MAC: Mines and Communities

London Calling - May 29 2005

Published by MAC on 2005-05-27

London Calling! May 27 2005

London Calling reaches those parts that other mining sites can't reach

Poor little rich boy

One has to weep for BHPBilliton. According to an Indian news source the comp;any's bought a pup. But, if the story is true, London Calling won't be shedding tears. Late last year we accused Chip Goodyear, the company CEO, of telling porkies about the deal to shareholders at the London AGM. Should we now care if a pig's ear has been made out of a silver purse?

The pup is a bauxite lease in Orissa called Karlapat, supposedly controlled by the Indian outfit, Sulakshini Mines, headed by Subash Panda who, though allegedly having no experience in mining was backed by a group of politicians.

BHPBilliton is said to have handed over Rs 400 million (that's about ten million US dollars) for the lease, only to find last month that Panda had absconded without trace - presumably with the dosh.

A high level state government team, headed by the mines minister, then sped to Australia to assure BHPBilliton that, whatever happens, the company will get its bauxite and its refinery.

Readers of this web site may already be familiar with attempts by the notorious British-Indian company, Vedanta, to secure the Nyamigiri hills - a bauxite deposit which effectively is an extension of Karlapat. Indeed, we more than hinted last year that the Big Aussie and the Shabby Brit might have agreed share the spoils, depending on which company got clearance first.

At the moment it looks like neither company is getting very far. The Indian Supreme Court has sent a clear message to Vedanta that deliberations by its Central Empowered Committee (CEC) into the legality of its Orissa operations will not be sidetracked. What's less well known is that the Karlapat prospect, from which BHPBilliton has apparently now been jilted, has also been named by the CEC as a protected site which it would be illegal to mine.

This may not bother the lackies of Navin Patnaik's, Orissa's chief minister. But if BHPBilliton cares for a shred of corporate social responsiblity, it should worry the hell out of Goodyear.

Not seeing the trees for the Wood

A chip off the old BHP block is its chief community trouble-shooter, the mild-mannered Ian Wood, who's rapidly gaining a reputation for opening his mouth before his brain is fully in gear.

Not only did he reveal a startling ignorance of land ownership in West Papua's Gag Island in 2003, when the company's nickel project threatened both forestry law and Indigenous rights (it looks like the scheme is now on hold). Recently Wood repeated the canard that the company was accused at last year's AGM in London of complicity in the massacre of Wayuu protestors in northern Colombia (see Colombian makes BHP plea for justice).

In fact the shareholder who raised this issue expressly didn't indict BHPBilliton, although he pointed out (quite reasonably) that it continues to have highly questionable relationships with the Colombian military.

A former consultant to BHPBilliton also tells us that, when director of environment and public relations at the Ok Tedi mine in Papua New Guinea in 1992, Wood claimed to have no knowledge of the major deforestation caused by the mine:

"So we loaded him onto a helicopter and made him walk through the ghost forests".

The company we keep on criticising

Over the past decade, Rio Tinto's attempts to forestall its critics have certainly borne some fruit. "We can and will do better" was the mantra offered at this May's London AGM in contrast to so many feckless - and sometimes outrageous - excuses made for its breach of operating standards through the seventies, eighties and nineties.

For example, there was the late Alistair Frame, who once declared that radiation from uranium miming was "no worse than background radiation from a Scottish city". On a later occasion, trying to jusify Rio Tinto's flagrant violation of the 1974 UN Decree on Namibia's Natural Resources, Sir Anthony Tuke burbled that "one might think" (as he clearly did) "a gunboat is worth any number of UN resolutions".

These days just about every environmental and social precept endorsed by so-called "civil society" gets an airing in the company's annual reports. So have the tables (and the worms) finally been turned?

Since 1995 Rio Tinto has spent millions of dollars in PR, and sponsorship of more social responsibility forums and "dialogues" than the World Bank could pack into a lifetime. Naturally this has taken its toll on the world's longest-surviving shareholders' campaign. Twenty years ago Partizans could call on eighty "dissidents" to pack a Rio Tinto AGM and fire off dozens of telling questions to a fumbling board. Over the past few years the group has failed to muster more than a dozen such hardy souls.

But this shouldn't give excess comfort to Britain's oldest mining company. Increasingly the real battles are being fought on other ground than the playing fields of Eton.

Indeed, this was the case with the most embarrassing issue raised at this year's AGM: the abject failure of the company to prevent, then acknowledge and deal with, serious damage done to its workers at the ERA uranium mine in Australia. Even the Australian courts and authorities couldn't sidestep this one.

Recently, activists in at least three other countries have put Rio Tinto on notice that they won't stand idly by while it threatens their territory.

First there's resistance in Sarawak to the company's revived intention to profit from the Bakun dam, one of the world's potentially most damaging hydro projects (see article below). Then, there's considerable concern in India that Rio Tinto will move back into protected forests in Orissa and resuscitate an iron ore venture apparently abandoned three years ago.

Third comes the announcement by leading politicians on Bougainville that they will be far from happy should the company attempt to re-open the Panguna mine (as hinted a fortnight ago), whose appalling depredations were at the heart of the 1988 rebellion.

It's the height of naivity to expect a leopard to change its spots. But, if you can't take the jungle out of the beast, you can still do your damndest to remove the beast from the jungle. (For an account of this year's Rio Tinto London AGM, see Appendix below).

Finally, it's out of the can

Talking of jungles, forget Cannes and its inevitable hype. The authentic movie story this month arrived with the tenth Royal Television Society (RTS) Student Awards, generally considered the most prestigious event of its kind. The winner in the postgraduate factual category was "The Company We Keep", directed by former Partizans activist Simon Chambers. It's an engrossing, witty (some might say quirky) account of one person's quest to expose the legacy of Rio Tinto's deadly Capper Pass tin smelter which was based in Hull, northeast England.

Although the film was finished more than a year ago, and swiftly snapped up by Channel Four TV, we've been unable to inform you of screening times because it's had no public showing (except one at a London art cinema and another at Cannes last year).

That's because Rio Tinto threatened legal action against the National Film and TV School who financed the project, just as soon as they got wind of it.

It took several months before the School mustered courage enough not to be browbeaten by the British Bully.

Renowned film producer Paul Watson, in his presentation of the RTS award on May 5, called Simon "a personable young man [who] takes on an (allegedly) unpleasant corporation and convinces me using unconventional methods that he's right to worry about trading their shares. If I didn't want television to lose an innovative talent I would advise him to get rich quick and sell insurance. Brilliant!"

Just as the RTS was deliberating on its awards, Sir Richard Doll published a report on the incidence of lung cancer among 380 men who had died after working at Capper's between 1967 and 2001.

"We found that the overall mortality and the mortality for all cancers were not significantly different from what would be expected" concludes the study. "However the mortality from lung cancer was significantly higher than expected while morality from heart diseases was lower than expected ... [We] conclude the risk of lung cancer has been enhanced as a consequence of employment at Capper Pass"

Rio Tinto issued a press statement "welcoming" Doll's report (it could hardly do otherwise since it had commissioned it as part of the ongoing Claims Review scheme). "We are pleased that there are now conclusive answers to questions which many people who have worked at the plant have" said Lisa Cullimore for the company, without a hint of irony.

In fact the only conclusion that can be safely reached so far is that around 70 workers contracted lung cancer, thanks to Rio Tinto's operations. Shortly after the Doll report was released, Professor Sorahan from the University of Birmingham's Institute of Occupational Health said it "does not completely close the door on other [non lung cancer] claimants", since it did not "look in detail at what happened to the people exposed to substances like arsenic and lead." Nor, one might add, who were exposed to hundreds of toxic and hazardous substances which went into or out of the plant.

Rilba Jones, the intrepid Hull campaigner, maintains that the study "certainly hasn't examined the possible links between childhood leukemias [and Capper Pass operations], particularly in the West Hull villages". It was this link which Ms. Jones revealed back in the early eighties, thus triggering one of the longest-ever health and safety investigations in UK history.

Tom the piper's son?

Coincidentally, while Simon Chambers was relishing his gong, the reluctant anti-hero of his film also came before the TV cameras. Tom Burke, long-standing"advisor" on environmental issues for Rio Tinto, went on BBC's Newsnight programme to vigorously oppose nuclear power and vaunt the value of "clean coal". Burke's advocacy of the black stuff comes as little surprise (Rio Tinto is, after all, one of the world's major coal mining multinationals and, in the late eighties, began pushing what it called "enviro coal" from its Kaltim Prima mine in Indonesia).

One wonders, though, how Burke's vehement opposition to nuclear power squares with his continuing to boost the fortunes of a company implacably in favour of uranium.

But then, as we know, Rio Tinto is a broad church which cherishes its dissidents.

Capitalising on nuclear

Of course it's not only big energy companies - or renegades like James "Gaia" Lovelock - which are now pushing nuclear power. Last week, as the German government presaged a reversal of its long standing opposition to nuclear power, the presidents of both Chile and Venezuela announced they too were seriously regarding it as an option.

No surprise about Chile. However, left-wingers who've uncritically backed Venezuela's Hugo Chavez as socialism's answer to US hegemony might now care to revise their opinion. In fact, since his announcement soon after inauguration that he welcomed increased foreign investment in the country's mining sector; his lavish praise for both the Iranian oligarchy and the despotic Putin, one wonders what solid credentials the Latin American folk hero has left to boast.

Peter Hudis of the Marxist-Humanist journal "News and Letters" recently summarised Chavez's (lack of) strategy in an appraisal of January's World Social Forum in Brazil where the Venezuelan president was an honoured speaker.

Pointing out that conflicts between state run companies and workers in Venezuela are far from unknown Hudis writes: "While the ultimate trajectory of Chavez's 'bolivarian revolution' is far from clear, the fact that many in the global movement against capital are jumping to embrace him is a disturbing sign. In the absence of a comprehensive concept of a new society .. many are reverting to the old notion that nationalisation of property represents the negation of capitalism - despite almost 100 years evidence to the contrary".

APPENDIX: Rio 2005 - An account of Rio Tinto's May 2005 London annual general meeting

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; 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]

"London Calling" is published by Nostromo Research, London. Its views do not necessarily reflect those of any other individual, organisation, or the editorial board of this website. Reproduction with acknowledgment is welcomed.

Rio considers Borneo aluminium smelter

Jesse Riseborough,

Tuesday, April 26, 2005

RIO Tinto is reportedly considering a partnership with Malaysian construction and financial services group, Cahya Mata Sarawak, to construct a $US2 billion aluminium smelter on the island of Borneo.

Melbourne newspaper The Age quoted Malaysian newspaper The Edge as reporting Rio was looking into tax incentives that would justify the capital investment.

The smelter would use most of the power from the nearby Bakun hydroelectric dam project, recently approved and currently under construction in the Borneo jungle. The construction of the hydroelectric project sparked the interest of Rio.

BHP Billiton was reported as previously being interested in the project, while several other companies have also expressed interest in the project including Chinese power producer Shandong Lueng and Smelter Asia.

The project has proven to be controversial with the potential impact on the region's Penan people highlighted in media reports.

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