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Rio Tinto: Closer Inspection of a Reckless Mining Giant

Author: 
Corporate Watch
Originally published: 
Corporate Watch, 2010

Rio Tinto Group is an Anglo-Australian mining company involved in exploration, extraction and refinement of a variety of metals and minerals including energy products such as coal and uranium. It is one the world's largest mining companies with operations on six continents. US Fortune magazine has Rio Tinto listed as the 134th biggest company in the world.[1] It is the world's largest producer of aluminium and second biggest iron ore. In 2009, Rio Tinto's net earnings amounted to US $4.9 billion.[2] Here we examine the company's history and record on issues of labour rights, environmental and human rights impact.

Rio Tinto is in fact two conjoined companies Rio Tinto plc. and Rio Tinto Limited, which operate as a dual listed company (DLC), and were founded in 1873 and 1905 respectively. The two companies hold separate shareholder lists, but investors own the assets of the both branches together. Rio Tinto plc and Rio Tinto Limited are listed on London's FTSE 100 and Sydney's S&P/ASX 200 stock exchanges respectively.

History
The original Rio Tinto company was set up by a group of investors including Matheson & Co. and Deutsche Bank, who together bought the Rio Tinto mine, in Huelva, Spain, from the the Spanish government for $3.7 million in 1873.[1],[2] By the end of the 1880's Rio Tinto was the world's leading copper producer.[3]

Thus in its early years RTC returned huge profits to its investors - introducing new technologies and collaborating with competitors to fix prices.[4] The company repeatedly refused to raise wages, despite increased revenues, instead offering workers services such as company accommodation, shops and schools.[5] However by the 1920's labour struggles and political difficulties emerging from nationalist attempts to reclaim profits from the mines created difficulties for Rio Tinto. During the Spanish civil war Rio Tinto infamously applauded Franco's forces for assassinating strikers and a group of radical miners who occupied their mines. Turmoil caused by this war and then the second world war led to production difficulties and Rio Tinto saw a decline in profits. Around this time copper reserves also began drying up.[6], [7]

Growing difficulties at the Spanish operation led Rio Tinto to expand its business elsewhere. Its first major acquisition was of a significant portion of the Rhodesian copper belt in 1930.[8] Through merging RTC's assets with those of Anglo-American, the Rhokana corporation was formed which swiftly became a leading copper producer worldwide.[9] Then in 1955 RTC began its first foray into uranium mining – acquiring a majority share in the Algom mines in Lake Elliot, Canada. By the end of the 1950's Rio Tinto Algom was producing around 15% of the world's uranium oxide.[10]

In 1962 the Rio Tinto company merged with the Consolidated Zinc corporation to form RTZ (initially Rio Tinto-Zinc corporation) and its Australian subsidiary CRA (initially Conzinc Riotinto of Australia limited). This allowed Rio Tinto to expand its operations significantly and a boom period followed the merger. Between 1962 and 1968 the two groups discovered and began operating numerous mines worldwide including the Rossing Uranium mine and Bougainville Copper as well as acquiring several smaller companies.[11], [12] Due to their success, from 1968 to 1987 RTZ and CRA expanded their operations beyond mining, buying up shares in many different industries such chemicals, oil and gas. However in 1988 the company decided return its focus to core mining activities and proceeded to sell off all non-core assets.[13] In 1989 Rio Tinto purchased all of BP's mineral operations, spread over 15 countries in a US$4.3 billion deal that made RTZ one of the largest mining groups in the world.[14] In the same year RTZ's pacific subsidiary Bougainville Copper was forced to cease operations due to militant attacks on its mine by indigenous islanders.[15]

In 1995 RTZ merged with its Australian subsidiary CRA to form Rio Tinto - a dual listed company and then in 1997 RTZ and CRA were renamed Rio Tinto Plc and Rio Tinto Limited, collectively known as the Rio Tinto Group.[16] In 2007 Rio Tinto acquired the Canadian aluminium producer Alcan Inc. in a US$38 billion deal that made Rio Tinto the world's leading aluminium producer.[17] Due to mounting debts in recent years Rio Tinto has been forced to seek capital investments and in the same year sold a 12% shareholding to a joint venture of China's national aluminium company Chinalco and American company Alcoa.[18] Relations with Chinalco have since tightened with the signing in March 2010 of a US$1.3 billion deal for Chinalco to acquire a 47% stake in the Simandou Iron ore mine in Guinea.[19] Despite the increasing interest of Chinese business in Rio Tinto, on 5th July 2009 four Rio Tinto employees were detained in Shanghai on alleged corruption charges and all found guilty in March 2010, with sentences varying from 7 to 14 years.[20]

Labour violations
From its earliest days Rio Tinto has been involved in exploitative labour practices in order to maintain high profits. The Spanish mines at Huelva where Rio Tinto's operations began were the site of numerous industrial actions and during the Spanish civil war Rio Tinto infamously applauded Franco's forces for assassinating strikers and a group of radical miners who occupied their mines.[22], [23] Due to their policy of operating only with high quality, large reserve deposits [24] Rio Tinto's projects are uniformly large in scale with a lengthy lifespan. This means a large workforce with long term employment prospects, yet in order to keep profits high Rio Tinto has employed an array of tactics designed to maximise exploitation and prevent union activity. These attempts essentially amount to a company wide 'deunionisation' policy and in response workers of Rio Tinto came together in 1997 to form a global union to protect themselves against the company (the ICEM Rio Tinto Global Union Network). As former Australian prime minister Bob Hawke stated, “What runs through as a common thread is [Rio Tinto's] philosophy that they want to see the trade unions out of their operations”.[25]

The Borax mine in southern California, run by a wholly owned subsidiary of Rio Tinto is the site of an ongoing attack on unionised workers by management, who are attempting to impose new contracts that would increase precarity and overtime whilst scrapping the seniority system, allowing managers to cut jobs, hours and pay at whim with little benefits for the workers.[26] After voting unanimously to reject the new contract, workers who turned up for shifts the next day on the 31st January 2010 found themselves locked out. Rio Tinto has maintained production at Boron through the use of professional scab labour provided by security firm, JR Gettier.[27] Borax management's actions amount to a pre-emptive attempt to destroy the workers' ability to take any sort of collective action to defend themselves.

Rio Tinto has also seen significant labour conflict at its Rossing Uranium mine in Namibia, where concerns have long been raised about apartheid-style discrimination against black workers.[28] Conditions at the mine and the Arandis camp where the workers live were described in 1979 as “akin to slavery”.[29] In the same year, miners went on strike after the introduction of pay awards that saw white employees receive 12 times that of black workers, an action that was broken up by police violence involving dogs and tear gas.[30] Rossing management refused to recognise an independent workers union until 1987.[31] In 1989, a Newspaper investigation found over 90% of black workers' earnings in the company's lowest wage bracket, which did not constitute a living wage.[32], [33] Most recently, workers at Rossing walked out in a series of wildcat strikes in 2008.[34]

Environment and safety
Rio Tinto claim on their website that “when an operation reaches the end of its life, we close it safely and rehabilitate the land, often restoring such natural biodiversity to the area that you would never know that a mine, smelter or refinery had once been there.”[35] The countless documented cases of environmental devastation caused by Rio Tinto's operations present an entirely different picture.

Rio Tinto's Grasberg mine, run jointly with Freeport McMoRan is located in the heart of Mount Jaya in West Papua. It is home to three of the world's eight remaining equatorial glaciers as well as a sacred site for the indigenous people inhabiting the region and dependent on its ecosystem to survive. Apart from gradually destroying huge sections of the mountain top, the mine uses more than a billion gallons of water a month and dumps 230,000 tonnes of toxic waste into the Ajkwa rivers each day, killing all plant life along its banks and contaminating drinking water supplies.[36] Waste dumping into lake Wanagon, also considered sacred by the local Anungme people, will total 3.5 billion tonnes throughout the mines' lifetime.[37], [38] In 2000, the mines waste dump dam collapsed killing four workers and sending tidal waves of waste down the mountainside destroying the local village.[39] In a statement of astonishing insensitivity Freeport McMoRan's CEO Jim Bob Moffet likened the environmental impact of the Grasberg operations to him “pissing in the Arafura sea”.[40]

Similar effects have been documented at the Panguna mine in Bougainville where around a billion tonnes of waste was dumped into three local rivers, killing all aquatic life before it was shut down by a revolutionary indigenous uprising in 1989.[41] Locals claim contaminated water supplies led to birth defects and that mining activities caused the extinction of the island's flying fox population.[42], [43] Representatives of the Bougainville islanders filed an ongoing lawsuit in the United States in 2000 for damages caused by Rio Tinto.[44]

In Australia, the ERA, a wholly owned subsidiary of Rio Tinto, runs a uranium mine where over 100 serious incidents have been recorded, including 'unacceptable contamination'. The Ranger mine was found to have been leaking around 100,000 litres of water a day with a uranium level 5,500 times higher than normal.[45] An Australian senate committee was advised that the site 'would be impossible to rehabilitate', yet despite this ERA, which made a net profit of AU$273 million in 2009[46], refutes these claims and has stated that Ranger is one of the most environmentally regulated mines in the world.[47] In March 2007, when a contaminated water pipe was mistakenly attached to a drinking fountain, management failed to warn workers despite being alerted soon after the incident happened. Staff at the mine unwittingly showered in the water, and at least three people drank it, yet when the workers sought medical treatment they were effectively sacked.[48]

Human rights
In a bewilderingly blatant act of racist collusion between police forces and Rio Tinto in November 1963, a night time operation was carried out in which the entire aboriginal community of Mapoon were arrested whilst the entire town burned to the ground in order that work could begin on the Weipa bauxite mine.[49] It took 35 years for a settlement to be reached between Rio Tinto and the displaced residents.

The environmental devastation and social displacement caused by Rio Tinto's Panguna mine on the pacific island of Bougainville (mentioned above) was so great that it sparked an armed secessionist uprising by the local population, who formed the Bougainville revolutionary army in 1988. After a series of raids, attacks on Rio Tinto workers and acts of sabotage the mine was forced to close. With the Panguna mine contributing 45% of Papua New Guinea's (PNG) export revenues the government was quick to act against the rebels, and in May 1989 sent in troops with 'shoot to kill orders'.[50] Reports of human rights abuses over this period are rife. Between 1989-1990 alone, it is estimated that 6,000 homes were destroyed and 24,000 people forcibly relocated to concentration camp-style 'care centres'.[51] Meanwhile, the Australian government donated helicopters, military advisers and Au $32 million of military aid to PNG.[52] Under Australia's guidance the PNG defence force lay siege to Bougainville, preventing any supplies coming onto the island, a blockade which was to last eight years. During the conflict and around 15,000 Bougainvillians – roughly 10% of the islands population - lost their lives. It is claimed that Rio Tinto worked closely with the PNG and Australian authorities during this time, encouraging the conflict and colluding in the numerous abuses against islanders.[53] Bougainville citizens have been pursuing a class action law suit in the US against Rio Tinto since 2000.[54]

The Freeport McMoRan mine at Grasberg, west Papua has also stimulated vast discontent amongst the indigenous people of the area. The site of the mine, Mount Jaya, is considered by the Amungme people to be the head of their sacred mother, who has not only been decapitated, but is now having her heart dug into.[55] Apart from contamination of water and food sources, many locals were forced to relocate to the lowlands and there has been a sharp rise in malaria fatalities.[56] Keen to avoid a similar defeat at Grasberg to that experienced in Bougainville, the mines management has pumped vast sums of money into securing the region around its operations. They paid $20 million over a 7 year period to Indonesian police and military, including payments to individual commanders and paramilitary groups known for human rights abuses. The area around Grasberg is now the most militarised region in Indonesia.[57] Locals whose lives have been destroyed are faced with the threat of serious violence if they protest against the mine, there are countless cases of murder, rape and torture against residents of the region.[58] The conflict in West Papua has claimed around 10,000 lives[59], but remains a huge earner for Rio Tinto, which made US $232 million from its stake in the Grasberg project in 2005 alone.[60] Around 4,000 Amungme people have been displaced since the mines creation in 1976, yet none of them have received any compensation from the company.[61]

The actions of Rio Tinto Group worldwide exhibit systematic environmental and social abuses, which in their striking similarity and number cannot be reduced to individual incidents. Throughout all of the company's operations there is a clear strategy of maximising profitability by any means possible, including violation of local and international law; collusion and funding of armed repression; corruption, lobbying and political manipulation; price-fixing; aggressive union busting; wholesale environmental destruction; and negligent health and safety policies.

Perhaps most shocking is the fact that Rio Tinto is considered by many ethical business rankings a leader in the mining sector. The FTSE4good ethical share index included Rio Tinto in its listing in 2007,[62] whilst Covalence[63] rates Rio Tinto second 'best' in the 'basic resources' category and 44th across all sectors.[64] If a company with as deplorable a track record as Rio Tinto is considered to be one of the best behaved mining companies we must call into question both the credibility of such 'ethical' ranking systems and also the bad practice of the extractive industries as a whole.

References:
[1] http://money.cnn.com/magazines/fortune/global500/2009/full_list/101_200....
[2] www.riotinto.com/annualreport2009/performance/index.html
[3] www.fundinguniverse.com/company-histories/Rio-Tinto-PLC-Company-History....
[4] www.fundinguniverse.com/company-histories/Rio-Tinto-PLC-Company-History....
[5] www.fundinguniverse.com/company-histories/Rio-Tinto-PLC-Company-History....
[6] www.fundinguniverse.com/company-histories/Rio-Tinto-PLC-Company-History....
[7] www.fundinguniverse.com/company-histories/Rio-Tinto-PLC-Company-History....
[8] www.crocodyl.org/wiki/rio_tinto_group
[9] www.fundinguniverse.com/company-histories/Rio-Tinto-PLC-Company-History....
[10] www.fundinguniverse.com/company-histories/Rio-Tinto-PLC-Company-History....
[11] www.fundinguniverse.com/company-histories/Rio-Tinto-PLC-Company-History....
[12] www.riotinto.com/whoweare/timeline.asp
[13] www.telegraph.co.uk/finance/2811968/A-history-of-Rio-Tinto.html
[14] www.riotinto.com/whoweare/timeline.asp
[15] www.crocodyl.org/wiki/rio_tinto_group
[16] www.eco-action.org/ssp/bougainville.html
[17] www.riotinto.com/whoweare/timeline.asp
[18] www.riotinto.com/whoweare/timeline.asp
[19] www.minesandcommunities.org//article.php?
[20] http://news.bbc.co.uk/1/hi/business/8575737.stm
[21] www.businessweek.com/news/2010-03-29/rio-s-stern-hu-found-guilty-in-shan...
[22] www.thenation.com/doc/20100329/davis/2
[23] www.greenleft.org.au/1997/300/15334
[24] www.riotinto.com/ourapproach/17194_life_of_an_operation.asp
[25] Rio Tinto Unravelled, www.hagens-berman.com/files/Rio%20Tinto-History%20of%20Business%20Practi...
[26] http://boraxminers.com/tenexamples.PDF
[27] www.icem.org/en/78-ICEM-InBrief/3607-Rio-Tinto-Engaged-in-Savage-Union-B...
[28] www.sea-us.org.au/gulliver/rossing.html
[29] www.sea-us.org.au/gulliver/rossing.html
[30] www.sea-us.org.au/gulliver/rossing.html
[31] www.sea-us.org.au/gulliver/rossing.html
[32] www.sea-us.org.au/gulliver/rossing.html
[33] Rio Tinto Unravelled, www.hagens-berman.com/files/Rio%20Tinto-History%20of%20Business%20Practi...
[34] www.crocodyl.org/wiki/rio_tinto_group
[35] www.riotinto.com/ourapproach/17194_life_of_an_operation.asp
[36] www.ratical.com/ratville/IPEIE/IJ_PNG.html
[37] Fanning the flames: the role of British mining companies in conflict and the violation of human rights. War on want, Nov. 2007
[38] www.ratical.com/ratville/IPEIE/IJ_PNG.html
[39] www.ratical.com/ratville/IPEIE/IJ_PNG.html
[40] www.ratical.com/ratville/IPEIE/IJ_PNG.html
[41] www.ecnt.org/pdf/mining_2001_04_27_rio.pdf
[42] www.landswaps.com/documents/2DABE9BD15E37DF0B441018A223BEBD033676499.html [43] www.aph.gov.au/house/committee/jfadt/bougainville/bv_chap2.htm
[44] www.hbsslaw.com/rio_tinto_lawsuit
[45] www.minesandcommunities.org//article.php?a=9914
[46] www.theaustralian.com.au/business/mining-energy/eras-profit-up-23pc-flag...
[47] www.abc.net.au/news/stories/2010/02/09/2814665.htm
[48] http://sa.org.au/component/content/article/717
[49] Rio Tinto: Tainted Titan, ICEM, 1998 - www.cfmeu.com.au/storage/documents/rio/RT.pdf
[50] www.eco-action.org/ssp/bougainville.html
[51] www.eco-action.org/ssp/bougainville.html
[52] www.eco-action.org/ssp/bougainville.html
[53] Fanning the flames: the role of British mining companies in conflict and the violation of human rights. War on want, Nov. 2007
[54] Rio Tino: Tainted Titan, ICEM, 1998 - www.cfmeu.com.au/storage/documents/rio/RT.pdf
[55] Rio Tino: Tainted Titan, ICEM, 1998 - www.cfmeu.com.au/storage/documents/rio/RT.pdf
[56] Rio Tino: Tainted Titan, ICEM, 1998 - www.cfmeu.com.au/storage/documents/rio/RT.pdf
[57] Fanning the flames: the role of British mining companies in conflict and the violation of human rights. War on want, Nov. 2007
[58] Rio Tino: Tainted Titan, ICEM, 1998 - www.cfmeu.com.au/storage/documents/rio/RT.pdf
[59] Fanning the flames: the role of British mining companies in conflict and the violation of human rights. War on want, Nov. 2007
[60] Fanning the flames: the role of British mining companies in conflict and the violation of human rights. War on want, Nov. 2007
[61] www.ratical.com/ratville/IPEIE/IJ_PNG.html
[62] www.riotinto.com/media/5157_6724.asp
[63] www.covalence.ch/index.php/ethical-rankings/basic-resources/
[64] www.covalence.ch/index.php/ethical-rankings/across-sectors/

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Originally published by Corporate Watch, 2010
http://www.corporatewatch.org/?lid=3590