Yahoo Finance 'Rio is still on notice': native title groups say mining company's reshuffle is mainly PR
Aboriginal native title groups say Rio Tinto’s executive reshuffle is a sign the company is in “PR mode” and the new appointments won’t lead to meaningful change in the miner’s dealings with traditional owners.
Investors also remain sceptical as to whether Rio has committed to the cultural change needed after it destroyed 46,000-year-old rock shelters at Juukan Gorge in the Pilbara. They are flagging a confrontation with management at the company’s annual meeting in May if it cannot convince them it has taken substantial action to avoid repeating the disaster.
As part of the reshuffle announced on Thursday, Rio Tinto created a new position – chief executive for Australia – to be filled by Kellie Parker, who is responsible for the company’s aluminium operations in Australia and New Zealand.
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Parker “will focus on rebuilding trust and strengthening external relationships across Australia”, Rio said in a statement.
Rio’s decision to blow up the Juukan Gorge shelters drew global outrage from Indigenous groups and shareholders. It led to the resignation of the chief executive, Jean-Sébastien Jacques, and two other senior executives. A federal parliamentary inquiry into the disaster found Rio’s actions were “inexcusable”.
“Rio knew the value of what they were destroying but blew it up anyway,” the inquiry’s interim report stated.
It recommended Rio Tinto negotiate a restitution package with the Puutu Kunti Kurrama and Pinikura traditional owners (PKKP), undertake an independent review of all agreements it has with traditional owners and remove any gag clauses.
In August, the company promised to overhaul the way it dealt with Indigenous heritage, including by having heritage issues managed by technical staff rather than through its corporate affairs division.
The chief executive of the National Native Title Council, Jamie Lowe, said it was disappointing Rio’s announcement of its executive changes made no mention of the company’s commitment to managing Aboriginal heritage.
“Our concern generally is there’s still a bit of PR spin here,” Lowe said. “That is the trap they fell into over the past five years about how they manage issues, where it wasn’t about doing the right thing but about how they could spin it.”
“We are keeping a close eye on them, because there remains a lot of grey areas with their Indigenous relations.”
Lowe said he was concerned that the list of new appointees lacks an “Australian presence” or anyone with a strong expertise in working with Aboriginal traditional owners.
“We are waiting to see if it translates into any meaningful change,” Lowe said. “Rio still on notice.”
The chief executive of $52bn superannuation fund Hesta, which has been a leading critic of the company among institutional investors, said the reshuffle could help the company change its governance and culture.
“It’s important that we now also see senior leadership and board take substantial action to fully implement the very significant initial recommendations of the parliamentary inquiry,” Debby Blakey said.
She repeated Hesta’s demand that Rio open all its agreements with traditional owners to independent review.
“Companies that fail to negotiate fairly and in good faith with Indigenous communities represents a clear systemic risk to investors,” she said.
“Without a full, transparent review of these agreements, investors cannot be confident this risk is being managed appropriately.”
Rio’s progress on improving its governance and culture “will inform our share voting at Rio’s AGM in May,” she said.
Brynn O’Brien, the executive director of activist shareholder group the Australasian Centre for Corporate Responsibility, said “deep cultural change” was needed at Rio, a test of which would be whether it went ahead with the destruction of sites significant to the Apache people at Oak Flat in Arizona. A joint venture between Rio and BHP, Resolution Copper, plans to mine the area for copper.
“The next three to six months are the critical time for Rio Tinto’s refreshed leadership structure and executive committee to demonstrate that they are capable of delivering that change,” O’Brien said.
“Shareholder reservations about board competency remain, and we expect that investors will be looking to the company’s AGM in May as an opportunity for renewal.”
She said Rio should act boldly and decisively to “draw a line under the company’s recent past, and realign the company’s culture and behaviour with its human rights and climate commitments”.
“Will Rio Tinto respect the wishes of Apache people of Arizona, or will they proceed with copper mining plans that will destroy sites of immense cultural and spiritual value as they did with the Juukan Caves? Will the new leadership team put further structure around the company’s climate performance? Will they finally take action and deal with the company’s legacy issues in Bougainville in a transparent and meaningful way? These are the crucial questions for the new leadership team and investors will be watching developments closely.”
Parker will be based in Melbourne, which has traditionally been Rio’s Australian headquarters but was downgraded by Jacques in favour of Sydney and London.
The location will put her closer to key shareholders such as industry super funds, many of which have been critical of Rio’s handling of Juukan Gorge.
In addition to the new CEO Australia job, Rio CEO Jakob Stausholm has also created a chief operating officer position, and appointed a permanent replacement for iron ore boss Chris Salisbury, who resigned in the wake of the Juukan Gorge disaster.
Simon Trott, who is chief commercial officer, will become head of iron ore while head of copper and diamonds Arnaud Soirat will become chief operating officer.
Related: 'Gobsmacked': how to stop a disaster like Juukan Gorge happening again
Sinead Kaufman, who is an executive in the copper and diamonds division, will become chief executive of minerals.
Stausholm said Rio had performed well despite Covid-19 but there were “improvements we can achieve across the business to make Rio Tinto more resilient, and an even stronger performer and employer”.
“I want to reestablish Rio Tinto as a trusted partner for host communities, governments and other stakeholders,” he said.
The changes are effective from 1 March.
