Socially Conscious Investors Pressuring Rio Tinto Over Water Contamination Claims
Melanie Burton reports from Melbourne that Rio Tinto, a global mining giant, is facing pressure from investors and lenders regarding water practices at its mines in Mongolia and Madagascar. The company, reeling from the fallout of destroying an ancient Indigenous site in Australia, is now under scrutiny for its water management practices.
UK pension funds, represented by the Local Authority Pension Fund Forum (LAPFF), have raised concerns about Rio Tinto’s water management at its Oyu Tolgoi mine in Mongolia and an ilmenite mine in Madagascar. The LAPFF has been trying to build support for a resolution pressing the company to undertake independent water impact assessments at its mine sites.
CEO Jakob Stausholm is facing challenges in restoring the company’s social license after the backlash from the destruction of the Aboriginal rock shelter at Juukan Gorge. The questions surrounding Rio Tinto’s environmental credentials could further complicate its efforts to secure government approvals for building a lithium mine in Serbia and a copper mine in Arizona, both of which have faced delays due to local protests.
LAPFF Chair Doug McMurdo expressed concerns about reputational damage stemming from Rio Tinto’s water challenges in Madagascar and Mongolia, highlighting the potential financial materiality of these issues due to growing incidents of litigation around water management globally and tougher regulations coming into place.
Rio Tinto acknowledged the significance of water to its host communities and committed to driving effective water stewardship and enhanced transparency for stakeholders. However, the company’s reputation has already suffered from its handling of the Juukan Gorge incident, making its water challenges a significant threat of further reputational damage.
Concerns have been raised about Rio Tinto’s operations at the Oyu Tolgoi mine in Mongolia, with accusations that the copper operations have affected groundwater quality outside the mine lease. Civil society groups and local herders have reported ill livestock and environmental incidents due to the mine’s operations.
In Madagascar, concerns have been raised about tailings dam failures at Rio Tinto’s ilmenite mine, affecting water quality and causing conflict in the region. Advocacy groups are pushing for independent audits to provide transparency and accountability to resolve the challenges at the mine.
The LAPFF and advocacy groups have criticized Rio Tinto’s water audits in both locations, raising questions about the full impact of its operations on the environment. Shareholder resolutions are being considered as a means to hold companies accountable for their environmental practices.
Rio Tinto has engaged with the pension fund group and acknowledged that it could do better at its Madagascar site, recognizing the need for greater transparency and equity around its water management practices.
These issues present significant challenges for Rio Tinto as it navigates the complexities of water management and environmental impact at its global operations.
