Mining giant Rio Tinto Limited (ASX: RIO) has been panned for its inadequate response to its destruction of Juukan Gorge in Western Australia.
The $36 billion company legally blew up the site in May despite protests from archaeologists and Indigenous groups due to its cultural and historical significance.
Rio Tinto earlier this week concluded in an internal review that the action was a mistake, but refused to blame any single person or decision.
“We will implement important new measures and governance to ensure we do not repeat what happened at Juukan Gorge and we will continue to rebuild our trust with the Puutu Kunti Kurrama and Pinikura people,” said Rio Chair, Simon Thompson.
But several major investors have now criticised this response.
HESTA, a $52 billion superannuation fund, was so incensed that it drew up a “statement on working with Indigenous communities” and sent it to 14 Australian mining companies.
HESTA Chief Executive, Debby Blakey, said there was much investor disappointment at the Juukan Gorge saga.
“Not only was priceless heritage destroyed and the costs borne by shareholders as a result, but we had believed this risk to be well managed in our portfolio,” she said. “This has prompted us to renew our focus on ensuring fair and sustainable outcomes for Indigenous communities and companies,” she added.
The other 13 resources and energy companies that received HESTA’s statement were:
- BHP Group Ltd (ASX: BHP)
- Fortescue Metals Group Limited (ASX: FMG)
- Newcrest Mining Limited (ASX: NCM)
- Santos Ltd (ASX: STO)
- Saracen Mineral Holdings Limited (ASX: SAR)
- Woodside Petroleum Limited (ASX: WPL)
- Origin Energy Ltd (ASX: ORG)
- Alumina Limited (ASX: AWC)
- Northern Star Resources Ltd (ASX: NST)
- South32 Ltd (ASX: S32)
- Evolution Mining Ltd (ASX: EVN)
- Mineral Resources Limited (ASX: MIN)
- Cooper Energy Ltd (ASX: COE)
Price of destruction is $7 million
Priceless as the site might have been, Rio Tinto did shave 4 million British pounds ($7.2 million) off the bonuses of three top executives.
This ‘valuation’ of the site’s destruction has angered some investors.
“Remuneration appears to be the only sanction applied to executives. This raises the question – does the company feel that £4 million is the right price for the destruction of cultural heritage?” said Australian Council of Superannuation Investors Chief Executive, Louise Davidson. “The company should explain why greater accountability was not applied in light of this disaster, ” she added.
Davidson, whose organisation represents investors that own an average of 10% of every S&P/ASX 200 Index (ASX: XJO) company, said a third party should have conducted the review.
“The destruction of the caves resulted in a devastating cultural loss… It is of significant concern to investors because it puts at risk Rio Tinto’s relationship with key stakeholders and its social licence to operate,” she said. “An independent and transparent review would have given investors greater confidence that accountability applied was appropriate and proportionate,” Davidson added.
Blakey said Rio Tinto’s behaviour was a “wake-up call for all investors”.
“It has caused us to review how we are assessing company performance,” she commented.
“Investors expect companies to think strategically about future opportunities and risks that may impact their businesses. Likewise, they should also be thinking about how changing societal expectations may impact their decisions around heritage and community engagement,” she went on to say.