Visitors to the Rio Tinto AGM: left to right, Verner Wilson from Alaska, USA; Alexandra Thebert from the Upper Pensinsular of Michigan, USA; Roger Featherstone from Arizona, USA; and Sukhgerel Dugersuren from Mongolia. Photo: Amy Scaife/London Mining Network.
Report on the Rio Tinto AGM, London, Thursday 18 April 2013
Richard Solly, Co-ordinator, London Mining Network
This year’s London Rio Tinto AGM was a marathon three hours. If you are interested in money, it was a gripping performance by both board members and individual shareholders wanting more of the stuff. If your major concerns are Indigenous rights, workers’ rights, human rights in general, and the health of the environment, it was not such a hit.
In his introductory remarks, Chairman Jan du Plessis said – among many other things – that the company voluntarily declares its tax payments, including at local government level, as it believes in transparency. This was presumably a response to recent accusations that it had lobbied the UK Government to oppose European Union legislation to compel extractives companies to report on such payments on a project by project basis. Jan du Plessis also said that urbanization across the world would lead to continuing demand for minerals.
When the Chairman opened the meeting to questions, a number of shareholders made exceptionally lengthy points about investments, profitability, income and dividends. The Chairman appeared to enjoy these points and at no stage attempted to curtail them.
In answer to one such question, new CEO Sam Walsh said that phase 1 of the Oyu Tolgoi project in Mongolia was coming to fruition. It had produced its first concentrate in January and intended to move to full production in the first half of this year. It had already paid a significant amount of tax – $830 million since 2008. He said that everyone wants the project to succeed. Once it is fully operating, it will generate 36% of Mongolian GDP. It will “create a new basis for Mongolia to go forward”. The government and Rio Tinto are having constructive discussions, but the company is clear that the existing investment agreement is the basis on which the company has invested in the country. Such agreements are “sacrosanct”. The company had “helped the people of Mongolia to understand the importance of that,” he said. Every investor in Mongolia takes the same view.
Shareholder Albert Beale spoke of last year’s Greenwash Gold Campaign, in which Rio Tinto, BP and Dow Chemical were shortlisted as the three worst corporate sponsors of the Olympics on the basis of projecting a ‘green’ image belied by their actions. After a public vote in which thousands of people had taken part, Rio Tinto won the award as being the ultimate company in relation to such ‘greenwash’. Albert asked why this important award had not been mentioned in the Annual Report. He also asked why former CEO Tom Albanese was not in the room to answer questions about the period covered by the Annual Report, given that he was CEO for the whole period covered by the report and remains on the company’s payroll until 16 July 2013.
Jan du Plessis replied that he had no intention of publicizing the Greenwash Gold Campaign in the company’s report. He said that as Tom Albanese is no longer a director, it would be inappropriate for him to be at the AGM. John Varley, senior independent non-executive director and chairman of the remuneration committee, added that Tom Albanese had been entitled to twelve months notice but that this had been reduced to six, and that relations developed by Tom during his tenure would be “developed in an orderly way”.
Joel Reynolds of the Natural Resources Defense Council spoke about the Pebble Mine project in Alaska, USA. He said that an advertisement had been published the day before in the Financial Times expressing the continuing support of 80% of local residents for efforts to stop the project. He asked how, if Rio Tinto supports sustainable development and cultural and social commitment, it could continue to support a project opposed by 80% of local people and condemned this year by the US Environmental Protection Agency. The opposition campaign generated over one million signatures against the project last year and a further quarter of a million this year. He said that Bobby Andrew, a Yupik elder, was at the AGM to represent the community of opposition to the Pebble Mine at Bristol Bay.
Bobby Andrew pointed out that the company is supposedly pursuing “greater value for shareholders”. He said that with all that is happening with climate change, permafrost thawing in Alaska and the recent landslide at Bingham Canyon in Utah, it was clear that a disaster could happen at Bristol Bay if the Pebble Mine were to go ahead. He suggested that the company divest from Northern Dynasty, the company through which Rio Tinto has a share in the Pebble Mine project. There is no infrastructure there, the mine would be experimental, the site is currently accessible only by air for much of the year and by barge for three and a half months, and the company is looking for low cost operations. In its own best interests, the company should divest. Bobby pointed out that the Yupik people have been in the area for thousands of years and that Rio Tinto is onoly 140 years old. The Yupik people rely on all the renewable resources in the region and everyone requires clean water: nobody could survive more than three days without water. He said that the aim of the project’s opponents is to stop the project, and that they would not give up. Their numbers are growing. This could be very costly for shareholders.
Jan du Plessis said that CEO Sam Walsh had been pleased to meet the Alaskan representatives the day before and that he had heard that their presentation had been “extremely professional”.
Sam Walsh added that Rio Tinto has no immediate plans to develop the Pebble project. Its investment is indirect, through its 19.5% holding in Northern Dynasty, which owns 50% of the project. He said that the issues of which Bobby had spoken are very important to the company. Rio Tinto would only participate in the project if it can be constructed, operated and closed in a way that protects water and preserves wildlife. Rio Tinto favours underground mining there, unlike Anglo American, which wants an opencast mine. Before the project could proceed, there is much to be done to prove that it can go ahead in a way that meets Rio Tinto’s standards.
Roger Moody called out that he should answer the question about divestment – and not only from the Pebble project but from other damaging projects in which the company is involved. Jan du Plessis replied that the company has “no intention” of selling its share in the Pebble project.
Glen Mpufane of global union IndustriALL asked about the company’s conflictive relations with trade unions, noting particularly the lockout of workers at the Alma smelter in Quebec, Canada, in 2012. How could the company move away from its image of being anti-union?
Sam Walsh replied that the Alma smelter dispute that went on during the first half of 2012 was about remuneration and how to do business, how to improve productivity and the viability of the smelter. He said that the company is in a tough position in relation to aluminium. It has invested a lot of money in the industry to improve its cost basis. It is important that the company gets “an outcome to work smarter”. He said that the company is not anti-union, that it respects the right of workers to join or not to join unions, but that it does want to maintain direct contact with all its employees. It needs full communication and engagement with employees. It needs to improve productivity, to use the knowledge and experience of employees to deliver value.
Sukhgerel Dugersuren of Mongolian NGO Oyu Tolgoi Watch said she was speaking on behalf of herders who live around the Oyu Tolgoi mine. She said that Rio Tinto is diverting the Undai River – the sole river that supports life in this Gobi desert region – without local community consent and necessary government permits. She said that the Bor Ovoo spring does not freeze until late December, providing a unique ecological service to all creatures living in the area. It is on the site of the spring that Rio Tinto has chosen to dump its waste rock. Water is an essential – life and death – resource for the indigenous nomads of the Gobi Desert.
Sukhgerel asked what guarantees Rio Tinto would commit to in ensuring that herders, livestock and other plants and animals would have water in December. She said that Rio Tinto will not recognize the herders as Indigenous people or even as mobile land-based people, and is offering inadequate compensation for loss of access to pasture and water. More herders will lose livestock and livelihood – what will the company give them in compensation? She said that many statements had been made about Rio Tinto being ‘world class’ but that affected communities did not see this at Oyu Tolgoi. There had recently been an explosion at the chalk dispenser because of inadequate dust control. The tailings dam was already leaking and lacks a commissioning permit. She said that OT Watch and other organizations had reviewed the company’s Environmental and Social Impact Assessment (ESIA) and that it lacked an operational management plan, a tailings management plan, a waste rock management plan and a closure plan. She called for Rio Tinto to disclose these plans. She asked when the company would disclose them so that the herders could hire independent experts to review them. She said that the herders had prepared a petition to the company which would be delivered soon.
Jan du Plessis said that the company would arrange to receive the petition when it was ready.
Sam Walsh thanked Sukhgerel for her comments and for travelling to attend the AGM. He had noted her comments and recommended that she speak with the Head of the Copper Division. He said that 89 herder households were impacted by Oyu Tolgoi infrastructure, that agreements had been made with 88 of them and that the company was negotiating with the remaining family. Compensation had been agreed in line with company standards and IFC and EBRD guidelines. The consultation process with the herders was participative. The company will continue to monitor the livelihoods of these households to ensure that they have a healthy and prosperous future.
Sam Walsh continued that the company was not using its own definition of Indigenous Peoples but following the definition established by the World Bank/International Finance Corporation. He said that this is an issue for the World Bank. [So the company is clearly unwilling to accept Indigenous Peoples’ own definitions of who they are – they are to be defined by international financial organizations with a vested interest in minimizing costs to the projects that they support.]
He said that the company had undertaken not to draw on surface water but from a deep underground aquifer, distinct from the shallow river bed used by herders. The mine will draw 20% of the available water from underground wells over the next 40 years. Herders will be enabled to monitor and inform the company if water availability deteriorates. The company has undertaken to find new water sources and committed to reusing most of the water at the mine. The Undai River is ephemeral and flows at different times of year. It crosses the open pit and the waste dump and the company needs to divert it. This is clearly understood by the government. The Undai River Protection Project is continuing in the mine lease area and the company is using external experts to ensure that the work is done well. The company is waiting for a permit to work outside the mine licence area and will not do so until the permit has been received. The company will replicate the spring downstream for the use of herd animals and people.
He said that mine management plans are internal documents provided to the government as appropriate but that they exist mostly to provide direction to the management team. This is so that the company can draw on best practice and have one standard worldwide.
Sukhgerel replied that the compensation package for the herder families was the subject of a complaint to the International Finance Corporation and that mediation is in process but that there has been little change in the company’s position. Families are losing livelihoods. More than 89 families will be affected as the mine expands – the 89 families initially affected are having to move away into the pasture of other families who will be impacted as a result.
Richard Harkinson, a research associate of London Mining Network, added that the US Government’s position when the IFC voted on funding for Oyu Tolgoi was that the company’s ESIA lacked essential information and that the compensation offer to families was inadequate. In negotiation with multilateral funders the IFC and the EBRD, Rio Tinto is insisting that if loans are approved, environmental reporting should take place annually rather than quarterly, despite the fact that the EBRD believes that quarterly reporting is ‘non-discretionary’. The company is going through the motions of consultation with the EBRD while blundering on with a badly organized river diversion which will impact of the ecosystem and on families who have been there much longer than Rio Tinto has been in existence.
Richard added that the company had recently had a landslip in Utah and had pulled out of Palabora in South Africa because of a collapse, so its operations are clearly not unproblematic.
Sam Walsh said that the company was reviewing compensation to make sure it was contributing to sustainable livelihoods. He said that the US Government regularly abstains from voting on project funding of this sort and that its public statement did support the project and said that the new ownership is expected to raise standards in the mining industry in Mongolia. He said that Rio Tinto is committed to work along the lines of the report published in August 2012 and that the project meets the company’s standards and those of the EBRD, IFC and other organizations which do not take funding decisions lightly and only do so after much research and analysis. These organizations and the people of Mongolia would hold the company to account.
Sam Walsh continued that mining is difficult and complex. At Bingham Canyon, a faultline runs under the mine and the company had been monitoring it continuously in recent years with the latest technology. As a result, the company was able to ensure that everyone left the mine at 11am, and the landslide happened at 9.30pm.
Andy Whitmore asked if the company could confirm that Rio Tinto subsidiary ERA will cease its operations at the Ranger Mine in Australia by 2021 and complete rehabilitation by 2026.
Sam Walsh replied that the company is looking at the underground expansion known as Ranger Three Deeps, but that this is exploration activity. The company has a range of commitments with the project and it will keep these commitments.
Alexandra Thebert from Save the Wild U.P. in Michigan, USA, spoke about the Eagle Mine in the Upper Peninsula of Michigan. She said: “Our community has been fighting Eagle Mine since the project nearly a decade ago, which you know as we’ve travelled to your London shareholders meeting for years to call attention to our issues.
“To set the stage, mining engineers have said that this permit was fraudulently issued and the structure is unsound to drill a portal, which is located directly underneath sacred land to the native people of this region, who have lived here far longer than the 140 years of Rio Tinto’s existence.
“As a sulphide mine, Eagle Mine threatens nearby Lake Superior and other major watersheds– over 20% of the world’s freshwater, with sulphuric acid drainage as there is no precedent for a similar mine that does not leak, including your own Flambeau Mine in Wisconsin, where you are now fighting your Clean Water Act violation and I’ll see you in a Chicago courtroom next week about that.
“With the recent reporting of uranium at the site, former federal oil regulator Jeffery Loman has stated the risks associated with the project have just increased exponentially, potentially endangering the workers, community, and environment to radiation and radon exposure.
“Further, you seek to remove your only air filter from your mine portal– added in response to community outrage that unfiltered mine dust, potentially laden with heavy metals– and now uranium, would be piped straight into our community.
“Over 10,000 citizens oppose this mine, including hundreds of health professionals and over 100 faith leaders and support is continuing to mount. Yours is a very expensive and risky investment, and we are a very expensive, and growing opposition dedicate to protecting our health and environment. We will not stop pursuing you. We will not stop suing you until you have left our community – fully intact.
“My question is – at what cost to the health and safety of our community will you pursue so-called value for your shareholders?”
Sam Walsh replied that the project has state and federal government environmental approvals; that it has been awarded all necessary permits to operate; that the permits have been upheld in court; that the mine has reduced its allowable emissions by 80%; that air quality is being monitored by independent organizations; that uranium is naturally found in very small percentages and that it is being tightly controlled by the company; and that the company is preserving the sacred Eagle Rock outcrop in its natural state and providing access to it for visits by tribal members.
Jan du Plessis said at this point that he was aware that people had come from around the world to address the meeting and that as time was moving on he would take any further questions from those who had travelled from overseas before taking any further questions, if time allowed, from other shareholders.
Roger Featherstone, Director of the Arizona Mining Reform Coalition in Tucson, Arizona, USA, said: “We have been closely following and are very concerned about Rio Tinto, through its subsidiary, Resolution Copper, not playing by the rules in your attempt to privatize an area withdrawn from mining by President Eisenhower in 1955 in order to build a copper mine. This area, the Oak Flat Campground and the surrounding watershed is sacred and critical for the religious freedom of Native American Tribes. It is heavily used for recreation, especially rock climbing and camping and is ecologically sensitive. Oak Flat is an hour east of Phoenix, Arizona in the United States.
“There is a tried and true method of permitting mines located on public land. This method involves completing exploration, and writing a mining plan of operations, and submitting it to the appropriate federal agency for a through review. Every large mine permitting in the United States since 1973 has gone through this process. However, instead of writing a mining plan which can be fully vetted, you have chosen to instead pressure the United States Congress to pass special interest legislation that would give you the land without first writing a mining plan. You say it will take you a decade before you would be ready to mine at Oak Flat, which would give you plenty of time to write a mining plan.
“You have tried to bypass the normal permitting process with your special interest bill 11 times and have failed. Yet you persist in trying yet another time which only wastes time and money both for your company and our communities.
“You say that you will only mine after receiving the free, prior, and informed consent of local people that would be impacted by your proposed project before moving forward. However, in this case, you have not and cannot receive the free, prior, and informed consent of local people without first writing your mining plan, yet you continue to pressure the US Congress and others to give you this precious piece of public land. How do you reconcile your corporate rhetoric about getting local informed permission first with your actions on the ground in Arizona? Will you commit to stop pressuring the US Congress to pass your legislation until you have completed your exploration, written your plan and had it fully vetted by the appropriate federal agencies?
Sam Walsh replied that the plan is for an underground mine which will still allow access to areas above ground. The company aims to have a mine plan available before the summer. Resolution Copper is committed to managing the lands it acquires in a respectful way, including land of significance to Native Americans. He said that Rio Tinto acknowledges that the US Forest Service land has historical significance and includes sites of cultural and archaeological significance. It recognizes the rights of the Apache tribe but would like a direct dialogue with them, and the San Carlos Apache tribe limits itself to government-to-government relations rather than talking directly to the company. He said that it would help if Roger Featherstone would also engage directly with Resolution Copper.
Dr Natasha Posner, a shareholder and Australian citizen, said: “I would like to ask you about the implications of the New South Wales Land and Environmental Court’s decision on Monday not to allow the extension of the Warworth mine the Hunter Valley on environmental and social grounds. What happened about any consultation and agreement with the community of Bulga – a community which would have suffered from the impact of noise and dust and in effect have been wiped out? What value was put on the ecosystems and endangered species involved? The extension would have destroyed an extremely rare and endangered ecosystem, home to 17 endangered native animal species. Does this court decision have implications for Rio Tinto’s involvement in coal mining In Australia?”
Sam Walsh replied that the whole process has been long. For three and a half years the company had attempted to get a decision. They thought they had approval from the State Government and the outcome is a blow to the company’s plans and to the many people who work at the existing mine and to the mine’s suppliers and contractors. Rio Tinto is exploring other development options. He said that he did not know if the company could develop a new plan that meets the objections raised. Rio Tinto has existing projects and these will continue while the company gets a better understanding of the ramifications of the decision.
With the question session drawing to an exhausted close, shareholders wanting to raise important issues about the company’s involvement Grasberg in West Papua and its Bunder diamond project in India were unable to make points that they had been trying to make since the beginning of the session. A report on the company’s Bunderr project can be found at http://londonminingnetwork.org/2013/04/rio-tinto-what-it-says-and-what-it-really-does-in-india/. Information about its Grasberg involvement can be found at http://londonminingnetwork.org/?s=Grasberg.
There was one final question, from Hilary Temple, a shareholder who said she had ‘sympathy’ for the environmental concerns raised and wondered how the company justified raising its dividend to shareholders in a year when it made a “thumping loss”. Jan du Plessis replied that the policy of continuously raising the dividend was adopted years ago.
Perhaps if the dividend accurately reflected the impacts of the company’s operations on the communities and workers whose lives it ruins, shareholders might all withdraw their investments!
Rio Tinto has posted a webcast of the the entire AGM at http://www.riotinto.com/shareholders/12361_agm_2013.asp. Registration is required. This takes you to http://www.media-server.com/m/p/ame2hzwm. The webcast has a slider with which to move to particular time points within the meeting, but the slider does not become visible immediately – a wait of two minutes may be necessary. The webcast lasts 2 hours 55 minutes and 39 seconds, and includes all the questions and answers.
There is a further reflection on the Rio Tinto AGM at http://londonminingnetwork.org/2013/04/london-calling-sees-the-grey-man-cometh/.