on BCL, both to Rio officers in February 2016 in Singapore and to the Bougainville House of Representatives on April 5th. The stated ABG position is that if Rio decides to end its investment in BCL:
(i) “there must be equity transfer to the ABG and landowners without any payment” and
(ii) “Rio must take full responsibility for an environmental clean-up and for dealing with other major mine legacy issues.”
In the light of this context, I ask:
1. Does Rio intend to retain its investment in BCL and does Rio intend to re-open the Panguna Mine?
2. If not, how does Rio intend to dispose of its BCL shareholding?
3. Has an estimate been made by Rio of potential clean-up and compensation costs? What contingency has Rio made to cover these potential costs?