by Richard Solly

https://londonminingnetwork.org/2020/04/remote-control-rio-tintos-agm-and-shareholder-engagement-session-london-8-april-2020/

16 April 2020

The UK government’s response to the COVID-19 health crisis has meant that company AGMs are even more controlled by the companies’ Boards and even less accountable than usual. Rio Tinto’s AGM this year was a hole-in-the-corner affair, with the minimum legal quorum of shareholders present. We do not even know which hole in which corner, as the company did not divulge the physical location of the meeting.

Once it was done and dusted, the company then held a phone-in for shareholders, which involved a number of technical difficulties which inhibited ‘engagement’.

This account is by London Mining Network Co-ordinator Richard Solly, with assistance from Andrew Hickman, Andrew Whitmore, Eryck Randrianandrasana, Keren Adams, Rhodante Ahlers, Richard Harkinson, Roger Featherstone, Volker Boege, Yvonne Orengo and Zoe Lujic.

Post-meeting comments are included in square brackets to make clear the utter inadequacy of the company’s answers to the questions posed – and we still await answers to questions from shareholders who could not get their questions registered or who were not called to speak before the meeting ended.

A summary report on the shareholder engagement session and LMN’s online week of action can be found here. Information about the demands of affected communities in Bougainville, Madagascar and the USA can be found here.

Setting the scene

1. Rio Tinto Chairman Simon Thompson began the meeting by pointing out that the UK government had required people to stay at home except in limited circumstances and prohibited gatherings of more than two people, so it would be unlawful for the company to hold its AGM in the normal way. He said that this had obliged the company to hold its AGM with the minimum quorum with the sole purpose of opening the poll. But the Board wanted to engage with shareholders, to talk to and hear from its smaller retail shareholders. Hence the conference call, for which it had allowed 90 minutes. Almost a quarter of this time was then squandered with the self-congratulatory speeches of the Chairman and Chief Executive Officer (CEO) Jean- Sebastien “JS” Jacques, which were quickly posted on the company’s website anyway. (See https://www.riotinto.com/invest/shareholder-information/annual-general-meetings.)

2. The under 70 minutes remaining provided much less than the time usually spent on questions and answers at Rio Tinto’s recent AGMs and allowed for a far greater degree of control over the process of asking the questions. Some would-be questioners could not get through to the teleconference line in time to register their questions; others had tried, but failed, to submit questions by email in advance. However, among unsatisfactory practices, this compares favourably to the plans of Anglo American and Antofagasta to hold their AGMs on 5 and 20 May respectively without any interaction with shareholders. These two companies’ commitment to publish all questions and answers on their websites may allow a far greater number of questions to be put than would be possible at a normal AGM; but there will be no opportunity at all for questioners to challenge the undoubtedly inadequate answers that they will receive.

3. Sound quality during the teleconference was varied. Simon Thompson sometimes sounded as though he was speaking far from his microphone. JS Jacques often spoke so quickly that it was difficult to catch what he was saying. A full recording of the session is available at https://www.riotinto.com/invest/shareholder-information/annual-general-meetings – readers may have better luck than we did in catching everything that was said.

4. Simon Thompson said that health and safety are the company’s top priority. This affected its approach to the COVID-19 health crisis that had necessitated the teleconference. [However, the company’s commitment may come as a surprise to residents of Bougainville who are suffering daily from the toxic waste legacy of the company’s abandoned Bougainville mine.]

Will Rio Tinto be successful?

5. The first question came from shareholder Robert Muriel. He said that the company’s results were “fantastic” and very welcome. He said that there were problems for the company to deal with in Mongolia, at Richard’s Bay in South Africa, and always in Canada. Were the prospects for long term success strong? Would aluminium become successful?

6. Simon Thompson replied that the company had “suffered from community relations challenges” at Richard’s Bay. There had been some community unrest relating to the chieftaincy of one of the four host communities. It turned violent. Rio Tinto had to curtail operations in November 2019 following three shooting incidents, but then resumed in December 2019, prior to the imposition of the COVID-19 restrictions. The company is working with the authorities to restore calm and they are making good progress.

7. JS Jacques said there was no doubt that aluminium is the material for the future and a big chunk of it will be led by the car industry, to reduce the weight of their vehicles. “We expect that to grow significantly. The immediate challenge is on the supply side. A lot of production is coming out of China and therefore there is an imbalance. The inventory has expanded 25% since the beginning of the year and that is why prices are under pressure.” But the Chinese government would restructure the aluminium industry in China and therefore balance the market. “Regarding our business in Canada,” he said, “the cost curve is in the first decile of the cost curve,” representing some of the best costs across the industry, significantly better than Rio Tinto’s competitors. It was still profitable.

Mongolia

8. Regarding Mongolia, JS Jacques said that Oyu Tolgoi is a “multi-generational project”. The open pit is running. None of the workers had been impacted by COVID-19 at all. “Underground is where the bulk of value is and we have had to slow down, bringing experts from abroad, which we cannot do at present,” he said. Rio Tinto would say more the following week when it disclosed its quarterly results. “Everyone is healthy and safe and we are progressing the underground project,” he said. [He made no mention of the massive financial controversy surrounding this project, with allegations that the company did not divulge important information about technical problems with construction of the underground extension to the mine. And that’s in addition to the conflict with local nomadic herders, of which you can read more below.]

Climate change and Climate Action 100 Plus

9. Helen Wildsmith from CCLA investment management thanked the company for its ongoing engagement with the Climate Action 100 Plus Group. She welcomed the most recent report on the company’s targets and partnerships approach to reducing emissions, especially in Asia. She asked whether the company could ensure investors that its 2020 emissions would continue to be on the projected transition pathway.

10. Simon Thompson thanked her for her role in leading engagement with Climate Action 100 Plus. “The transition pathways initiative is intended to calculate a two degrees pathway for aluminium through to 2030,” he said. Rio Tinto is tracking ahead of the pathway, generating less CO2 than the pathway allows. Rio Tinto would continue to look at ways of making further progress. It was working with ALCOA, Apple and the governments of Canada and Quebec to reduce CO2 emissions per tonne of aluminium produced. He noted that in Australia its operations rely on coal fired power. Regarding the delay of the COP 26 climate talks, he hoped that the COVID-19 crisis would not delay urgent action by governments. He said he is a member of the commission engaging with steel companies in Europe and India and hoping to showcase low carbon initiatives under way in the sector at the COP 26 talks, “but we need a common position on what is needed for governments to help industry achieve net zero emissions”. Rio Tinto had signed a Memorandum of Understanding with China’s largest steel producer and its most prestigious university to develop new methods for lowering carbon emissions and improving environmental impacts generally. This had been delayed by COVID-19 but had made good progress over recent months.

Water and radiation at the QMM mine in Madagascar

11. Simon Thompson read out the pre-submitted question by Eryck Randrianandrasana from Publish What You Pay Madagascar about the QMM mine in Anosy, Madagascar, and company obligations to report transparently.

12. “At its AGM last year Rio Tinto admitted that QMM had breached a protective environmental buffer and had encroached onto the adjacent lake bed. It said this was “a mistake”. Rio Tinto assured shareholders and the public that the impact of the QMM breach was “negligible”. It cited the Malagasy state regulator for this analysis.

13. “We have repeatedly asked for evidence as to how this analysis was reached. It is important because the breach raised concerns about exposure to contamination of local waters by the mine and local people fish and draw their drinking water from the lakes and rivers around the mine. Rio Tinto knows that our requests to the company and the state environmental regulator in Madagascar have failed to produce evidence that any technical studies were ever carried out by the regulator on this question….

14. “Last December, Rio Tinto told an international journalist, “We are not aware of any formal inspection report”. That means Rio Tinto reported no “negligible impact” of the breach, knowing this was based on nothing. Under its obligations to the people of Madagascar and its shareholders, Rio Tinto is legally obliged to report clear information about the status and risks of its assets, as well as those of its subsidiaries. Rio Tinto is also committed to applying the highest standards and, where local ones may fail to meet these, states Rio Tinto will default to its international standards.

15. “Rio Tinto knows that the Malagasy regulator does not have the capacity to objectively monitor QMM mine performance against realistic indicators, and it has been financially dependent on QMM, which is a problem. Local people also do not have capacity to monitor the mine. For this reason, we have welcomed the independent studies about the QMM buffer breach, radiation issues and water quality. These studies provide clear evidence of water contamination downstream from the mine – with elevated levels of uranium and lead, 50 times higher than WHO safe drinking water levels. We do not think this is a “negligible” impact of QMM on our environment.

16. “Will Rio Tinto produce hard scientific evidence that there is absolutely no water contamination from its QMM mine from heavy metals, and no negative environmental impacts or risks to communities living around the mine? If it cannot do this, will it immediately provide safe drinking water to local people and urgently mitigate its waste water and mine tailings management?”

17. JS Jacques said that QMM is a mineral sands operation in Madagascar. Poverty in the area is high and the QMM operation is a major employer and economic contributor. Rio Tinto is making a “significant” contribution to Madagascar; it has invested $1 billion since construction began. It has 2000 employees and contractors and 95% are from Madagascar. 80,000 people use electricity provided by QMM’s partnership with the national electricity provider. He explained he had been to Madagascar a few times and met with the team and stakeholders. He had also met with Andrew Lees Trust (ALT) UK, Publish What You Pay Madagascar and Friends of the Earth, so had some knowledge of the items.

18. Regarding the buffer zone and the role of the National Office on the Environment (ONE), there had been uncontrolled water transfers as a result of heavy rainfall recently (in 2018) but there had been no impact on people or the environment. ONE issued an initial warning after the uncontrolled release of water but ONE concluded that the system had returned to normal within two weeks. ONE recommended mitigation measures. QMM did its own examination of the berms, which have been reinforced. “It is essential to know that we do not add any chemicals to the water during mining processes. We are committed to responding to any regulation. We follow Malagasy law. We have provided PWYP with information. We are obliged to follow the law and we support efforts to improve the regulatory framework including by the Chamber of Mines dialogue with the Malagasy government on this specific issue,” he said.

19. He went on, “The question about water relates to the zones in the mining area where the communities are not permitted and, as already said, our process does not use any added chemicals, only water. The mining pond has high concentrations of suspended solids and a low PH as a result of the churning action of the mining process. The water from the mining pond is run through a circuit of settling ponds (paddocks) to passively remove the solids until the water meets the permitted criteria. The company has been monitoring water quality and discharges into the natural environment since the operation began. All monitoring reports are submitted to the Madagascar regulatory body. There is no evidence that QMM impacts on the health of local communities.

20. “Radiation: there is a limited amount of naturally occurring radioactive minerals such as uranium and thorium which are characteristic of the geology in Madagascar where QMM is situated. The increased likelihood of exposure as a result of our activities was rated low in prior baselines studies that were conducted. After ALT UK raised concerns about radiation exposure pathways in 2018 [actually it was 2017], we agreed to participate in a supplementary study to review the risk of radiation in this area. The report concluded that it’s highly unlikely that exposures to naturally occurring radiation as a result of NORMs exceeded the IAEA dose limits, consistent with previous baseline studies. We agreed that available monitoring data does not currently allow us to prove this in a concrete way especially in terms of ingestion pathways. So, we have asked an international consultancy, JBS&G, to begin a year-long study from December 2019 to collect this supplementary data and the design of the study takes recommendations from the ALT UK report. So, the work is underway and when we have the results, we will make sure that the relevant findings are made public and we are committed to all stakeholders as well as peer review panel of experts at the end of the study.”

21. Yvonne Orengo from Andrew Lees Trust welcomed the new radiation studies which were a recommendation of ALT UK’s independent review. But she said, “this does not address the urgent water contamination issues that we have urgently raised since last year. 15,000 people continue to draw drinking water from natural water sources around the mine which are contaminated by uranium and lead discharged by the mine. You said last year and again just now that the mining process only uses water, and changes nothing in the natural environment… but you have conceded in writing that the extraction process concentrates radio-nuclides, like uranium, and also heavy metals, in the mining basin; these are related to the mining operation and are well in excess of WHO [World Health Organisation] safe drinking water guidelines. You have also admitted that the process water may have more elevated minerals and metals than are considered safe by drinking water standards. Despite claims that your processes are monitored, and everything is “fine” you have not provided us or other CSOs with any evidence about how your waste water management using the settling ponds system is removing contaminants before the process waters are released into the local environment. You simply state that it does. Saying it does not make it true. We are still waiting for evidence. The burden of proof rests with Rio Tinto. Meanwhile, local people are drinking water from these contaminated lakes and rivers and Rio Tinto refuses to provide safe drinking water to local communities, in line with WHO guidelines. Rio Tinto/QMM knows that it can contribute to national potable water targets in Madagascar and must do so under the polluter pays principle. You did not answer this question from Eryck. Will you please provide drinking water to the community in Anosy and not put the burden of cleaning up water on the cash-strapped Malagasy government?”

22. JS Jacques said, “I repeat what I said – we are not using chemicals in the process at all. We monitor the quality of water before it is discharged and the monitoring shows us that the water is fine when it is discharged. The geology of the ground in the area means uranium occurs naturally. Baseline studies are clear and we will share information from the new studies as we have promised. There have been delays in the JBS&G study because of COVID-19 and the laboratory doing the study is currently closed but we hope this will change very quickly.”

23. Yvonne replied, “You keep re-emphasising that you don’t add anything, you know that the process concentrates up the metals and radionuclides. The uranium in water downstream of the mine was 350 times higher than upstream. You cannot make the claim that there is no impact from the mine when these kind of results come through from water sampling tests: it indicates there is a serious concern, concerns that were also raised by the radioactivity specialist whose result you never mention, which was that she found elevated uranium 50 times higher than WHO guidelines; and her first recommendation was for the provision of safe drinking water to the communities. I am pleading with you, as I have for over a year, to please give communities safe drinking water.”

24. JS Jacques said, “You are referring to one of the studies which you shared with us. Our experts did review that report and we did respond formally to you and your organisation in February. Our experts do not agree the findings are supported by the data, but we are using this report to support our year long study with JBS&G.”

25. Yvonne replied, “But you said that your study will not look at water contamination studies. So there is a disjoint.”

26. JS Jacques said, “We do not believe that the findings in the report are correct. We need to make sure there is no misunderstanding of the situation and we will continue the dialogue.”

27. Simon Thompson added, “We have had third party audits of the radiation issue in water in 2001, 2012, 2014 and 2018. We are now doing a fifth study using the consultants which JS referred to, and we will make the results publicly available and try finally to address this issue.”

28. [Commenting on the company’s answers after the meeting, our colleagues at Andrew Lees Trust provided the following information. The company completely avoided the issue of there being no evidence on which they based their claim to shareholders in 2019 that the impact of the QMM buffer zone breach was “negligible”. Instead they talked about overflow incidents that happened at least four years later, and subsequent to complaints formally raised with the Malagasy Government about the ONE- QMM relationship being compromised. Rio Tinto then focused on the lack of chemical additives in the extraction process to defend questions about water contamination. This obfuscates the cause of the contamination, which is that in separating mineral sands, which contain naturally occurring radionuclides such as uranium and thorium, the extraction process concentrates radionuclides and heavy metals in the mining pond. This concentration effect is a well know impact of mineral sand extraction (WHO 2012). Elevated uranium is clearly identified in the mining pond using QMM’s own water data, and is discharged, seeps or overflows into local lakes and waterways. Rio Tinto has been unable to provide scientific evidence to counter our water study findings that have demonstrated QMM’s negative impact on downstream water quality with 99% confidence. They cannot demonstrate that their water management system successfully removes the contaminants. Separately, the radioactivity study they cite (ALT UK’s independent study by Swanson, 2019) in fact said it was impossible to draw general conclusions about radiation impacts of the mine, due to the “unacceptable” level of QMM monitoring. However, the study was able to identify elevated uranium in water 50 times higher than WHO guidelines and recommended safe drinking water provision. The radiation study Rio Tinto is now undertaking is their first to address radiation in the wider environment e.g. ingestion pathways post mining, but will not study environmental contamination such as from heavy metals. The other studies mentioned were pre mining in 2001(baseline), then focused on worker exposure (2012); one following ALT UK raising the radiation issue in 2017; and the 2018 study was ALT UK’s independent review by Swanson, in which all previous studies were reviewed. All the Trust’s independent studies are available here.]

Trade associations and climate change

29. Doug McMurdo, Chair of Local Authority Pension Fund Forum (LAPFF), said, “Thanks for your ongoing engagement with the Climate Action 100 Plus engagement group of which LAPFF is a part. We welcome the latest disclosures on trade associations and the acknowledgement of gaps between policy and practice especially at the Minerals Council of Australia (MCA). How will Rio Tinto work with its peers to advocate for climate-aligned policy globally, through ICMM or otherwise?”

30. Simon Thompson replied that the company had received well over 100 emails asking similar questions on the MCA, and the subject had been raised at each of the CSO round tables he had hosted in Australia, and he was aware of the strength of feeling. “There is a lively debate about whether it is better to stay in an industry association and engage in debate or refuse to engage with organisations that hold views different from ours,” he said. “I remain convinced that Rio Tinto’s position is right. We make our climate change policy very clear then work with others to try to find common ground. The only way we will make progress is if everyone engages and tries to find common ground. Refusing to talk to people or organisations that hold different views will get us nowhere. Rio Tinto and other members of MCA have made progress in moving forward the climate change debate. There has been a formal separation from Coal 21, which represents coal producers. MCA has published a climate change policy now that is broadly aligned with Rio Tinto’s own. Rio Tinto has pulled out of coal. MCA’s advocacy has not always matched its stated policy and that is frustrating, but it is now trying to ensure better alignment between policy and advocacy. It is frustrating that the MCA climate action plan has been delayed because of COVID-19 as everyone is so busy dealing with all the impacts of COVID-19 in Australia, but we are trying to expedite publication of the plan.” He said it was unfortunate that controversy over MCA’s climate change policies overshadows all the work being done by MCA on other issues like environment, landowners’ rights and worker safety. Rio Tinto would continue to engage with MCA and ICMM. JS Jacques sits on the senior council of ICMM and is actively engaged with ICMM on a range of issues including the greener vehicle initiative.

The Jadar lithium project in Serbia

31. Simon Thompson read out the pre-submitted questions on the Jadar lithium project from Zoe Lujic of Earth Thrive on behalf of the municipality of Loznica in Serbia.

“1. The community is asking for immediate, complete and open publication of ALL documents, plans and studies done so far by your Serbian subsidiary – Rio Sava Exploration Ltd. Belgrade as they claim that the studies and other documents have only been shared with the selected group of people. Can we have your assurance that an immediate and full disclosure of all available documents will be made openly and publicly and in a way that is easy to understand by ‘ordinary’ people?

“2. In your spatial plan that covers almost 300 square kilometres, there are 4 or more protected areas. Can you give us a firm open and public assurance that those protected areas will really and fully be protected from any harm that your mining operation may inflict on them? Also, can we have your full promise that you will fully respect all national and environmental laws applicable in your case?

“3. Can you give open and firm assurances that the surrounding agricultural land will not be adversely affected by your mining activities in the locality?

“4. It is our understanding that you promised the local community and affected farms a full 3D model of the proposed mine some two years ago but that has yet to materialise. Can you kindly let us know when will this model be produced as well as when the both the local and wider communities will be informed of the exact mining process that will be employed?”

32. JS Jacques said that the project is in the early stages, scoping out the mine. Ongoing studies are under way. The Environmental and Social Impact Statement is expected in 2020 subject to COVID-19. “We must engage with all stakeholders and we will continue to engage with communities and NGOs,” he said. Regarding the sharing of studies, obeying local laws and protocols means the company must finish studies before they are released to the general public. “We try to consult during the whole process,” he said. Two information centres have been set up, to make information more available to local people. In 2019 the company held over 16 open days which were promoted widely. Experts were available and studies were shared and discussed. Meetings were held in Serbian and involved ordinary people.

33. The combination of the sound quality on the teleconference and JS Jacques’ tendency to race through prepared answers as though being pursued by armed robbers meant that it was extraordinarily difficult to hear all the details of the rest of his answer. Among the points he made were that the company would respect all national environmental laws and European Union directives. The Special Plan was a government document and covered the whole concession of 290 square kilometres. The project would have no impact on four areas within the concession. Regarding agricultural land, a strategic environmental assessment had been approved which will impose conditions in full compliance with all applicable laws, and is available online. Detailed three dimensional models of the proposed mine had been put in one of the local information centres in 2016 and in the other in 2018.

34. [Despite what JS Jacques said about the three dimensional model of the mine, when Zoe Lujic was visiting local communities in May 2018, people kept asking for that model to be produced, as they were very keen to see what the mine would look like and how it would impact the region. Other local contacts active on this issue say they have never seen the model nor been informed of it being shown to the community.]

Tailings dams

35. Adam Matthews from the Church of England Pensions Board expressed support for Rio Tinto’s actions on COVID-19 and on climate change. Regarding tailings dams, he welcomed the company’s disclosure to the Global Tailings Review (GTR) and the role of Rio Tinto in ensuring the development of a new global tailings standard. There had been another tailings dam collapse the previous week in China. He encouraged Rio Tinto to play an active role in ensuring development of a global standard and to work with others in the GTR initiative, including continuous monitoring.

36. Simon Thompson agreed that this was a critical issue for the whole industry. JS Jacques spoke of meeting Adam with the ICMM. “Our vision is to make sure there is a proper standard, starting with ICMM members,” he said. “Work is under way, led by an independent professor doing a very good job, Bruno Oberle. Our mission is to have a standard for the industry, and the sooner we can do it the better. Rio Tinto takes this risk very seriously. We had our first standard in 2015, before Samarco [the Samarco tailings dam collapse in November 2015 in Brazil]. We reviewed it post-Samarco. We are probably the only mining company that has published its current standards on the web. Anyone with comments to improve it is welcome. There are three layers of protection, similar to how we manage other critical risks.” He mentioned examination by people on site every two years with third party review, which sounded to me like only one layer. “We will continue to review standards,” he said. “The committee [but which committee?] will make sure we have a standard as soon as we can across the industry.”

The Panguna mine in Bougainville

37. Simon Thompson read a pre-submitted question from Keren Adams of the Human Rights Law Centre in Australia.

“In 2016, Rio Tinto divested from the Panguna mine in Bougainville, leaving behind almost a billion tonnes of mine waste tailings. As a result, several thousand people around the mine are living with contaminated water sources, ongoing flooding of their villages with mine waste and health problems ranging from skin diseases to respiratory problems.

“1. Will the company abide by its international legal obligations and take steps to remedy this situation, including through re-committing to fund the environmental and safety audit of the mine commenced in 2014 which was halted as a result of the company’s divestment?

“2. Is Rio Tinto prepared to engage with stakeholders in Bougainville in a dialogue about how the company can contribute to addressing these urgent problems?”

38. Simon Thompson thanked Keren for sharing her observations when they met last year.

He said that, as background, the Panguna mine was discovered in the 1960s in Bougainville, owned and operated by Bougainville Copper Limited (BCL), in which Conzinc Riotinto of Australia (CRA) had a 54% holding, CRA being a predecessor of Rio Tinto. It began operations in 1974 and went on till a civil war halted operations in 1989. All personnel were evacuated. The war ended in 1989 but the security situation did not permit the reopening of the mine. In 2014 [actually it was in 2016], 26 years after Rio Tinto was last able to access the mine site, Rio Tinto gifted its shares to the Autonomous Bougainville Government (ABG) and the Government of Papua New Guinea, so between them they have 73% of BCL. “We have read Human Rights Law Centre’s report and acknowledge issues of human rights in Bougainville,” he said, “but we believe that BCL was fully compliant with all laws in 1989 when it was forced to withdraw. Rio Tinto personnel have not visited the area since. In 2014 BCL staff participated in a meeting which suggested that there should be an independent environmental study, but it is not correct to say that that study did not go ahead due to the divestment. We understand that talks broke down because of differences between the company and the government, especially because of the new mining law passed, which deprived BCL of legal tenure of the mine. BCL did not walk away from Bougainville but was forced to pull out because of being specifically targeted and then effectively expropriated. Panguna was the biggest copper mine in the world and was the biggest contributor to the PNG government, which may be why it was targeted by the Bougainville Revolutionary Army. The reopening of the mine is highly contested in Bougainville.”

39. [Having been prevented from asking her own question despite being ready and waiting on the telephone, Keren was not given the opportunity to respond to this staggering piece of bold-faced obfuscation. Simon Thompson spoke as though the Panguna mine was caught up, quite by accident, in a civil war, and the pollution caused by the mine since its forced closure was deeply regrettable collateral damage. But it was the pollution from the mine that caused the civil war in the first place! That, and the fact that the local people suffering from the pollution were not seeing any supposed benefits from the mine. Mine personnel were kept from returning because of the deep distrust towards them felt by many local people. The Bougainville Revolutionary Army targeted the mine because it was the damage caused by the mine that triggered the struggle for independence. A fuller rejoinder to Simon Thompson’s answer appears at the end of this report.]

New shares

40. A representative of Heronbridge Investment Management commented on one of the resolutions which the company had put to shareholders for approval. “Resolution 22 is a request to issue up to two thirds of the company’s share capital in new shares,” he noted. “We are not sure this is in shareholders’ interests. This level of share issuing would represent a class 1 transaction which would mean it would have to be put to shareholders. 10 to 15% is a more sensible level to propose to shareholders at an AGM.” He said that this kind of resolution had been pushed by the Association of British Insurers to help companies dramatically overleveraged in the 2009 financial crisis.

41. Simon Thompson replied that Rio Tinto routinely sought this permission every year, as do most FTSE 100 companies. “We have no present intention of exercising these authorities,” he said, “and they do reflect standard practice which the British Insurers’ Association has approved. We will debate the question again at the board and decide if it is appropriate to go for the normal amount which guidelines permit or go for a lower amount.”

42. It was announced that there were no further questioners waiting on the line, which was not true, as several of us were still in the queue.

The Resolution Copper Project in Arizona, USA

43. Simon Thompson then read the pre-submitted question about Resolution Copper from Roger Featherstone of Arizona Mining Reform Coalition.

44. “My name is Roger Featherstone from Tucson, Arizona, and I’m the Director of the Arizona Mining Reform Coalition. I regret that it is not possible to be in London for your meeting today. This all shows that in today’s world nothing is for certain and nothing is a sure bet.

45. “I appreciate this opportunity to ask you a question regarding the Resolution Copper proposed block cave copper mine that would be located East of Phoenix, Arizona, and would destroy the sacred ecological and recreational haven of Oak Flat and thousands of acres of surrounding public land.

46. “Last August, the US Forest Service released a Draft Environmental Impact Statement (a DEIS) that, incomplete as it is, for the first time took a close look at the impacts of your proposed Resolution Copper proposal that would destroy Oak Flat and a total of close to 16,000 acres of land and would use as much water as a city of 200,000 people.

47. “Jean-Sebastian, when we first met before you officially became Rio Tinto’s CEO, you assured me that Rio Tinto would not continue the Resolution Copper project should it become apparent that it wasn’t feasible. Yet the DEIS says that the amount of water the project would use “could be greater than the estimated amount of physically available groundwater.”

48. “At the Rio Tinto AGM last year, you indicated that Rio Tinto would meet or better any local laws for the Resolution Copper project but you hedged a bit on whether that meant you would meet or do better than any tailings dam safety laws anywhere in the world. The DEIS shows that none of the 4 tailings dump locations, including the Preferred Alternative dump location, would be illegal in Brazil, Ecuador, and China. None of the 4 alternatives, including the Preferred Alternative, would meet the weak standards for tailings dam safety required by our Arizona Department of Environmental Quality.

49. “It is also clear that in light of ongoing problems you’ve had constructing the world’s only comparable block cave project at Oyu Tolgoi, and the multiple severe problems the DEIS outlines, that your Resolution Copper project is an experiment that will fail.

50. “It is time for you to abandon this failing experiment, retire all lands and mining claims you have acquired, and relinquish any claims you have to Oak Flat. Will you save your shareholders the embarrassment and financial losses that are sure to occur with the Resolution Copper project and permanently halt the Resolution Copper project?”

51. JS Jacques said that the Resolution Copper Project is located in Arizona in the USA. It is one of the world’s largest known undeveloped copper deposits. The mining application continues to progress as expected. The US Forest Service released an Environmental Impact Statement last autumn following years of study. There were three main questions from Roger Featherstone. Regarding land, following years of analysis and engagement including with Native American tribes, the company had changed the area of land to be used by the project. The total project area was less than Roger had suggested. [Roger commented later that the figures he quoted come directly from the DEIS and no one (at least outside of Rio Tinto) has seen any changes in project design from Resolution Copper since the DEIS release.]

52. Again, it became difficult to hear what JS Jacques was saying. Perhaps my telephone, or my ears, or both, require urgent attention, but despite the limited time the company had allowed for this teleconference, it would have been helpful if JS Jacques could have read his prepared answers more slowly and clearly. He mentioned that a high proportion of the energy for the mine would be provided from renewable sources. [This was news to everyone as the DEIS makes no mention of energy coming from renewable sources. Energy for the project would come from the Salt River Project, which has virtually no renewable energy supplies in its porfolio and no plans to build or acquire renewable capacity.] The mine’s water consumption during its entire life would apparently be one-fourteenth of what the residents of the whole state of Arizona use every year. [This would make it very far in advance of every other such copper mine and Rio Tinto continues to vastly understate the amount of water that would be required. In addition, the water contracts that Rio Tinto continues to misrepresent as “more than 50% of water the project needs has already been acquired,” would likely not be available, as Arizona’s drought continues and is projected to get worse. The reality is that Rio Tinto would pump groundwater from a series of wells in a valley where the available groundwater is already oversubscribed.] As part of the Environmental Impact Study process the US Forest Service had conducted extensive analysis of the tailings storage plan. The preferred site complies with international standards as well as national and state regulations. The long term stability factors incorporated in the design would withstand a once in 10,000 year earthquake. He also claimed that a once in 10,000 year earthquake event is better than the Maximum Credible Event (MCE). [This is not true: the MCE would be in the neighbourhood of a one in 100,000 year earthquake event.] This is better than international guidelines. The rest of his answer became inaudible.

53. Simon Thompson said there were three questions waiting on the line and there was only time for one.

The Grasberg copper-gold mine in West Papua

54. Andrew Hickman of London Mining Network said his question was about the Grasberg copper-gold mine in West Papua. He said it was connected to the previous questions on tailings and on Bougainville. “You divested from Grasberg two years ago,” he said. “Given the record of Grasberg of environmental, social and human rights abuses, as well as riverine tailings disposal that continues, how is it possible for the company to defend its claims that it has sold on its liabilities to Inalum, the Indonesian state aluminium company? Maintaining this kind of legalistic position is too great a reputational, legal and financial risk to the company and investors in the face of this record. This is an ethical and moral question.” He said that the company had left its involvement in Panguna some years ago, but was still answering questions about its responsibility there, so why did it feel it was no longer responsible at Grasberg?

55. Simon Thompson replied, “You raised this at the AGM last year and my answer is the same. Rio Tinto had a metal strip arrangement, not an investment arrangement, it had a share of the metals produced by the mine from 1999 and sold it in 2018 for 3.5 billion dollars to Inalum, the state owned Indonesian mining company, which achieved the objective of the Indonesian government to increase its economic interest in what it regards as a strategic national asset. The Indonesian government was aware of the liabilities, and the price paid reflects its awareness of those liabilities. We are not hiding. Willing buyer, willing seller, and the Indonesian government entered into it knowing they would be responsible for these liabilities.”

Engagement with affected communities

56. Simon Thompson then said he would answer one final question, submitted in writing ahead of the meeting by Lara Blecher of PIRC. Her question was, “To what extent does engagement with affected communities factor into disposals of assets when there are legacy environmental and social impacts? How are these disposals done to ensure there are no operational, reputational, legal or financial risks to the company? To what extent do Rio Tinto’s environmental and social impact assessments incorporate affected community input? How is this input used?”

57. JS Jacques said that the company considers all factors, including environmental and social impacts, when selling, gifting or closing assets. All these dimensions drive decision making. The company carries out a detailed risk analysis which takes into account financial, legal and other risks. He failed to explain why the company had gone ahead and pulled out of Panguna and Grasberg without cleaning up the enormous toxic legacies of those mines. Perhaps his hope is that the memory of investors is small and the capacity of those who suffer from those legacies is small. If so, let us hope he is wrong on both counts.

An untimely end

58. Simon Thompson then drew the meeting to a close. He thanked shareholders for their participation and patience. He said, “We still have a couple of questions on the line so we will keep the mailbox set up for written questions open for a couple of days. Thanks to shareholders for their support and to all Rio Tinto employees around the world.” He wished everyone good health.

Unanswered questions on the Oyu Tolgoi mine in Mongolia

As well as questioners waiting unsuccessfully on the telephone to ask their questions, two others had attempted unsuccessfully to submit written questions on the company’s operations at Oyu Tolgoi in Mongolia. At least one had experienced such difficulties in connecting to the teleconference in the first place that they had missed the brief opportunity before the meeting began to register their questions.

Sukhgerel Dugersuren of Mongolian NGO Oyu Tolgoi Watch wished to submit the following questions on behalf Khanbogd herders affected by the Oyu Tolgoi (OT) mine.

Environmental and Social Impact Assessment (ESIA)

Parliamentary Resolution #92: Based on recommendations of the Parliamentary Working group on Oyu Tolgoi, the State Great Hural (parliament) issued Resolution #92 on November 21, 2019 https://www.legalinfo.mn/law/details/14771?lawid=14771 tasking Government, in addition to bringing the OT Investment Agreement and all related contracts in compliance with law, and carry out the following:

4/ Undertake a revaluation of the reserves of copper, gold, silver and other elements at the Oyu Tolgoi deposit using international standards effective in Mongolia, develop and conduct a feasibility study based on the revaluation and obtain expert opinion of the competent authority thereof;

5/ Redo environmental and water impact assessments and amend Resolution 175 on “Appropriation of land for public purposes” of the Government of Mongolia of June 8, 2011 to align with underground water use requirements in the Gobi Desert region.

2017 MDT/IEP, p. 26/2289 – “OT should commission and disclose, in advance of work starting, the results of one or more supplemental ESIAs to IFC standards to identify and consult on any additional impacts (and impact mitigation measures) related to the underground mine project; the power agreement; changed plans for workforce accommodation; the railway construction; paving of the Khanbogd Soum to OT road, any significant changes to the project since the 2012 ESIA was published, and update the analysis of cumulative impacts of other infrastructure and mining/oil projects. Assessment should consider if paving the Soum centre to OT road will create additional and faster traffic that would limit animal movements.”

Question One: What is Rio Tinto doing about these recommendations, and when will it carry out the environmental and social impacts assessments for underground mine construction and operations and the new tailing storage facility section as per the Parliament of Mongolia and recommendation of the Multidisciplinary Team (MDT) report cited above?

WATER

Water in the Gob Desert: Non-disclosure of water related reports and quality of Rio Tinto public statements on water has been an ongoing debate between Oyu Tolgoi and the local herding community.

“OT reports state without supporting technical information that the water recycle rate has been up in at average 85% and have gone up to 90% at some point in its 2018 Year in Review [The most recent such report available at www.ot.mn at p. 7/58 (at https://www.ot.mn/media/ot/content/docs/year_in_review_18/OT_Year_in_Review-English.pdf). In contrast, one of the few independent reports of OT operations, the 2017 MDT/IEP report (at www.caoombudsman.org/cases/documentlinks/documents/MDTIEP_FINALREPORT_ENG_January292017_000.pdf) found OT consultants determined that the tailings management and disposal operations at OT were not meeting design performance values, causing the tailings to retain more water than design values, have lower dry density – be bulkier – than design performance values and fill up the tailings disposal cells faster than planned. (2017 MD/IEP, P. 207/289).

“As a result of the inability of OT operations to meet design performance values, OT will run out of capacity at the only two tailings cells it identified in its 2012 ESIA, at P. 34/77.

OT is planning for an additional four tailings cells the size of the original tailings cell 1 – design capacity of about 750 million tons.

“We demand that OT provide detailed water management calculations to demonstrate water consumption at the facility including:

– Total water balance, including water consumption rates for operational elements as projected in 2012 ESIA A4 at p. 41/77;

– Tailings liquids and solids balance reflecting mass, volume and water content of tailings generated at OT during operations including characteristics of current tailings and characteristics of tailings projected to be generated at OT operations compared to design performance values provided in 2012 ESIA;

– Detailed design proposals for future tailings associated with proposed operations including environmental and social assessments and emergency response plans for potential tailings impoundment failures.”

Question Two: What is Rio Tinto’s justification for non-disclosure of this information important for both shareholders as well as local community?

Rhodante Ahlers, of Dutch NGO SOMO, wished to ask the following questions.

When will Rio Tinto carry out the environmental and social impacts assessments for its underground mine construction, operations, and the new tailing storage facility section as per the Resolution #92 of the Parliament of Mongolia (November 2019) as well as the recommendations of the Multidisciplinary Team Report (2017 MDT/IEP, p. 26/2289)?

Water is a life sustaining resource in the Gobi desert. Rio Tinto has failed to disclose water related reports regardless of numerous demands for information on total water balance, water consumption rates for all operational elements, tailings liquids characteristics justifying need for more tailings storage and design plans for new storage cells. When can we expect this information or a written official document justification non-disclosure?

Now that the COVID-19 pandemic has shown the importance of public budgets for governments struggling to afford goods and services needed to protect lives, will Rio Tinto abort the UNCITRAL arbitration process and revisit the Oyu Tolgoi Investment Agreement to better meet the needs of the Mongolian people and the protection of the Mongolian environment?

Response to Rio Tinto’s (non-)answers to questions regarding the Panguna mine legacy at the Rio Tinto London AGM on 8 April 2020

provided by colleagues in Australia

1.Rio Tinto did not answer the questions. The questions were about the environmental, social, cultural and spiritual legacies left behind by the Panguna mine in Bougainville which have grave negative effects on the lives, the livelihoods and the human rights of the communities affected by the mine. Rio Tinto was asked whether the company would be prepared to engage in a dialogue with stakeholders in Bougainville about how the company could contribute to addressing the legacy issues, and whether the company would abide by its international legal obligations and take steps to help remedy the situation. In its response at the AGM, Simon Thompson did not engage with these questions at all. His non-answer has to be taken as a ‘no’ to the questions.

2. So what did Rio Tinto say in its response? Basically, it tried to present the company as a victim and a benevolent donor which has no responsibility for the current catastrophic situation in the Panguna mine area.

3. The ‘victim’ narrative: Simon Thompson gave a brief overview over the history of the Panguna mine from the 1960s to the late 1980s, positing that the mine was forced to halt operations because of a ‘civil war’ on the island. No word about the mine’s and the company’s role in the causation of that war and its escalation. The major underlying cause of the violent conflict were exactly the environmental degradation and social disintegration caused by the Panguna mine. People in affected communities demanded from Bougainville Copper Limited (BCL), the operator of the mine, which was majority-owned and controlled by CRA (= today’s Rio Tinto), to address their concerns regarding the serious environmental and other effects of the mine. The company management of the time did not respond to these concerns. Instead it opted for a heavy-handed approach, expecting from the PNG government government to ‘solve’ the problem through the use of force. Supported by BCL/Rio Tinto, the PNG government sent its police riot squads and later its military to the island to deal with local protests. This led to the escalation of the Panguna-mine related localised conflict into an all-out civil war which lasted for almost a decade and cost thousands of lives. In the initial stage of the war, when BCL/Rio Tinto were still present on the ground, the company actively supported the war efforts of the PNG security forces. In short: the Panguna mine and Riot Tinto played a crucial role in causing the conflict and triggering the war. In short: it is totally unacceptable that Simon Thompson presented Rio Tinto as an innocent object of the war. And it even got worse: at the end of his response Thompson even posited that it was mere greed that the Bougainville Revolutionary Army (the rebel forced opposed to the mine) motivated to start a war (he said: “Panguna was the biggest copper mine in the world and was the biggest contributor to the PNG government, which may be why it was targeted by the Bougainville Revolutionary Army”). So in Thompson’s history lesson the victims become the perpetrators, and the perpetrator becomes the victim.

4. The ‘benevolent donor’ narrative: In his response Simon Thompson said that Rio Tinto “gifted” its shares to the Autonomous Government (ABG) and the government of PNG in 2016, and he makes this sound like a generous present. In fact, it was the smart (or not so smart) way for Rio Tinto to walk away from any responsibilities with regard to the Panguna mine legacy issues. As BCL/Rio Tinto had abandoned the mine in 1990 amidst the violent conflict, there has never been a proper mine closure. Now that Rio Tinto has relieved itself from its majority shareholding in BCL, it argues that this is none of its business any more. Let the Bougainvilleans themselves deal with the mess Rio Tinto left behind. At the same time the company is well aware that cleaning up the mine legacy is a massive task which goes well beyond the resources and capacities of the ABG or any local actors. Hence Rio Tinto is not the benevolent donor that makes generous ‘gifts’ to the locals, it acts more like a thief that is stealing away after it has stolen the goodies and totally damaged the house in the process.

5. To add insult to injury, Rio Tinto legitimises its behaviour by positing that the company was “fully compliant with all laws in 1989 when it was forced to withdraw” (Simon Thompson at the AGM, repeating many previous similar statement). Mind you: those were the laws which made it possible to cause the environmental destruction which caused a bloody violent conflict – environmental destruction which until this very day lets the people in the mine affected communities suffer from all kinds of health issues and making their lives dangerous and miserable. Just to note: riverine tailings disposal which was practised by the Panguna mine and which is at the core of today’s environmental catastrophe in the Panguna area and downstream, was perfectly legal back in those days. But it is illegal everywhere today (with a few exceptions – Grasberg, Ok Tedi – themselves horror stories of environmental destruction), and Rio Tinto today would not dare to become engaged in riverine tailings disposal today, because of its devastating effects. What matters are not the laws of the 1980s – what matters is the fact that people today severely suffer from Rio Tinto’s activities back then (lawful or not).

6. In line with the victim’s and the benevolent donor discourse, Rio Tinto complains that company personnel were not able to go to the Panguna area ever since the mine ceased operations, due to security concerns, and it complains about the new mining laws passed by the ABG in 2014 “which deprived BCL of legal tenure of the mine” (Thompson at AGM). Here we are again: Rio Tinto as the victim: “BCL did not walk away from Bougainville but was forced to pull out because of specifically targeted and then effectively expropriated” (Thompson). Well, the locals in the Panguna mine area as well as the ABG have many times invited Rio Tinto/BCL to come back and participate in a reconciliation process according to Bougainville customs (and at times this ‘Bel Kol’ – cooling of the heart – process seemed to make good progress), but it is Rio Tinto which so far has not come to the table. The issue is not BCL walking away from Bougainville (in fact, the ‘new’ non- Rio Tinto BCL is still on the ground), the issue is Rio Tinto walking away from its responsibilities with regard to cleaning up the mess it left behind. Today people still want Rio Tinto to come back and make a contribution to the clean-up, and they are willing to provide security for its personnel. The people in Bougainville expect Rio Tinto to come back and to contribute to the clean-up. The audit of the Panguna situation which had been planned in 2014 by BCL and other stakeholders and which did not take place, not least because of Rio Tinto’s disengagement, would be a good start for Rio Tinto to re-engage.

7. Finally, a word about process: At the AGM, Rio Tinto management read out the questions put forward by the Human Rights Law Center (HRLC), and Simon Thompson ‘responded’ in the way described above. However, Keren Adams from HRCL, who had registered to ask the questions live and who was ready to respond to the statement of Thompson via phone, was not given the opportunity to speak. Rio Tinto was in total control of the process and thus could easily prevent people from asking ‘uncomfortable’ questions. Appalling.

The Panguna case in general and the Rio Tinto AGM in particular clearly demonstrate that legacy issues are important in the overall picture of mining. We cannot let the big mining companies just walk away.