Appendix: Rio 2005 - An Account Of Rio Tinto's May 2005 London Annual General MeetingPublished by MAC on 2005-05-15
Paul Skinner (chair) started the meeting after the now obligatory multi-media feel-good experience on the screens by noting that profits were up to US$2.2 billion. Earnings had increased by over 60%, thanks to high commodity prices with China a major factor - but based on the quality of their project portfolio. Cash flow was up 428%, another record. Dividends were up 20% to 77 cents per share. As such they are planning to buy back shares in Australia.
Aside from these marvellous figures there must also be a commitment to sustainable development, said Skinner. More needs to be done, but they are satisfied with the growth.
According to the CEO, Leigh Clifford, decentralised working was improving. Three new Australian projects would be coming on-line, 15 projects are undergoing development studies, 10 developments are in the pipeline. These include the Resolution mine in the US, and iron ore mining in Guinea. The company is still involved in Freeport, although it sold its shares for 882 M$ in 2004.
Health, safety, communities & environment were still a priority. Two "incidents" happened at Ranger that were unacceptable. However action had been taken and 3 Australian audits were satisfactorily completed.
As the new directors were voted in, a woman Partizans sharehodler noted that Vivienne Cox was the first female director on the board This was a small step. According to another shareholder this meant there was 7% female board representation, up from 0%. He also noted that, With Cox on board the average age dropped too.
The China question(s)
Finally we got to the annual report & financial statements. The first questioner asked why so many non-core businesses were being sold when prices are so high? And what about the court action on joint venture with China Steel. Also former chair, Robert Wilson (who was sitting a couple of rows behind me & had a good laugh over this) had said in 2003 that he expected the price of copper to drop but it had gone the other way.
Skinner noted Rio Tinto wanted to dispose of assets when the proceeds were high because it would be difficult to sell some of them in less favourable times. Action had to be taken against China Steel to protect RT customers in China. Commodity markets have high volatility - there is now high demand & one central reason for this has been the historic under-investment with commodities a low priority. Now China is increasing demand (20-50% of global demand for Rio's products comes from China) it is likely this bull situation will continue at least in short term.
Another shareholder asked about plans for the abandoned Panguna mine at Bougainville. Skinner said there were no plans to reopen the mine. Why not,the shareholder continued, if copper prices were so high? Leigh Clifford gave a brief account of why the mine closed (rebellion in 1989 - but he didn't say it was because of the mine itself); his understanding was that most of the infrastructure has gone because it has wasted/withered away. Also not got peace finalised - Bougainville Copper will be seeking to look after all shareholders interests.
On the breach
A shareholder asked for an expansion on the accidents at ERA. Leigh Clifford noted there had been 3 main incidents The first derived from the incorrect connection of contaminated water into the processing plant. Workers were exposed to radioactive water but (he understood) it was not sufficient to have a detrimental affect on the long-term health of employees: rather, it was a breach of standard operating procedures. The two other incidents both involved contaminated equipment leaving the site: it had been cleaned but not thoroughly. These were also breaches of the operating procedures. The company closed the mine for a week and did a full review of standard operating procedures
Snowy Jones of Hull Action Against Child Cancers said she was aware that the company had funded (with BNFL, British Nuclear Fuels) a study published in Occupational Health magazine regarding lung cancer in work places at the Capper Pass smelter. How generous would Rio Tinto be with regard to compensation for the widows and survivors. Skinner was very polite & complimentary to Snowy (particularly on her depth of knowledge on the issue). He offered a brief background and claimed Rio Tinto was trying to find an equitable solution to the claims. They had supported Sir Richard Doll in writing the report. What about the cost of the report and the fact that BNFL was part of study. Skinner said to the best of his knowledge BNFL were not a party but Snowy named the relevant doctors involved; also pointing out that the UK Health & Safety Executive had been critical of air quality around Capper Pass.
One of Partizans legendary dissident shareholders then asked a number of questions, first pointing out that, during Leigh Clifford's presentation the assembled company had been shown a graph with 1 accident for 200,000 hours worked. The shareholder noted that the phrase "much remains to be done" had been used, so what did need to be done and when? Skinner said it was a good question: they had had one fatality last year and that was one too many. "We are still not where we would like to be on injuries. We are also energy intensive and need to improve energy efficiency in regard to global warming"
Then further questions were raised about transparency at ERA. The Australian Conservation Foundation had filed a complaint with the Australian Securities & Investment Commission (ASIC) against ERA for non-compliance with its disclosure obligations. What action would Rio Tinto take over this omission and would it review the group reporting procedures? Leigh Clifford made the observation that ERA is an independent company (in fact it is 2/3rds owned by Rio Tinto). ASIC will, he said, look into the complaint. ERA had been forthcoming prior to publication of the report. The Office of the Supervising Scientist had reported favourably. Our evaluation is that they have adequately reported on the incident" Does this mean that if the ASIC complaint is upheld Rio Tinto will endorse ERA breaking the law...?
[Reportage by AW, Partizans]
[Sources: BHP porkies (see www.minesandcommunities.org/Action/press520.htm); Orissa and BHPBilliton: Insight Orissa 1/5/2005; 20/5/2005; Ian Wood on Gag Island: personal communcation Jason McLeod December 2003; past Rio Tinto practice, see Plunder! (Partizans and Cafca, 1991); Rio Tinto's Bougainville gambit: see National Post, (Papua New Guinea) 12/5/ 2005; Doll report, Sorahan, Rilba Jones and Rio Tinto statements: Yorkshire Post 9/3/2005, 10/3/2005, 12/3/2005; Doll et al "Mortality Experience of male workers at a UK tin smelter" Occupational Medicine 9/3/2005]