Rio Tinto has sacked three senior executives, including the global CEO, as penance for destroying a 46,000-year-old archaeological and sacred site in Western Australia’s Pilbara, but shareholder and Indigenous groups insist the move must signal the start of a major overhaul of the way all mining companies operate in the region.
One of Australia’s biggest superannuation funds says the departure of CEO Jean-Sébastien Jacques, head of iron ore Chris Salisbury, and corporate affairs chief Simone Niven won’t be enough to restore investor confidence.
Hesta, which manages $52bn on behalf of more than 870,000 Australians, wants an independent review of all current agreements between the company and traditional owners, and says it is talking to major global investors to join them in lobbying the Rio Tinto board.
“The nature of these agreements and how they are negotiated represents a systemic risk for investors that will not be mitigated by executive changes,” CEO Debby Blakey said. “The board has yet to adequately demonstrate to investors that they have appropriate governance and oversight arrangements in place to manage this risk.”
Hesta’s concerns flow from revelations that many of the agreements between traditional owners and mining companies contain “gag clauses” preventing them from voicing concerns about heritage destruction. The agreements used by the three major mining companies – Rio Tinto, BHP and Fortescue Metals Group – are largely the same. Additionally, the WA Aboriginal heritage act does not give traditional owners the right to veto or even object to the destruction of their important sites.
Australia’s biggest superannuation fund, the $175bn AustralianSuper, also sees the executive departures as merely a starting point.
“Rio can now work with traditional owners to guarantee that its processes are appropriate for the protection of culturally important sites and that it has the right internal accountabilities,” chief executive Ian Silk said. “We will continue to take an active interest in how these changes are implemented.”
One of Rio’s biggest global investors, Aberdeen Standard International, said the company needed to work on rebuilding trust with its stakeholders.
“Our expectation is that oversight and accountability for cultural heritage management is elevated to the highest levels within Rio Tinto,” Aberdeen’s Camille Simeon said.
“We expect a level of transparency that will afford investors the confidence that cultural heritage is being managed appropriately so that stakeholders can be confident that similar oversights do not recur.”
The University of Melbourne academic, Prof Marcia Langton, who has advised several companies on Indigenous engagement, says transparency is essential.
“We need to see those agreements. We need to make sure that there’s been no unconscionable conduct,” she said. “It is very much a part of the complex of problems that led to the destruction of the caves that the agreements are completely confidential and also include gag clauses. In no way can this be called a satisfactory partnership or legal arrangement.”
Langton said Rio must now build a workforce with greater local knowledge, better able to engage with traditional owners to “establish the kinds of cultural heritage protection mechanisms that were recommended to them”.
“We need to see them commit to employing experts in their company, not spin doctors and external relations people,” she said. Langton told ABC TV on Friday: “We’re [not] going to be satisfied with three scalps. How about the main problem? How about their utter incompetence in dealing with our cultural heritage?”
‘We will not allow this devastation to happen again’
After becoming CEO in 2016, Jacques cut the size of Rio’s Melbourne office, which is the company’s headquarters in Australia. He bought a house in Sydney.
Rio itself was increasingly run from its global headquarters in London – a move some market observers say left executives increasingly out of touch with what was happening on the ground in the Pilbara, the source of the rich iron ore that drives the company’s profits.
The company recognised its loss of engagement with Australia on Friday. At the same time as announcing the executive exits, it gave one of its non-executive directors special responsibility for oversight of its affairs in the country.
The Puutu Kunti Kurrama and Pinikura (PKKP) people are the native title holders for Juukan Gorge, where the ancient rock shelters were destroyed in May. They met with Jacques this week and are negotiating a permanent moratorium around mining at the site – and say they’ll continue to push for sector-wide changes.
“We cannot and will not allow this type of devastation to occur ever again,” the PKKP Aboriginal council said.
The WA treasurer and Aboriginal affairs minister, Ben Wyatt, also said Rio had lost connection with the Pilbara, where it generates 75% of its revenue.
“That left them exposed when this crisis occurred. This isn’t a positive thing for Western Australia. I’m keen now for the board and the company to move on, learn the lessons that it needs to learn and become again the leader in those partnerships between Aboriginal and non-Aboriginal people,” he said.
But Wyatt won’t halt current mining company applications to destroy heritage under the WA act saying a moratorium was “a clumsy approach”.
“A more sophisticated approach is one that we have been adopting, and that is requiring genuine engagement between the proponents,” Wyatt said.
“The loss of those executives I suspect was inevitable. When the shareholders get involved, you often get a reaction from the board. But I suspect those shareholders haven’t finished in respect of what they want to see from the board. So there may be more changes.”
The National Native Title Council said changes must be industry-wide.
“If this is the behaviour of a company thought to have sector-leading standards, what is the risk another Juukan Gorge-type incident will happen again, without sector-wide reforms? Traditional owners are not anti-economic development. They just want to be able to protect their most significant cultural heritage sites,” council CEO Jamie Lowe said.
Rio culture ‘significant factor’ in sites’ destruction
The political fallout is ongoing. The parliamentary inquiry set up to investigate the debacle welcomed news of Friday’s resignations.
“The evidence received by the committee has made clear that the internal culture at Rio Tinto was a significant factor in the destruction of these sites,” inquiry chair, Queensland LNP MP Warren Entsch, said. “New leadership, new structures and new operating principles within the company are essential to preventing such catastrophes in the future.”
Entsch said he hoped other mining companies would make similar commitments. Earlier this week, the parliamentary inquiry said Rio had misled its members.
“It is hard to argue that we have not been misled by Rio Tinto’s evidence to the inquiry when you look at what was said together with the documents the company has provided on notice,” Entsch told Guardian Australia.
“It is a profound statement to say that senior executives did not know when the company has been aware since the early 00s of the significance of the caves.”
Entsch said Rio’s appearance before the inquiry raised more questions than it answered. A subsequent release of hundreds of pages of documents in response to the inquiry’s questions revealed that Rio’s senior management hired lawyers to prepare for a potential injunction against the destruction of ancient rock shelters in Juukan Gorge, three days before they were destroyed.
This contradicted Jacques’ earlier public statements that senior executives did not know just how important Juukan Gorge was until after it was destroyed.
Rio Tinto has been contacted for comment regarding Entsch’s allegations.
Western Australian Greens senator Rachel Siewert said Rio’s decision should also put pressure on the federal and state governments to strengthen heritage protection laws.
WA has released new draft laws which carry a $10m fine for unauthorised damage to a site, but rely on the same agreement-making processes already used by mining company’s negotiating with native title holders. They are supported by the mining industry. Changes to the Environmental Protection, Biodiversity and Conservation (EPBC) Act will allow state governments to make the decision for nationally-listed cultural heritage places such as the Fitzroy River.
Investors want more than ‘business as usual’
“Mining companies are on notice they do not have the social license to destroy First Nations peoples’ heritage and culture,” Siewert said.
That warning was echoed this week by ratings agency S&P which said investors would be looking for more than just technical compliance with the law.
“Any company looking to develop a new project or expand an existing one will need to ensure all stakeholders are satisfied – above and beyond what government legislation stipulates you can or cannot do,” S&P said in a report to clients.
Mining companies are taking notice. On Thursday, BHP announced it was setting up a heritage advisory council with Banjima native title holders to inform the design of its $4.5bn South Flank iron ore mining operation.
Guardian Australia revealed in June that the Western Australian government had granted BHP permission to destroy 40 Aboriginal heritage sites belonging to the Banjima people, in order to progress its South Flank development. A further 46 sites identified as sacred by the Banjima did not meet the threshold for the WA Aboriginal cultural materials committee to register them as a site, meaning they could be destroyed or damaged without permission.
Shareholders are also seeking accountability from Fortescue. The Australasian Centre for Corporate Responsibility (ACCR) wants FMG to halt mining activities that would disturb, destroy or desecrate cultural heritage sites until relevant laws are strengthened.
“In engagement with us, FMG has been clear that it is happy for business to continue as usual. Shareholders, in the wake of Juukan Gorge, know that business as usual is absolutely unacceptable,” said the ACCR’s Brynn O’Brien.
“FMG has a dubious history of engagement with Pilbara native title holders, specifically the Yindjibarndi people. Comments as recently as last year, coming from the chairman saying ‘That is not a community I’m going to empower with tens of millions of your cash’, demonstrate the company and board have a long way to go in understanding and valuing the intricacies of cultural heritage and the agency of traditional owners.”
The ACCR has also sought similar assurances from BHP. Mining companies usually advise a vote against such shareholder resolutions, but BHP has left the door open to supporting it.
For its part, FMG said it does not have heritage “gag order” clauses in its agreements with traditional owners and does not support a moratorium on mining activity.
“The moratorium, proposed by people unfamiliar with the West Australian mining industry, is not supported by Fortescue as it would disempower local Aboriginal people in the Pilbara and limit the positive contribution the mining industry is making to the state and national economies, at a time when it is needed most,” the chief executive, Elizabeth Gaines, said.
As the dust settles on Friday’s announcement, questions remain about the safety of 7,000 artefacts salvaged from the Juukan Gorge site. Rio admitted that a huge number are still sitting in a non-airconditioned shipping container on a mining site in the Pilbara.
A latex peel taken from the wall of the oldest rock shelter has been on display in the Brockman 4 administration building since 2014.
Anthropologist Prof Glynn Cochrane, who spent 20 years implementing Rio Tinto’s social performance program, said: “It’s like blowing up the tomb of the unknown soldier and forgetting about the occupant.”
“The traditional owners can access their material at any time by request,” the company said. “The reason that a request must be made is because the facility is located on an active mine site. We can repatriate anything and everything salvaged from PKKP country at any time should a request be made by the PKKP.”
Langton said the PKKP and other traditional owners in the Pilbara must be given the power to decide how they want their cultural materials stored and reparations should also be made in the form they demand.
“It’s very important that the most significant material taken from the destroyed sites is always available to the traditional owners, in a centre that’s dedicated to them,” Langton said. “But it is such a tragedy that we have to talk about the situation in these terms. What we need to do is stop the destruction of sites.”