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Rio Tinto Dirties Its Reputation – Pension Fund Divests
MEDIA RELEASE
Thursday 10th September 2008
Australia’s Mineral Policy Institute (MPI) queries the credibility of the mining industry after mining giant, Rio Tinto, defend their involvement in the practice of riverine tailings disposal as 'exemplary'.MPI's executive director, Techa Beaumont states, "Rio Tinto aggressively brands itself as a leading player in the mining industry but is still involved in one of the most destructive mining operations operating on the globe. This is a sad reflection of the industry as a whole and evident of the many loopholes in their voluntary commitments to responsible action."
"We applaud the Norwegian Pension Fund’s recent decision to divest based on Rio Tinto’s “grossly unethical conduct” and that they will not be involved in activities leading to "severe environmental damage" where there is no efforts by the company to avoid this in the future.”
The Norwegian Pension Fund, one of the world's largest sovereign wealth groups, does not take such decisions lightly and published a detailed report backing up its drastic conclusions.
“Shareholders ranging from retirees with select mining shares in their portfolio to institutional investors holding billions of dollars in funds are increasingly questioning the ethical dimensions and the financial risks associated with involvement in companies involved in poor practices such as those that cause significant environmental destruction.”
Ms Beaumont states, “A growing body of evidence links poor environmental outcomes to substandard economic performance in companies. This makes responsible management of environmental challenges an indicator of the capacity of a board to manage other issues including economics.”
Rio Tinto is the third company the pension fund has divested from on the basis of its involvement in the discredited practice of riverine tailings disposal. Earlier decisions of the pension fund's council of ethics saw them divest from US miner Freeport McMoran, and South African miner DRD for their involvement in the Tolokuma mine in PNG. The pension fund has also made public that it is evaluating its exposure to Canadian miner Barrick Gold, which continues to operate the Porgera gold mine, an operation that dumps its tailings directly into local creeks in the Highlands of Papua New Guinea.
MPI has raised the issue of Rio Tinto's involvement in the Freeport operation recurrently at the company's annual general meetings in Australia at the request of concerned shareholders of the company.
Contact:
Natalie Lowrey, Communications Officer, Mineral Policy Institute – 0421 226 200
Techa Beaumont, Executive Director, Mineral Policy Institute – 0409 318 406
Background:
MPI has visited and undertaken research documenting the severe environmental damage and extensive human tragedies at various sites where riverine tailings disposal, the direct dumping of toxic mine waste into rivers, is still permitted.
Rio Tinto spokesman Nick Cobban in London defended their involvement in Grasburg - as quoted in an article in the Guardian newspaper in response to the decision as saying: "Our immediate response is one of surprise and disappointment. We have an exemplary record in environmental matters, world leading in fact, and they are given the very highest priority in everything we do."
Kristin Halvorsen, the Norwegian finance minister, said the problems with Rio Tinto, the world's second-largest iron ore miner, concerned a joint venture with Freeport McMoran, a company excluded by the fund in 2006, at a mining operation in Indonesia.
"Exclusion of a company from the Fund reflects our unwillingness to run an unacceptable risk of contributing to grossly unethical conduct. The Council on Ethics has concluded that Rio Tinto is directly involved, through its participation in the Grasberg mine in Indonesia, in the severe environmental damage caused by that mining operation," she said.
"There are no indications to the effect that the company's practices will be changed in future, or that measures will be taken to significantly reduce damage to nature and the environment," she added in a formal statement posted on the website of the finance ministry in Oslo.
For more information, please contact:
Natalie Lowrey
Communications Officer
Mobile: +61 (0) 421 226 200
Created: 11 Sep 2008 | Last updated: 11 Sep 2008
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