Commentary

Rio Tinto’s ‘Co-management’ Business Model Must be Standard-setter

Respect for Indigenous rights is inherent to the green energy transition, say Joan Carling of Indigenous Peoples Rights International and Business and Human Rights Resource Centre’s Michael Clements.

Almost exactly two years ago, in Australia’s remote Pilbara region, mining firm Rio Tinto detonated explosives that collapsed the Juukan Gorge: a sacred, 46,000-year-old cave of enormous archaeological value and incalculable cultural significance. The Puutu Kunti Kurrama and Pinikura (PKKP) people clarified for the world it was not “rocks and carvings” lost in the incident, but something much more precious.

Recently, Rio Tinto marked the anniversary of the debacle by announcing a non-binding agreement with the PKKP owners, to “co-manage” a portion of its iron ore concession there. A press announcement stated the agreement will “involve earlier and more detailed consultation, increased sharing of information, and greater involvement of PKKP representatives in Rio Tinto’s decision-making throughout the lifecycle of the mine”.

That’s long on aspiration and short on detail – but the aspiration sounds like the most basic asks of most mining host communities, many of them Indigenous peoples, around the world today.

More than fine words

Indigenous peoples have land tenure or management rights over some 25% of the earth’s land mass. Increasing international acknowledgement of Indigenous peoples’ rights to self-determine the course of their development and the use of resources on their lands, combined with burgeoning community protests against mining projects, means agreements like that between PKKP and Rio Tinto are ones to watch. Will this become just more fine words, or could it be at the vanguard of a new business model? Mining companies, their investors, and the states in which they operate have increasingly little choice but to look for more sustainable models of community involvement and – importantly – benefit.

This search is given impetus because the world stands on the brink of a new mining boom to supply the massive increase in metals required to power the green energy transition.

It’s a daunting task. The ‘social licence to operate’, though ill-defined, is today a must-have for the mining companies which generally profess to give it top priority. It is perhaps best described as the aggregate of local stakeholder trust that a company’s activities and overall posture will deliver net benefit, which can confer an implicit legitimacy on a mining project.

It’s also easy to see when a company doesn’t have it – with real implications for investors.

Rio Tinto knows this well, as do others across the world. The Las Bambas copper mine Peru has been suspended for more than a month due to community allegations it failed to honour commitments to local stakeholders. Chile’s government recently declined a crucial expansion permit for Anglo American’s Los Bronces copper mine, reportedly due in part to public health concerns, and Rio Tinto’s lithium project in Serbia was terminated last month in the wake of fierce community opposition.

Not at any cost

These are not standalone examples. The recent publication by the Business and Human Rights Resource Centre of its Transition Mineral Tracker, an assessment of the human rights records of these companies, revealed widespread allegations of land, water and Indigenous rights abuses across the globe. Rising dissent is evident, with Indigenous human rights defenders frequently at the frontline of resistance to irresponsible mining operation and investment, and the first to face repression.

ESG investors in the just transition should take note. The sixfold increase in transition energy minerals – including cobalt, copper, and zinc – required by 2030 if we are to arrest the climate crisis offers opportunity for shared benefit, but also significant risks. Patterns of human rights abuse and rising community protest in response reflect an increasingly evident truth: Indigenous peoples will not yield to the demand for minerals at any cost.

Real efforts to create robust compacts between companies and these communities are essential if the world is to benefit from the development of these resources, and if long-term investors in these companies are to realise sustainable returns. Demands for Indigenous peoples’ access to information, benefit and a bigger say throughout mining lifecycles – beginning with the fundamental principle of free, prior and informed consent – therefore represent opportunities for rethinking what sustainable mining in the transition to clean energy might look like.

In a recent article, the Centre for Social Responsibility in Mining highlighted the dearth of investor and mining company initiatives to build deeper partnerships with Indigenous communities, including co-ownership with shared asset models, co-management and co-benefit. This fresh approach is now required, to determine if and how resources on Indigenous peoples’ land are developed, and to create models of shared benefit with long-term stability once they are.

Driving new models

Investors who manage long-term capital have a real stake in driving this changed business model, as they identify investee companies which can reliably supply the raw materials needed for the energy transition. This will be made far easier by company commitments to shared prosperity with and respect for the communities on whose land these mining projects will be built. This means investors also have a critical role in ensuring the often-neglected ‘social’ aspect of ESG investment, including operational impacts on Indigenous peoples’ rights, are properly disclosed and assessed, and that due diligence efforts include engagement with these communities themselves.

Many will be watching the evolution of the relationship between the PKKP and Rio Tinto, to see whether a new social compact for sustainable mining can be created out of the shambles of the Juukan Gorge. It shouldn’t take a catastrophe for Indigenous communities to be recognised as deserving a seat at the table in charting their own development, on their ancestral land, and around what they deem precious. The ability to extract the vast quantity of minerals required to power the green energy transition depends on it.

 

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