The Spanking new House that Jacques couldn't buildPublished by MAC on 2019-04-23
Source: Nostromo Research (2019-04-23)
London Calling sits in on the Rio Tinto AGM
This commentary is provided by Nostromo Research
23 April 2019
From Mueller to Milling and Mining
Mueller's redacted report on Donald Trump's ignominious browbeating of the US public is now out, dramatising further his belligerent attempt to extinguish allegations of complicity in a Russian anti-Democratic party conspiracy.
Hopefully the full report will soon be released thanks to pressures exerted by the same political caucus.
So too, a focus was again cast on the US president's mafia-type removal of those who've dared to challenge him – not least Mueller himself.
At first sight, this news would appear to merit no comparison with the conduct of Rio Tinto's annual general meeting on April 10th.
Like “Conspiracy”, “Lying in one's teeth.”, “Drastic misrepresentation of the facts”, “ Kicking embarrassing officers from the nest”!
Surely none of these played any part in the UK proceedings?
But - before jumping to conclusions- do scroll through Richard Solly's account of what went on at the meeting, and how his meticulous, characteristically nuanced version, contrasts significantly with the company's presentation.
Now, here's London Calling's own version.
A general schmooze-in
Most of the AGM passed (perhaps surprisingly) with little adverse shareholder argument; formerly highly-contentious issues triggered self-assured, even somewhat chirpy, responses from the chair and CEO, Simon Thomson and J-S Jacques.
“Aren't we all in this together?” seemed the order of the day: '”We've dispensed with coal, sold our largest uranium mine, brokered a ground-breaking climate deal, and are ahead of the field in safe- guarding against tailings risks. Now, let's get formal business over and done with, then you're welcome to join the board upstairs for an affable chat, a cuppa tea, and cake”'.
In reality, these men came nowhere near to being squeaky clean. Not just about the toll of the company's type three greenhouse gas emissions [See: Rio Tinto wont come clean on 'type three' emissions] but in peremptorily passing this key issue over to the forthcoming Perth AGM. (Fat chance, you might think, that most of those investors won't continue keeping the matter firmly under wraps down under).
Okay, the recently forged alliance between Rio Tinto, Alcoa and other aluminium commercial dependants, to cap such emissions, looks like a step forward.
Nonetheless don't let's be deceived into believing that the uniquely exiguous impacts of mining and processing this “green” metal, should be discounted - continuing the digging up of masses of bauxite, refining it at enormous electricity consumption costs, while leaving behind mountains of potentially toxic wastes..
Jacques goes up the hill...
As for addressing the persistent dangers of tailings failures (like that earlier this year Brumadinho in Brazil), J-S Jacques, went little beyond paying lip-service to the enormous regulatory tasks lying ahead. No comprehensive independent survey of Rio's more than a hundred such installations has yet been issued, while the company didn't worry much about three of these (Bougainville, Kelian and Grasberg), since it's withdrawn responsibility for maintaining them.
...but doesn't come down with essential water
Not only did the CEO fail to adequately address the fact that the impervious and secure dam. promised at the QMM mineral sand operations in southern Madagascar. had been cunningly morphed into a “berm” (a term previously more familiar to BMX and scramble riders than to most shareholders).
J-S also ignored the vital issue of how neighbouring communities will access clean water, as opposed to suffering from potentially dirty floods and similar contaminating incursions.
Out of the mouth of babes and suckers
The CEO was challenged by an eminently knowledgable share holder regarding the radionuclide dangers posed by the same project; he acknowledged the argument that this area is subject to an abnormally elevated incidence of background radiation, but claimed this shouldn't be attributed just to Rio Tinto.
This contention wouldn't sit well with governments and international bodies (such as the WHO) who have much higher standards than apparently does QMM, in determining how sources of ionising radiation should be identified and dealt with.
It's somewhat instructive to find J-S was employing a rule-of-thumb argument that was once used by former RTZ chairman, Alistair Frame.
In seeking to defending Australian and Namibian uranium ventures, this wily, but often distinctly rude,Scotsman tried to assure shareholders by simply stating: “The city of Aberdeen itself has a high level of background radiation”.
Those ugly spots
Although clearly much concerned to escape from Rio Tinto's dim, dingy, and often delinquent recent past record, its directors arguably only succeeded in proving that – to quote a familiar refrain – “the leopard cannot change its spots”.
More seriously, the company still seems unable to admit that formerly-controlled bad operations could have been avoided or dis-invested from, had the company had the guts to do so .
Simon Thompson tried discounting any responsibility for the huge financial and moral legacy of Indonesia's catastrophic Grasberg mine, arguing the government had now taken up the leash.
Apparently there was no contradiction between Rio Tinto's stated policy (some years old) of refusing to be involved in any extractive venture employing riverine tailings disposal, and its forsaking the Grasberg joint venture (JV) only when Indonesia authorities ordered it to do so.
And, make no mistake - this was a fully-fledged partnership, which is why the Norwegian Council on Ethics successfully recommended throwing Rio Tinto off the government global financial portfolio in 2007, reconfirming the ruling ten years later [See: Norwegian govt pension fund updates banned companies list].
The Albanese whitewash
However, the final indictment of the day must surely be laid at Thompson's door - although the issue went largely unnoticed by most of his audience.
One shareholder had risen to ask the chairman how Rio Tinto would answer a recent US Court decision that it answer accusations, made in early2018 by the Securities and Exchange Commission (SEC) in addition to its Australian equivalent (ASIC). of its failure to report major losses on buying the Riversdale mine in Mozambique [see: Rio Tinto finally accused of misleading investors ].
Thompson settled for two patent untruths – albeit with one patina of real fact
The first lie is that this matter had been fully addressed at last year's AGM ( it hadn't been) but,in any case, a heavy fine had been paid on discovery to the UK's Financial Conduct Authority (it was).
The second was that former CE0, Tom Albanese, had no involvement in any scam from Rio's point of view.
Once again, the board tried climbing out of a deep reputational hole - not by casting aspersions against a long-departed officer, but dissociating him from an undoubted role in advancing the company's profiteering at a time when fortune-making most counted .
As we've stated on many occasions, Rio Tinto has never divulged the full details of how Mr Albanese enabled the company to implement one of its most stupendous coups – acquisition of the stupendously rich Oyu Tolgoi copper venture from Ivanhoe Mines - even while this Canadian company was violating embargoes against Burma, and raking- in crucial monies from Rio Tinto. [See, inter alia: Amnesty calls for investigation of Canadian company role in Burma ].
Hear no, see no, evil
Whichever way the SEC/ASIC chips finally fall, Rio is left desperately wanting in its claim to be performing due diligence and opening itself to a thorough exposure of its transactions,
Its much-vaunted claim to be among best in practising corporate good governance is exposed as a compounded hypocrisy.
Does it know what its key fixers got up to?.
Or doesn't it much care when the facts are revealed?
Either way, it stands – another oft-employed adage of our's - as an emperor with no clothes .
[London Calling is a column from Nostromo Research: it does not necessarily reflect the opinions of any oyther party, including the ediutors of this website. Reproduction is welcome under a Creative Commons Licence]