Engagement with Rio Tinto on risk to water and communities

The Australasian Centre for Corporate Responsibility (ACCR) is commenting on an engagement it has undertaken with Rio Tinto regarding concerns raised by communities at three sites linked to the company’s operations:

• Panguna mine in Bougainville, where an independent assessment funded by the company has identified serious and imminent risks to life posed by a collapsing mine pit, failing levees and deteriorating infrastructure; access to clean water; and concerns raised about community engagement.
• Bungaroo Aquifer in the Pilbara, Australia, where Traditional Owners have reported that water over-abstraction by the company is causing water insecurity and damage to their cultural landscape, confirmed by independent hydrological assessment that abstraction is damaging the Bungaroo.
• QMM mine in Madagascar, where communities have reported negative impacts to health, livelihoods and environment related to mine wastewater contamination and tailings dam failures, with associated rights concerns.

During the engagement, Rio Tinto acknowledged shareholders could benefit from more visibility of these issues, however it is ACCR's view that the company has much more work to do in addressing critical risks and engaging effectively with communities in all three cases.

ACCR considers Rio Tinto to be crucial to the global energy transition and therefore its investors have an interest in ensuring Rio Tinto’s approach to critical business risk management and governance is as robust as possible.

Commenting on the engagement outcomes, Brynn O’Brien, Executive Director, ACCR, said:

“Investor interest in the risk management approach by major resources companies to issues directly impacting communities has been heightened since the Samarco disaster involving BHP and Vale, and the destruction of irreplaceable cultural heritage at Juukan Gorge by Rio Tinto.

“Investors have an interest in ensuring Rio Tinto’s approach to critical business risk management and governance is as robust as possible.

“ACCR has had intensive recent engagement with Rio Tinto about its approach to management of risks to life, water, culture and environment – as the company was not demonstrating it was prioritising these risks and the surrounding concerns of impacted communities.

“Through the engagement, ACCR formed a view that Rio Tinto’s response to community concerns is overly led by process - so much so that it impedes timely and meaningful action. While establishing processes is important, a 'process-heavy' approach without tangible outcomes weakens the company's ability to address serious risks in a timely and appropriate manner.

“ACCR did not proceed to a shareholder resolution in this case because we judged that a contested resolution on these matters would not deliver the required outcome, which is timely action.

“Rio Tinto has an opportunity to show the market it is a responsible operator by committing to practical strategies to resolve the issues raised by communities affected by its historical and ongoing business activities.

“In our view there is value in shareholders continuing to engage on these community safety, human rights and water resource management issues.

“ACCR appreciates our engagement with Rio Tinto Ltd over various issues for the better part of a decade, the longevity of which engenders a robust and meaningful exchange.”