Rio Tinto chief executive Jean-Sébastien Jacques does not like miners being portrayed as environmental vandals, telling investors in 2018 that comparisons made with the baddies in the movie Avatar made him “mad”.
But efforts by the France-born executive to turn that image round have taken a battering in recent weeks after Rio blew up a 46,000-year-old Aboriginal heritage site to make way for an iron ore mine.
The destruction of sacred rock shelters in the Pilbara, an area that generates two-thirds of Rio’s earnings, has turned the spotlight on the Anglo-Australian miner’s corporate culture and highlighted the growing importance of environmental, social and governance issues.
“Culture above greed,” read one of the placards at a protest outside Rio’s Perth headquarters last week over the blasting of Juukan Gorge, an area where thousands of ancient Aboriginal artefacts were recently discovered.
Indigenous groups, archaeologists and even some former Rio executives have condemned the mining group for blasting rock shelters nine times older than Stonehenge to make way for its Brockman 4 mine. And last week Simon Thompson, Rio’s chairman, was grilled by investors, with Aberdeen Standard Investments and Legal & General expressing concerns about the implications for Rio’s relationship with local communities.
Rio obtained the legal right to demolish the sacred sites in 2013 when it successfully applied to the Western Australian government for a section 18 approval under the Aboriginal Heritage Act. The company had previously negotiated native title agreements with the Puutu Kunti Kurrama and Pinikura people, giving it rights to mine the area.
But Rio’s failure to abandon demolition when more than 7,000 significant artefacts were discovered during an archaeological dig in 2014 has sparked an international outcry.
The furore caused by the blasts, which took place on the eve of National Reconciliation Week, a celebration of indigenous culture in Australia, is likely to accelerate the passage of tougher state heritage legislation that could slow mine developments in the world’s most important iron ore region.
A looming Australian parliamentary inquiry has also spooked the industry, which is concerned it could spark federal intervention. Last week BHP said it would re-engage with indigenous landowners for further consultation regarding 40 heritage sites on which it has already secured approval for demolition to pursue its A$3.6bn (US$2.5bn) South Flank mine expansion.
Experts in indigenous relations say the controversy highlights the power imbalance between indigenous peoples and miners, which wield significant influence in politics.
Western Australia’s Aboriginal Heritage Act was drafted in 1972 and favours mine development over protecting heritage. Miners can appeal against rejection of demolition applications by government while indigenous custodians cannot appeal against approvals.
Rio’s decision to demolish the Juukan Gorge sites and its failure to offer a fulsome apology is raising questions about the company’s governance, leadership and commitment to community relations, say critics.
It has blamed the destruction of the shelters on a “misunderstanding” with the PKKP, suggesting it was not made aware of the indigenous group’s recent concerns in time to prevent the blasts going ahead. An internal inquiry has begun.
So far Mr Jacques has remained aloof from the controversy, only making his first comment two weeks after the demolition.
“We are very sorry for the distress we have caused the PKKP in relation to Juukan Gorge and our first priority remains rebuilding trust,” he said on Friday.
Mining experts say they were surprised by Rio’s decision to blast the sacred sites, given its previous leadership on indigenous issues, including agreeing native title deals in the late 1990s and early 2000s. But critics allege it is the predictable consequence of cost-cutting since the mining crash in 2014 and a corporate restructuring led by Mr Jacques, which they claim downgraded the community and social performance division within Rio by placing it under the corporate relations department.
“Social Performance practice and assurance, the ‘S’ of ESG if you like, should be seen as a line accountability in the same way Health, Safety and Environmental performance are,” Bruce Harvey, a former global practice leader — communities and social performance at Rio Tinto and who left the group in 2013, told the Financial Times.
“Where it is positioned in the governance structure of companies has great influence on the way it is managed,” he said.
Rio denies that restructuring or cost-cutting has undermined its efforts. But if Mr Jacques wants to achieve his goal of resuscitating the industry’s image, he will clearly have to do a lot more to convince stakeholders that it is committed to being a good corporate citizen.