MAC: Mines and Communities

Uranium mine leaks dominate Australian Rio Tinto AGM

Published by MAC on 2014-05-08
Source: Statement, Australian Mining, Australia Radio, AAP (2014-05-08)

Rio Tinto held its second AGM in Melbourne, following the London meeting (see: Rio Tinto face a broad front of protestors)

Unsurprisingly, an issue that was only raised at the end of a busy London meeting - the problems at ERA's Ranger mine in Kakadu - received much greater interest in Australia. However, the company position, of refusing to step in to assist ERA if there were problems with rehabilitation, remained the same.

Not long after the AGM the mine suffered a further set back when a ventilation shaft collapsed at the Ranger mine.

The recent legal action against Vale and BSGR was raised at the AGM, with the company noting it still have good relations with the Government of Guinea, well for now at least (see: Rio Tinto sues Vale over iron ore rights in Guinea)

Rio Tinto subsidiary Bougainville Copper's AGM also took place, with Rio Tinto using its shareholding to block a motion for the appointment of an independent jurist to investigate Bougainville Copper's involvement in the civil war on Bougainville Island during the 1990's. (Indeed without that support the shareholder resolution garnered less than 1% of the votes!)

Kakadu uranium clean-up is Rio Tinto's nuclear test

Australian Conservation Foundation media release

8 May 2014

Environmentalists attending Rio Tinto's annual general meeting in Melbourne today have warned the mining giant it will be closely watched and long judged on how it exits and rehabilitates the Ranger uranium mine in Kakadu.

The Ranger operation, owned by Rio Tinto subsidiary Energy Resources of Australia, was the focus of national attention following the collapse of a leach tank and the spill of more than one million litres of highly acidic uranium slurry last December.

Mineral processing at the embattled site remains suspended in the wake of the spill and amid recent revelations of poor practises at Ranger.

All mining and processing at Ranger is required to cease in January 2021 with ERA legally obliged to have rehabilitated the site so it can be incorporated into the surrounding Kakadu National Park by January 2026.

Despite this compressed timeline and unresolved water and waste management issues ERA continues to push ahead with plans for a new and contested underground mining operation, the so-called Ranger 3 Deeps project.

In ERA's most recent annual report the company flagged that it may not have the resources to complete the required clean-up stating that if the Ranger 3 Deeps mine is not developed, in the absence of any other successful development, ERA may require an additional source of funding to fully fund the rehabilitation of the Ranger Project Area.

Environmentalists, concerned by Rio Tinto CEO Sam Walsh's comments last month trying to distance Rio from ERA, will have a presence outside and inside today's AGM.

"ERA is running out of time and Rio Tinto is running out of excuses," said ACF nuclear free campaigner Dave Sweeney.

"Rio Tinto needs to commit to the full rehabilitation of the Ranger site - Ranger is Rio's radioactive responsibility and a fundamental test of the company's credibility."

"As ERA's parent company Rio Tinto needs to take responsibility and provide certainty about the future environmental integrity of the unique Kakadu World Heritage area."

Comment: Dave Sweeney (ACF) inside the Rio Tinto meeting, 0408 317 812
For images: Michaela Stubbs (Friends of the Earth) outside the meeting, 0415 656 403


Rio Tinto dismisses Ranger rehab funding concerns as "hypothetical"

Ben Hagemann

Australian Mining 

8 May 2014

Rio Tinto has stated that concerns about the funding for rehabilitation of the Northern Territory Ranger mine site are hypothetical, and remain the concerns of the ERA board of directors.

CEO Sam Walsh once again shrugged off suggestions that Rio Tinto, as 68 per cent shareholder in ERA, is responsible as the parent company for any of ERAs financial shortcomings in regard to rehabilitation and clean-up at the Ranger uranium mine.

The Australian company chief was asked several times, during the Australian AGM in Melbourne this morning, about the issue of Rio Tinto taking responsibility for any shortfalls of funding for clean-up at Ranger, which ERA has admitted it will not be able to fund without income from the Ranger 3 Deeps expansion.

"ERA is a separate public company, and the board of directors will be responsible for the affairs of that company," Walsh said.

"Ranger 3 Deeps is an important element in relation to ERA, it does provide the ongoing operations plan, and it also provides the operations funding as the business goes forward, including some funding for rehabilitation work.

"If Ranger 3 Deeps didn't proceed, there is an issue for the ERA board... and all shareholders in relation to rehabilitation and other work that needs to take place.

"It appears from impression people have is that there's nothing physical going on in relation to rehabilitation - there is."

Walsh said that there has been $73 million spent by ERA on rehabilitation work, and a further $220 million slated to fund the brine concentrator, which will process water used in uranium mining operations.

"There is a plan for funding for the rehabilitation as we go forward," Walsh said.

"We are committed to the highest standards of rehabilitation and clean-up.

"There is a plan to fund it, there is work on the ground physically happening, and your question is hypothetical.

"Rio Tinto will play its part in doing whatever that board [ERA] deems is appropriate."

David Sweeney of the Australian Conservation Federation, in his question to Sam Walsh and the Rio Tinto board of executives, suggested that because ERA reports to RioTinto's energy division, it will be "closely watched and long judged on its actions regarding ERA".

"I thought his response was very partial and legalistic," Sweeney said.

"Clearly Energy Resources Australia is a separate legal entity to Rio Tinto, but Rio provides the mining instructions, they provide the management, the CEO of ERA is appointed by Rio and is always a Rio person, Rio's energy division manages ERA.

"It is absolutely a Rio Tinto subsidiary, it is a Rio Tinto child, and it concerns us greatly now that, when it's coming to the pointy end of what will be a costly and complex rehabilitation exercise, ERA is saying they don't have the funding capacity and Rio Tinto is saying they don't have the responsibility.

"Just this week, Rio bailed ERA out of a problem caused by the suspension of mineral processing, by saying that they will pool Australian and Namibian uranium through the Rio Tinto marketing authority."

Sweeney agreed that Walsh's assessment of ERA as a seperate Australian Company was precise and correct in a legal sense, but did not cover their corporate responsibility.

"Legally, it might be precise and correct, but in relation to on the ground reality, ethical responsibility and good corporate governance, it doesn't fly," he said.

"Rio Tinto runs ERA, and Rio Tinto has profited from ERA, and now Rio Tinto must underwrite the costs of cleaning up that operation."


Uranium mine leaks dominate Rio AGM

AAP

8 May 2014

Rio Tinto's uranium operations are contributing nothing to its profits - but they dominated its annual general meeting.

Anti-nuclear activists had plenty of ammunition after two toxic, radioactive spills in a week at its two uranium mines shortly before Christmas.

Australian Conservation Foundation campaigner Dave Sweeney accused the board of shirking its responsibilities by refusing to guarantee that it would fund the rehabilitation of the Ranger uranium mine site.

The site is surrounded by the World Heritage-listed Kakadu National Park, was shut down after December's spill and is operated by Energy Resources of Australia (ERA), which Rio owns 68 per cent of.

"I would urge you to commit to Rio Tinto addressing its full financial and other responsibilities for its subsidiary," Mr Sweeney said at the AGM in Melbourne.

"You share common uranium marketing with ERA, you direct ERA and ERA reports to Rio Tinto's energy division."

Rio's chief executive Sam Walsh told the AGM ERA was a public company controlled by an independent board that would decide how to rehabilitate the area.

As the major shareholder, Rio would play its part and he insisted there had been no overflows of leaked material into rivers.

The company was also presented with a letter from a community group representing people connected to Rio's Rossing uranium mine in Namibia.

It stated that higher than normal rates of cancers had been detected in past and present workers there going back to the 1970s and called for an epidemiological study.

Mr Walsh said he took the claims seriously and would order an independent review, but that there was no medical evidence of any issues.

Unions and workers from Rio's Hunter Valley coal mines in NSW also accused the company of shoddy industrial practices and safety standards.

The Construction, Forestry, Mining and Energy Union vice president Wayne McAndrew said Rio was the worst industry offender for relying on casuals and contractors, which led to slipping safety standards.

Mr Walsh said he cared deeply that three people were killed at Rio's operations last year.


Kakadu uranium plan on increasingly shaky ground

Ventilation shaft collapses at ERA's Ranger uranium mine

Australian Conservation Foundation media release

11 May 2014

Environmentalists have called for the suspension of all development activity at the Ranger uranium mine in Kakadu following confirmation of a recent collapse in a new ventilation shaft at the embattled site.

The shaft collapse is the latest in a litany of management and material failures at Ranger. Mineral processing at the site remains suspended at Ranger following a tank failure and spill of over a million litres of highly acidic uranium slurry in December 2013.

Mine operator Energy Resources of Australia has paused work on the compromised shaft but is continuing underground tunnelling at the proposed Ranger 3 Deeps project.

"All mine development operations at Ranger should be immediately halted," said ACF nuclear free campaigner Dave Sweeney.

"The Ranger mine is a dog's breakfast with eroding shafts, collapsing tanks and the company routinely losing contaminants and credibility. There have been enough warnings, now there needs to be a stop to works and a comprehensive and public assessment of the full impacts of this aging and failing facility".

The latest blow to ERA's contested plan to move to underground mining at Ranger follows further public concerns over the company's commitment and capacity to fully rehabilitate the mine site into the surrounding World Heritage listed Kakadu National Park.

In 2021 ERA are legally obliged to end all mining and mineral processing and start the comprehensive clean-up of Ranger. The company has flagged that they may not have the money to do so and at its annual meeting in Melbourne last week ERA's parent company Rio Tinto again refused to commit to underwrite this cost.

"Rio Tinto and the federal and NT regulators need to send a clear message to Energy Resources of Australia," said Dave Sweeney.

"Instead of moving further into literally shaky ground ERA need to step away from the flawed Ranger 3 Deeps project and step up to the challenging and costly task of repairing the existing damage and facilitating the transition to rehabilitation and closure".

Context and comment: Dave Sweeney 0408 317 812

Dave Sweeney
Nuclear Free Campaigner
Australian Conservation Foundation
Floor 1, 60 Leicester St, CARLTON VIC 3053, Australia
Ph +61 3 9345 1130 Mob +61 408 317 812 Fax +61 3 9345 1166
d.sweeney[at]acfonline.org.au
www.acfonline.org.au
@AusConservation facebook


Rio Tinto says has good ties with Guinea despite Simandou lawsuit

Reuters

8 May 2014

Rio Tinto has a good relationship with the government of Guinea, its chairman said, however the company will pursue Brazil's Vale and BSG Resources vigorously over the loss of its rights to half of the country's massive Simandou concession.

Rio Tinto sued its bigger iron ore rival, Vale SA , Israeli billionaire Beny Steinmetz and his BSG Resources (BSGR) in April over the loss of rights to half of the Simandou concession, one of the world's most valuable undeveloped iron ore deposits.

"What I want to emphasise is that we don't have an issue with the government of Guinea at all. We have a good relationship with the government," Rio Tinto Chairman Jan du Plessis told shareholders at the company's Australian annual meeting on Thursday.

"But in parallel, we think that some of the things that happened back in 2008 were wrong and we intend to pursue ouur rights rather vigorously."

Rio Tinto alleged in its lawsuit that the defendants devised a fraudulent scheme to steal its rights to the northern half of Simandou. BSGR obtained those rights after the government stripped Rio Tinto of those rights in 2008, accusing the company of having moved too slowly to develop it.

Rio filed its case after Guinea revoked BSGR and Vale's rights over the northern half of Simandou as a government report had found that BSGR won those rights through "corruption". BSGR has repeatedly said it was not involved in any wrongdoing.

BSGR, the mining branch of Israeli billionaire Beny Steinmetz's conglomerate, said on Wednesday it has sought arbitration over the government of Guinea's decision to revoke the rights.

Rio Tinto is working on finalising an investment framework for the long-delayed southern half of the Simandou project, now expected to cost $15 billion.

It expects first production in 2018 at the earliest, with a bankable feasibility study expected by early 2015.

(Reporting by Sonali Paul; Editing by Richard Pullin)


BSGR, defendant in Rio Tinto Simandou corruption claims, sues Guinea

Cole Latimer

Mining Australia

8 May 2014

BSGR Resources, which has been accused of bribery and corruption by Rio Tinto over the Simandou deposit, is suing Guinea and its president and has made threats towards Rio Tinto as well.

It comes after the company's concessions to Block 1 and 2 of the Simandou deposit were revoked by the Guinean Government.

Earlier this month Rio Tinto filed a legal complaint against BSGR and Vale over the loss of Block 1 and 2 of its Simandou mining concessions in Guinea.

In its filed complaint, Rio stated that negotiations between it and Vale started in 2008, and Rio provided the information regarding Simandou. It stated that "as Vale quickly surmised, gaining control of the Simandou deposit would strengthen Vale's position in the world's high-grade iron ore market, since the only other comparable source is Vale's own Carajas Iron Ore Mine in Brazil".

"Defendant Vale saw a golden opportunity to not only obtain that control, but to do so on the cheap, when Vale learned from Rio Tinto that Defendants Steinmetz and BSG Resources Limited (collectively with its named subsidiaries and affiliates, "BSGR") were attempting to interfere with and steal Rio Tinto's rights to the Simandou concession. Given BSGR's reputation for corruption and bribery-well known among those active in the mining industry, including Vale-Vale was on notice that Steinmetz's and BSGR's efforts to misappropriate Rio Tinto's rights included bribing various Guinean officials," Rio said.

The miner went on to state that Vale and Steinmetz "entered into a conspiracy to misappropriate Rio Tinto's Simandou rights" and used a campaign of bribery to do so.

It stated that Vale and Steinmetz's BSGR then paid a $200 million bribe to the Guinean minister of mines, Mahmoud Thiam, for his assistance in "unlawfully securing Rio Tinto's Simandou rights.

Responding to Rio Tinto's legal action, BSGR stated "this is the latest absurdity in the charade created by Guinean president Alpha Conde's illegal crusade to reward political allies who helped rig his election. Rio Tinto chose to do nothing with its mining rights so the mining rights were taken away. Baseless and bizarre lawsuits like this won't change that fact".

Speaking today at its AGM, Rio Tinto chairman Jan du Plessis stated that Rio will fight BSGR for the rights to the site.

Following the revelation of this information, the Guinean Government revoked all of BSGR and Vale's mining licences for both the Simandou and Zogota concessions in the country.

"The Government's decision is based on fraudulent conduct in connection with the acquisition of the mining licenses and refers to a report by the Technical Committee for the Review of Mining Titles and Agreements (the "Technical Committee") concluding that the mining concessions had been tainted by corrupt practices on the part of BSGR," Vale said in a company statement.

Vale went on to say that "the Technical Committee did not find any involvement by Vale in the fraudulent conduct relating to the acquisition of the mining licenses, which occurred more than one year before Vale made any investment in VBG, and recommended that the Guinean Government adopt measures to exclude VBG and BSGR, and BSGR's affiliates, from the reallocation of the mining titles, but did not suggest that Vale be prohibited from participating in any such process."

In the wake of this rescinding of licences, BSGR has begun arbitration with the International Centre for Settlement of Investment Disputes against the Government of Guina and its president, Alpha Conde.

BSGR stated that it "is seeking the restitution of its mining titles and agreements as well as damages arising out of the revocation of these interests, which have been unlawfully expropriated through the illegal and dishonest practices of the corrupt Alpha Conde government in Guinea".

It also went on to further threaten Rio Tinto and Vale, stating: "Anyone, whether it be the Guinean government, Vale, Rio Tinto or anyone else who has negotiated an interest in Simandou or does so in the future will be dealing unlawfully in BSGR's property. In such circumstances BSGR will take immediate steps to sue those parties who wrongfully interfere in its lawful interests."

The miner then went on to accuse Rio Tinto, the Guinean Government, and Vale of theft.

"BSGR will not sit idly while President Conde and his allies attempt to steal BSGR's assets. It is time for a proper adjudication of these matters in a court of competent jurisdiction rather than through the sham processes imposed by President Conde."

The case continues.


Rio Tinto votes down plan for inquiry into Bougainville civil war

7 May 2014

Radio Australia

Presenter: Jemima Garrett

Speaker: Peter Taylor, Bougainville Copper Chairman and Managing Director

Audia at: http://www.radioaustralia.net.au/pacific/radio/program/pacific-beat/rio-tinto-votes-down-plan-for-inquiry-into-bougainville-civil-war/1306942

Rio Tinto has voted down a proposal for the appointment of an independent jurist to investigate its subsidiary Bougainville Copper's involvement in the civil war on Bougainville Island during the 1990's.

The proposal - along with recommendations that the company should sign up to three international human rights and environmental sustainability standards - was put by a group of concerned shareholders at Bougainville Copper's annual meeting in Port Moresby.

Afterwards Jemima Garrett spoke to Managing Director Peter Taylor who opened the meeting with his update on BCL's talks with landowners, and at regional and national government level.


Bougainville Copper Shareholders heartened by support for corporate responsibility

Radio Australia

http://www.radioaustralia.net.au/international/radio/program/pacific-beat/bougainville-copper-shareholders-heartened-by-support-for-corporate-responsibility/1307728

8 May 2014

The Australasian Centre for Corporate Responsibility says it is encouraged by the number of Bougainville Copper shareholders who voted in favour of appointing an independent jurist to investigate the company's involvement in counter-insurgency activities during the Bougainville civil war.

The Centre's resolution, put to the Bougainville Copper annual meeting in Port Moresby was overwhelmingly defeated. but the Centre's Executive Director, Caroline Le Couteur, says that if you exclude the vote by major stakeholder Rio Tinto, it is clear the majority of votes cast favoured the appointment of a jurist.

Presenter: Jemima Garrett

Caroline le Couteur, Executive Director of the Australasian Centre for Corporate Responsibility

The Australasian Centre for Corporate Responsibility says it is encouraged that most Bougainville Copper shareholders are in favour of appointing an independent jurist to investigate the company's involvement in counter-insurgency activities during the Bougainville civil war.

The Centre's resolution, put to the Bougainville Copper annual meeting in Port Moresby was overwhelmingly defeated

LE COUTEUR: The majority of ordinary shareholders who voted actually voted in favour of ... resolution, so I think what that shows is that among the people who are following what's happening in Bougainville, and that of course includes quite a few people, residents there, there's still substantial concern that the wounds of the past have not been healed, and that we need a better process to heal them before any resolution can be achieved.

GARRETT: Rio Tinto has a 53 per cent shareholding, so it's obviously the crucial player here. Do you know why Rio Tinto voted against the motion?

LE COUTEUR: I think Rio Tinto's view is that it will make whatever decisions it makes internally as it were, and it won't be signalling them into sort of public meeting like an ATM. We actually me with Rio Tinto staff last weeks, and that's basically what they said, that they weren't going to vote to say anything to the board, they would do whatever they did internally.

GARRETT: The Papua New Guinea government also has a major shareholding in Bougainville Copper, it was a combatant in the civil war, but of course has signed a peace deal. How did the PNG government vote?

LE COUTEUR: Well they didn't vote and I find that really astounding. As you say they're a major shareholder, their citizens are the people who are affected by whatever happens in Bougainville. And for them to have no opinion on this is quite strange. I also note that they didn't vote in last year's annual general meeting and they seem to have a history of not being involved. And I think from the point of view of the people's PNG to whom presumably they hold these shares in trust, this is disappointing.

GARRETT: You had another resolution before the Bougainville Copper annual general meeting seeking to get Bougainville Copper to sign up to some international human rights and environmental standards. That did less well than the resolution for the appointment of a jurist. What do you put that down to?

LE COUTEUR: I put that down to the fact that probably most people there had not heard of the various international standards, and so it wasn't as meaningful. I have however talked to people after the annual general meeting about it, and most of them thought that it could be a positive step forward for establishing trust, but also some people felt that it really wasn't appropriate until a decision to mine was actually made. Whereas the second resolution clearly is appropriate now before any decision is made.

GARRETT: You actually got less than one per cent of the vote. How can you be encouraged by that?

LE COUTEUR: Well the reason why I can be encouraged is that the people of the ordinary shareholders, that is excluding Rio Tinto and the PNG government, of the ordinary shareholders who are concerned enough about what happened to actually vote, we got a majority of those people. They were the people who were most likely to vote for our resolution, and I think what the vote shows is that of the people who care about and are following what's happening in Bougainville, they realise that the situation hasn't normalised, there's still a lot of work that has to be done so that Bougainville Copper can regain trust in the Bougainville community. And that's what the resolutions are aiming to achieve.

GARRETT: Where will you be taking the issue from here?

LE COUTEUR: I anticipate that we will be back at next year's Bougainville Copper annual general meeting. I also anticipate that we'll continue dialogue with people we've already been speaking to, plus the new contacts we made as a result of the annual general meeting.

GARRETT: It's quite expensive to sign up to things like this. Why is it worth it for Bougainville Copper?

LE COUTEUR: The reason it would be worth it is because they need to demonstrate that if they re-open the mine it won't have the problems that it had last time. These international conventions have been put in place because of disasters like the Bougainville Copper Mine. And they've been put in place to stop them happening again, that is the reason it would be worthwhile for Bougainville Copper to sign up. One thing I suggested to some of the directors afterwards that maybe the compromise Bougainville Copper could commit that if and when the mine is re-opened, it would sign up at that point of time.


 

The resource curse of corporate social responsibility: The case of Rio Tinto

http://jamesmitchellmining.wordpress.com/2014/05/08/the-resource-curse-of-corporate-social-responsibility-the-case-of-rio-tinto/

8 May 2014

Corporate social responsibility (CSR), the vague term used to describe the voluntary self-regulation undertaken by companies to promote positive socio-economic and environmental outcomes, is especially prevalent in the mining industry. Yet the extent that CSR fulfils its ambitiously stated aims and thus represents large-scale mining companies as the honourable middlemen of Mother Earth is, frankly, highly debatable.

The western model of CSR spread into developing countries on the back of multinational mining, oil and gas companies during the period of enforced liberalisation of structural adjustment. The emphasis on CSR in the extractive industry is quite possibly a reflection of its preponderance for negative externalities - from environmental degradation, loss of biodiversity, pollution, displacement of indigenous and local communities and social conflicts. Consequently, extractive companies are under great pressure from environmental, indigenous and human rights movements, who are concerned about the negative social and environmental impacts of extraction.

Often, CSR in the mining industry is little more than a public relations exercise, with no tangible reality to support its elaborate rhetoric. In the case of Rio Tinto, the British-based Australian mining giant with operations on 6 continents, its most recent sustainable development report showcases the amount spent ($331 million) on 2,200 socio-economic programmes worldwide. It details how Rio Tinto is seemingly in line with all major international standards, from the United Nations Human Rights charter, to the management of resettlement of displaced communities under the World Bank's International Finance Corporation's Performance Standard 5: Land Acquisition and Involuntary Resettlement (p.36). It also highlights that Rio Tinto is a co-signatory of an ostensible external regulator's (the International Council for Mining and Metals) sustainable development principles. The ICCM is in fact entirely toothless: it is funded and maintained by the largest mining companies in the world, including Rio Tinto.

Yet, Rio Tinto's report has only a smattering of case studies, none of which has any tangible quantitative or qualitative evidence to support Rio Tinto's claims. Additionally, Rio Tinto's website shows only five anecdotal case studies of CSR practice in developing regions (Africa, Asia, South America).

According to Dr. Gavin Hilson, an expert on the mining industry, the largely anecdotal analyses of CSR buffers against the criticism mounted against the mining industries recent foray into the developing world. This foray often bypasses local and international law. During its time extracting in South America, Africa and South East Asia, Rio Tinto has been the recipient of 16 cases of resistance, with locals angered by Rio Tinto's unsound and dangerous practices, including but not limited to: biodiversity loss; soil contamination; soil erosion; deforestation; surface water pollution; displacement; loss of livelihoods; violations of human rights; lack of job security; and land dispossession.

Furthermore, a recent report by the global union IndustriALL, which represents more than 50 million industrial workers worldwide, criticised Rio Tinto for its "blind pursuit of profit at any cost" and for not "operating in a sustainable manner". The report included details of the apparently avoidable deaths of 40 workers in 2013 on Rio Tinto operations, the consistent refusal to adhere to Free, Prior and Informed Consent (FPIC) for indigenous communities prior to mining, and avoidable uranium mine spillages.

The reasons why CSR in developing countries has failed to match rhetoric with reality are manifold. As natural resource industry expert Ellen Morgan argues, holding companies responsible for contributing to the sustainable objectives of host countries in the developing world is both politically and morally attractive, but it is no panacea. CSR is primarily based on voluntary principles, none of which are supported by any form of implementable law. Furthermore, multinational extractive companies often produce third-party sustainable development progress reports from actors with debatable impartiality. In the case of Rio Tinto, their ‘independent assurance report' was curiously produced by PriceWaterhouseCoopers, a major multinational accountancy firm and the de-facto accountant of Rio Tinto.

Furthermore, the developing countries that host multinational extractive companies often do not have the political capacity or the financial clout to hold the companies to account if they transgress their previously stated promises of CSR. There is often a financial, organisational and human capital disparity between rich MECs with their legions of lawyers, contract negotiators and public relations experts and the often impoverished, indebted and dysfunctional host developing states. For example, Rio Tinto generated revenue of US$51.1 billion in 2013, which is more than twice that of the gross domestic product (GDP) of Madagascar for example, a country in which it has been accused of severe human rights violations.

Moreover, it needs to be explicitly stated that multinational extractive companies are not averse to engaging host states in a court of law. For example, Canadian mining major Infinito Gold is suing the Costa Rican government for more than USD$1 billion in the World Bank's International Centre for the Settlement of Investment Disputes (ICSID), for allegedly violating the Costa Rica-Canada Bilateral Investment Treaty by denying the company the right to mine in a protected rainforest.

Often, the host states, NGOs and local communities' ability to hold MECs to account is further constrained by the murky world of subsidiary ownership that is prevalent in developing countries. This not only constrains accountability but also the ability to collect appropriate taxation to such an extent that it is often actually deplorable that MECs espouse virtues of transparency and fairness as principles of their CSR. MECs often have a plethora of subsidiaries that operate in developing countries. For example, according to the Company Structural Secrecy Index, Rio Tinto has 509 fully- or partly-owned subsidiaries, while mining major Anglo American has 766. The extent to which a subsidiary's negative externalities and poor CSR practice blemishes the reputation of the mother company is limited: subsidiaries are dispensable and their names can be changed. Also, bizarrely, subsidiaries can even technically own subsidiaries - further muddying the waters.

The Tax Justice Network explains that the profits gathered by MECs in developing countries are being siphoned off to subsidiaries in tax havens - to such an extent that developing countries are losing billions of dollars each year. For example, According to its Chamber of Mines, Africa's largest copper producer - Zambia - is estimated to lose as much as US$2 billion annually through corporate tax avoidance structured by repatriation of revenues to foreign subsidiaries.

From a global perspective, there is also very little consistency to CSR initiatives. They can fluctuate wildly from company to company or region to region. They also can have only a very tenuous connection to ‘sustainable development' processes.

Worst still, CSR may actually undermine the formation of a fully functioning democracy with appropriate taxation mechanisms in place. As Ellen Morgan argues, CSR can displace accountability for the provision of social services or environmental protection - responsibilities that are at the heart of the state-citizen social contract. Rather than rely upon CSR to deliver an illusion of sustainable development, host governments must surely focus upon rebalancing the often-inequitable resource extraction taxation regimes in place in most developing countries, and use the taxation revenue to provide adequate social services and to regulate MEC behaviour more effectively.

Ultimately, CSR can never be an excuse for the displacement of accountability onto largely untouchable extractive companies, or for the tacit acknowledgement that multinational extractive companies actually pay very little in taxation relative to revenue generated in developing countries.

Home | About Us | Companies | Countries | Minerals | Contact Us
© Mines and Communities 2013. Web site by Zippy Info