Notes on Rio Tinto Meeting
Thursday 17 April 2008
written by Richard Solly, London Mining Network & Partizans
This report covers many but not all of the issues raised during questions on the company’s Annual Report and in some of the other items of business. Where several questions were asked about one area, they are reported together. The report was put together with the help of many of the people who attended the AGM.
For an hour before the AGM, there was an inspiring protest outside the Conference Centre, organised by Friends of the Earth, the Free West Papua Campaign and Partizans (People Against Rio Tinto and its Subsidiaries), with help from War on Want. West Papuan flags, illegal in Indonesia and its occupied territories, flapped in the strong wind, and West Papuan musicians sang and played music for the whole time as others handed out information leaflets from London Mining Network.
The AGM began with very long introductory presentations by Paul Skinner, the Chair, and Chief Executive Tom Albanese. These presentations are available on the company’s website at http://www.riotinto.com/investors/2008_annual_general_meetings.asp.
One shareholder then asked about the Panguna mine in Bougainville, referring to information contained in the London Mining Network leaflet which he had been given on the way in to the meeting. The mine had been closed down during a civil war triggered by massive pollution caused by the Rio Tinto-controlled operation. Company Chair Paul Skinner said that the mine had “not been active because of the problems evident in the region, which made it impossible to operate”. The company would “do everything practical”. Its “general stance is one that would seek positive and proactive engagement in the communities”.
Another shareholder, referring to the same leaflet, asked whether there was any substance to the concerns outlined. Were the concerns of local communities justified? Paul Skinner said that any concern of a local community is justified and we must listen to them. He said he was confident that company CEO Tom Albanese and the team do a good job on these issues. "There will always be isolated cases where people object to the progress of economic activity. I am not aware of where we are flying in the face of opposition." There was a follow-up question about the importance of water, and Paul Skinner agreed that we all have to manage water better.
Marcelo Giraud, representing the Mendoza Popular Assembly in Argentina, asked about the Rio Colorado potash project. He said: “I come from Mendoza, Argentina. In the south of this province is located the Río Colorado Potash project, which would require an investment of 900 million dollars. How do you explain the fact that the Annual Report 2007 says nothing about the delays to begin the construction of that mine, and the reasons for that? The first production was expected for 2009, but now you say 2011. Despite the fact that the new governor of Mendoza is pro-mining, the environmental authority will probably not give a permit for the project, because the application is incomplete, has too many scientific and technical errors, and lack of co-ordination. It presents no alternatives, as the law requires, to a massive salt deposit of 100 million tons that the company intends to leave on the surface and which could pollute the nearby Colorado River, used downstream for irrigation and drinking water. There are no contingency plans in the project, and I was astonished when reading, for example, that the emission of 838,000 tons of carbon dioxide per year would produce a ‘local’ greenhouse effect, ‘confined to the areas associated to the project’, when everybody knows it is global. This project is not only a concern for Mendoza, but for the governments of four other provinces as well, and the Ombudsman of Argentina has begun a legal procedure.”
Marcelo began to speak about the project’s enormous use of natural gas in the context of climate change and annual winter gas supply restrictions in Argentina, but Paul Skinner cut him off.
Paul Skinner replied that it had not been brought forward for investment for a number of reasons including a shortage of energy. He was confident that the company could "satisfactorily answer the concerns of local people" but there were ”a number of uncertainties”. The project ”needs a lot of energy”. He thanked Marcelo for coming so far and invited him to meet the director responsible for the project after the AGM to discuss technical aspects.
An MP from Quebec next asked a question about Alcan. Paul Skinner said that Rio Tinto is “committed to maintaining a strong economic commitment to the region”. A second MP from Quebec asked about cheap energy and former Alcan projects. He said that the people of Quebec want a fair return for Rio Tinto’s use of cheap energy. He asked for assurances on down-sizing. Paul Skinner replied that Rio Tinto could not give any guarantees, but would not abandon an asset unless they had looked at all the alternatives. (This seemed a little different from his introductory address, where all the talk was of consolidation into a smaller number of world class deposits.)
When asked whether the five principal shareholders, including Barclays, were at the meeting, Paul Skinner said: “They are here in my pocket, so to speak”.
There was a question about uranium, which was seen as having a good future, with Rossing and ERA having world class deposits.
Susan LaFernier, representing the Keweenaw Bay Indian Community in the Upper Peninsula of Michigan in the USA, introduced herself and said, “I too have travelled a long way and my Tribe and I thank you for the opportunity to ask these questions regarding the Kennecott Eagle Minerals Company’s proposed nickel and copper sulphide mine to be located in the Yellow Dog Plains, in Marquette….in the Upper Peninsula, in the United States.”
Paul Skinner said, “I must ask you to frame this in terms of one question, given the number of others who want to ask questions.”
Susan LaFernier replied that she had many difficult questions and Paul Skinner asked her to put the most important one.
Roger Moody, of Partizans, called out, “Oh, give a bit of latitude, she has come a long way!” Paul Skinner said he was aware of that. Roger Moody pointed out that Paul Skinner had already allowed some other shareholders to ask three questions each.
Gabriel Caplett, of the Yellow Dog Summer campaign group in Michigan, called out that Susan LaFernier was a national representative.
Susan LaFernier continued: “I think these questions are very pertinent for you to hear and to answer. How will you protect and guarantee our treaty rights with the United States to hunt, fish and gather on this land? How will you protect our great Lake Superior, where the rivers flow, and how will you protect our Migi zii wa sin, Eagle Rock, which is a sacred place where traditional ceremonies take place and which will be blasted through and to which we will be denied access for thirty-four years? It will probably be destroyed, totally.
“I do agree with the comment in the quote, in your March 2008 Rio Tinto review booklet: ‘locals can continue to use the area for recreation and, after it is exhausted, nothing will remain on the surface.’ I’d like you please to consider that Kennecott withdraw any plans to mine in the Upper Peninsula of Michigan because of the many reasons that could be stated here today. I couldn’t go into many. Finally, if metallic sulphide mining is allowed to proceed on this land, not only will our territorial sovereignty be jeopardized, but also our survival as a people. I pray that our ancestors’ vision and our determination will continue to be honoured, and I pray that you, too, will protect our Great Lakes and our Mother Earth.”
Paul Skinner thanked Susan for her comments and questions and for coming so far to be at the AGM. He said that company wanted to hear and recognize the impacts on local communities. He asked Tom Albanese to respond to the generality of Susan’s comments and invited Susan to speak afterwards to the responsible executive, Brett Clayton.
Tom Albanese said that he was very proud not only of what the company was doing on the site but of the whole process. He said that the State of Michigan has some of the most stringent environmental regulations in the world. The company is very comfortable working with that. He said that the company had a very good dialogue with the local community and recognizes that, although the core community, in the company’s experience, was in favour of the project, there is a small group opposing it. He said that the site, itself, is private land. It has been clear-cut over the decades. He said he had been pleased that the company had improved many local logging roads. He said he was very, very, very confident that the team was doing this work with utmost respect for the environmental protection of the area. He added that the Flambeau copper mine, in nearby Wisconsin, had now become a park, and said that this was a good testimony to what the company could do in sensitive environments.
Gabriel Caplett, of the Yellow Dog Summer campaign group, said that he was from the same area as Susan LaFernier, the vice-president of the Keweenaw Bay Indian Community. He went on:
“Rio Tinto has multiple projects planned for our water-rich area. These projects would affect the Great Lakes, which contain roughly one-fourth of the world’s fresh water. Other companies are planning metallic minerals projects, as well as uranium operations, and are encouraged by weak new mining laws that were heavily influenced by Rio Tinto’s agenda. Mr Albanese, I would counter your statement that we have the most stringent laws in the world. Our neighbour, Wisconsin, has laws that are much more stringent, that have, up to now, kept your company out of operations in that State for a decade. In Rio Tinto’s Review, on page 6 of the March 2008 Review, the Eagle Project manager, Jon Cherry, maintains that the Flambeau Mine operated for five years without a single environmental incident. Later, I will present you a book that contains State documentation, Kennecott/Rio Tinto documentation and Great Lakes Indian Fish and Wildlife documentation that proves otherwise. Mr Cherry also states, in the Review, that ‘we’ve just received a Certificate of Completion, which means that we’ve fulfilled all our obligations.’ The company has not received a Certificate of Completion for the actual mine site, which is thirty-two acres. The company has planted grass on the site, but has not received a certificate for the actual mine, even though it states so in the March Review.
“My question concerns Rio Tinto and Kennecott’s accountability to communities and lack of forthrightness. This, as I’ve demonstrated, has happened with the Flambeau Mine. It is also currently happening, in Utah, with Kennecott’s copper operations. Since 1988, the company has covered up the potential for a deadly tailings disaster at its impoundment, outside of Magna, Utah. It was only recently, when the Salt Lake Tribune published an expose, last month, that Kennecott/Rio Tinto has come forth with more information. In 1992, Rio Tinto conducted a risk assessment, tallying the legal value of people’s lives that would be affected by the potential spill, and Rio Tinto decided against fully containing this impoundment and, rather, to proceed with business as usual. In 1991, the company began purchasing some homes in the affected area. In 1995, even under new management the company began selling these homes to unsuspecting buyers.….”
Paul Skinner tried to cut Gabriel off, asking him to sit down and let Tom Albanese respond to the points he had made. Gabriel said he was about to ask his question, and Roger Moody called on the Chair to allow him to do so.
Gabriel Caplett said that if Mr Cherry were not present, he would like to put his question to Mr Albanese. He said: “I’m curious why the project manager continues lying to our community and why the project manager, in the Review, has lied to the company’s own shareholders. And I’m wondering if Rio Tinto feels that it can ever get full community support from any of its projects if it continues to lie to the communities and its shareholders.”
Paul Skinner said that he thought this sufficient coverage of some important issues. Gabriel Caplett responded that he would wait to see whether the response was sufficient.
Paul Skinner said that Tom Albanese could also talk about the tailings containment at Kennecott Utah Copper, because he was, for a period of time, “instrumental in setting up a good regime for management of those tailings.”
Tom Albanese said that he had covered a number of the points on the Eagle Mine and could talk further with Gabriel after the meeting. He went on: “Regarding your points on Kennecott Utah Copper – I could also personalize that one because I was responsible, in 1998, for the task force that looked at the seismic stability of the impoundment. As a matter of fact, the report I wrote is on the Salt Lake Tribune website, as we speak. After considerable technical study, and community studies, and surveys recognizing that Utah, like many other parts of the US, were undertaking earthquake regulations and preparedness regulations during the course of the 1990s, basically, we began to plan around, as referred to as an MCE, or Maximum Credible Event – in the case of Utah, a once every 1,300-year earthquake – and we had to ensure ourselves that we could protect life and limb, in the event of a once every 1,300-year event. We went through a long series of technical efforts, including dewatering, including community engagement, including warning signs and also some engineered berms that, basically, addressed all of the worst case scenarios in a once every 1,300-year event. I believe we did a very good job and I think that, as a result as of now, we’re agreed with the community to conduct an independent survey in an MCE-type of event. And we’ll pay for that independent survey.”
Gabriel Caplett pointed out that Tom Albanese had not answered his questions on the “Review.” He was ignored by the Chair.
There was a question about what would happen to the pension scheme if a merger takes place and there was criticism of the tactics Rio Tinto has used in fending off BHPBilliton.
Carmel Budiardjo of TAPOL, the human rights campaign for Indonesia, then asked about West Papua. She said:
“Rio Tinto has been involved in the Freeport copper-and-gold mine in West Papua since May 1995 which, thanks to the enormous profits it earns from the mine, is now Indonesia's largest source of taxes and revenues. Rio Tinto won the right to 40 per cent of earnings from the company since December 1994, while the Grasberg mine reportedly contributed $159 million to Rio Tinto's earnings in 2006.
“A 2006 report from Indonesia's leading environmental agency, WALHI, strongly criticised Freeport for seriously polluting the nearby river system in breach of regulatory water quality standards, discharging acid rock drainage and failing to establish mandatory monitoring points.
“The Mimika Statistics Agency recently reported that 28,000 of the 45,000 families in the vicinity of the mine are living below the poverty line and lack access to basic health care. It said: ‘Mimika is one of the biggest mining areas in the world but its people are still categorised as poor.’
“HIV/AIDS is widespread in the area, largely because of the presence of workers at the mine. Papua now has the highest incidence of the disease in Indonesia.
“What has Rio Tinto done to 1) address the serious problem of pollution affecting local rivers and water sources, and 2) improve medical services to deal with grave health problems afflicting local communities?”
Paul Skinner started by saying that Rio Tinto is only a shareholder. There were shouts from shareholders that the Grasberg mine was in fact a Joint Venture. Paul Skinner said that the company would do all it could to make it as good a project as possible. (This appeared to some shareholders to be a retreat from much stronger statements that the company had made at previous AGMs about its respect for ecosystems and human rights in the area.) Tom Albanese asserted that in areas of high rainfall and seismic activity river deposition with re-vegetation is the best technology. He pointed out how successful it had been as there was now more agriculture in the area thanks to re-vegetation in the tailings deposition area. (He did not make the obvious observation that this followed the catastrophic collapse of agriculture as a result of the use of riverine tailings disposal in the first place.) Roger Moody interjected that the company’s revegetation programme was not very effective. Paul Skinner said that Freeport-Rio Tinto was the biggest taxpayer in Indonesia but that it could not control what happens to the tax money paid. He said that 1% of the company’s revenues from the mine – $296 million – had gone to a local community fund and that the company had done good work on malaria and HIV prevention.
West Papuan leader Benny Wenda told the meeting:
“My name is Benny Wenda.
I am a West Papua Independence Leader and Chair of the Koteka Tribal Assembly.
I am from the area where your Company has its mine.
You just care about your Company and your Business.
You only want our Cooper and our Gold.
You never care about us Papuans as Human Beings just like you.
Rio Tinto and Freeport Mac Moran just bring disaster and death in West Papua.
You destroy our Sacred Mountain.
You filled our rivers with rubbish.
You give millions of dollars to the Indonesian Military.
These are the people who are killing, raping and torturing us.You are dealing with a robber – Indonesia – who has stolen our Land.
When will you stop thinking only about money and what you can take for yourself from my Country?
When will you start thinking of us West Papuans as Human Beings?
We are Human Beings just like you!”
Paul Skinner said, “The picture you’ve presented is some way from the reality I’ve seen.” he said that the mine creates considerable value for Indonesia. Failing to comment on the West Papuan people’s rejection of Indonesian control over their land, he said, that the company is not in a position to ensure that money from the mine flows to the local community. “Is it a perfect situation?” he asked. “No it’s not,” he replied. “Does it require further attention – yes it does.”
Andy Whitmore of Partizans said:
“In your annual review you state, with regard to your share in the proposed Pebble Mine in Alaska, that the company ‘will not support the development unless it is conducted in a way that protects fish, wildlife and the environment’.
”However, Rio Tinto's partner in the project, Northern Dynasty, has already admitted in its annual report that ‘unexpected environmental damage from spills, accidents and severe acts of nature, such as earthquakes, are risks which ... could mean the total loss of shareholders' equity.’
”Local communities are very aware of the potential problems with the proposed project. Over 40 local community organisations, native tribes and commercial fishing groups have passed resolutions in opposition to the mine. You will be aware that local groups are trying to block the project through recourse to legislation on 'clean water'.
”Therefore will the company commit to meet with as many of the groups as possible to listen to, and take on board, their concerns?”
Tom Albanese responded that Rio Tinto only had a 10% stake in the project. He made a vague commitment to listen to groups. He had already been in public meetings and made on-the-record statements that he thought it should be a deeper mine with more a limited foot-print. Andy Whitmore asked if that was a commitment to meet opposition groups and Tom Albanese said that there would be a long consultation on this. He said that the company had “already met with many NGOs who have expressed concerns in Alaska and Washington DC”.
Owen Espley of Friends of the Earth England, Wales and Northern Ireland, said:
“We have been concerned for some time with the ilmenite mine in Port Dauphin in Madagascar. In the annual report, on page one, you make the promise to “work as closely as possible with host countries and communities”. On page 34 you claim: “Extensive engagement and consultation with the Government of Madagascar and local people and leaders has taken place over many years”. However, just last week, a community leader told an independent researcher - I quote a translation of their words: ‘Our main concern is the lack of communication with the mining company because we don’t know the reality of the situation.’ Clearly your efforts at communication have so far failed to match your promise. Communication around Port Dauphin has not allowed communities to form their own view independently and without fear. We believe that there needs to be an independent stakeholder forum set up, including communities near the mine, which would improve transparency and provide an opportunity for individuals to safely voice their concerns. Will you honour your promise around communication with local communities and allow such a forum to be set up and take measures to ensure that Rio Tinto employees do not interfere with its independent functioning?”
Paul Skinner started by asking if Owen had been to the project, which Owen had not, and then said he had been two or three times. He said that the project provides a “completely transformational opportunity for a very poor part of the world”. He said that ”however well you do, you will never reach a point of full communication” and that it would be unwise to commit to anything without talking to the local management. He finished by rather patronisingly saying, "Try to get there."
There were other questions, but the Chair closed off the general questions without too much objection because of the time. The meeting moved on to questions on the election of directors.
Albert Beale, of Partizans, started by pointing out the ridiculous lack of diversity in the board.
Geoff Nettleton, of Philippine Indigenous Peoples Links, asked of one of the new Canadian directors from Alcan, Yves Fortier, who had government experience, what his position was on the UN Declaration on the Rights of Indigenous Peoples, given the Canadian government's blocking of it. Paul Skinner responded how good Rio Tinto's relationship with Canadian aboriginal people was and that the rights of aboriginal people in Canada are well respected. There was an argument about whether Geoff could ask the director directly, or talk about it later (after the vote). In the end we moved on to the next director, Paul Tellier, who had similar experience, which set the whole discussion off again. Eventually Yves Fortier was allowed to respond, and said it was a controversial issue in Canada and was not an anti-aboriginal stance, as it had to do with the constitution. Canada was probably more progressive in its treatment of aboriginal people than this implied, he said, but he personally was not involved in it. Paul Tellier agreed, and said he was head of department of Aboriginal Affairs and his record speaks for itself.
On the election of Tom Albanese, Cynthia Prior, from environment group Yellow Dog Watershed Preserve in Michigan, criticized his poor response on issues of concern in Michigan and urged him to think about them. She said he was woefully misinformed and indicated that he needed to visit the area again and meet with community without Jon Cherry. Gabriel Caplett urged people to vote against him because of his role in the potentially deadly tailings disaster.
On the election of Vivienne Cox, who is an executive vice president of BP, Richard Samuelson of Free West Papua Campaign raised issues to do with BP in West Papua. Vivienne Cox said she was not directly involved but understood the concerns.
On the appointment of auditors, there was a debate about increased fees, involving the audit of Alcoa. Albert Beale of Partizans asked how long PricewaterhouseCoopers LLP had been sole auditors. Paul Skinner noted that there is a major concentration of audit firms in size and not much choice in finding non-conflicted auditors. Albert pointed out how in the introduction there had been a basic error in showing a straight line for compound interest growth promised. The response was that any forward looking statement must be validated. Albert asked whether the people doing the validation had 'O' level maths (a basic British secondary school qualification).
After the meeting, members of the Eagle coalition from Michigan were able to meet privately with Tom Albanese, to whom Cynthia Pryor presented group resolutions and the 10,000, 550 Road, Big Bay and on-line petitions with signatures. Gabriel Caplett presented the Roscoe Churchill and Laura Furtman book on Flambeau, The Buzzards Have Landed. They also met with Brett Clayton, Chief Executive of Copper and Diamonds and Jon Cherry’s boss. They clearly indicated to him the lack of transparency; the lack of community involvement; the lack of technical expertise/submission in the applications; and the lack of best management practices on the plains involving road crossings, mineral well drilling and waste management; and the resolve of the community opposed to the mine. He indicated that he would commit to coming to the region to meet with the opposition and Cynthia said no – to meet with the affected communities. Cynthia also said to him that he needed to discuss Paul Skinner’s inappropriate behaviour to Susan LaFernier and their offence at his actions. Fran Whitman, from Michigan, was unable to be recognized during public comment at the AGM, but was able to pass on to him the strength and resolve of the community who opposed the Eagle mine and to alert him that the community would not just sit down and accept it. Brett Clayton told Fran Whitman and Susan LaFernier that a survey had been conducted and the majority of the people want the mine. Susan asked him if the public received the results and she requested a copy. He said he would look into it.