Rio Tinto: Corporate Rap Sheet

Rio Tinto

By Philip Mattera

Rio Tinto, one of the largest mining companies in the world, started out in 1873 as a copper operation in Spain but now has operations on six continents, with the largest presences in Australia and North America. Its products include aluminum, copper, diamonds, coal, uranium, gold, iron ore, and industrial minerals (borates, titanium dioxide, salt, and talc). Rio Tinto, which has dual headquarters in London and Melbourne, is one of the most controversial corporations in a controversial industry. Mining industry critic Danny Kennedy once called the company—a frequent target of criticism over its policies relating to the environment, labor relations, and human rights—“a poster child for corporate malfeasance.”

In January 2013 Rio Tinto's chief executive was forced to resign after the company took a $14 billion write-down on the value of aluminum and coal mining assets.


Environment and product safety 

From the beginning, Rio Tinto’s operations have had adverse environmental impacts. Aside from the effect on the land of the open-cast mining, operations in Spain befouled the air by heating ore on site to burn off the sulfur. The heavy smoke damaged vegetation, crops, and the health of local residents. The company's contended that these effects were unavoidable side effects of progress. An Anti-Smoke League was formed, and the elimination of the ore burning was one of the demands put forth by the unsuccessful uprising of workers in 1888. After that incident the Spanish government issued a decree limiting the amount of burning, but the company had it withdrawn. The company, however, developed a new process that eliminated the burning.

In the following decades there were frequent controversies over the environmental and health effects of the company's operations. Soon after the construction of Rio Tinto's lead and zinc smelter in Avonmouth, England, in the late 1960s, reports surfaced that workers at the facility were developing greatly elevated levels of lead in their blood. High concentrations of toxic metals were also found in nearby waterways. Similar problems have arisen at the company's Capper Pass tin smelting plant in Yorkshire (now closed) and other smelters in Wales.

Workers at the Elliot Lake uranium mines operated by a Rio Tinto subsidiary in Canada were being exposed to radiation levels seven times higher than the recommended limit. Pressured by the Steelworkers union, the company agreed in 1981 to a plan under which the union sent its own safety inspectors into the mines.

The company at times used political influence to get around environmental regulations. In the late 1970s it successfully lobbied the U.S. Congress to ignore the objections of the Carter administration and allow it to open a molybdenum mine in a national park in Alaska.

Over the years Rio Tinto has faced formidable opposition, especially from groups of indigenous people and their supporters. In Panama, for instance, the Guaymi Congress joined with the Catholic Church and other groups to block the company's plan for a huge copper mining project. The operation would have displaced thousands of indigenous people and the destroyed their land.

After purchasing Kennecott Copper from British Petroleum in 1989, Rio Tinto inherited a new set of environmental problems. Kennecott’s operation in Utah, one of the biggest emitters of toxic pollutants in the country, was hit with heavy fines for improper use of transformers using PCBs. The operation was also repeatedly charged with groundwater contamination violations and eventually had to sign a $20 million consent decree with the U.S. Department of Justice.

In the late 1980s and early 1990s, Flambeau Mining in Wisconsin, a unit of Rio Tinto's Kennecott subsidiary, faced opposition to its plan to open an open-pit copper mine within fishing and hunting lands of Chippewa Native Americans. The Chippewa joined with environment groups such as Greenpeace and Earth First! in opposing the project. Although the state allowed the project to proceed, opponents kept up the battle, with occupations of the site and other non-violent protests. The mine was closed in 1997 after being depleted, but controversy continued over whether the company did adequate reclamation of the site.

More recently, Kennecott has faced opposition to its plan for a nickel and copper mine in the Upper Peninsula of Michigan. Suspicions were heightened when it was learned that the state’s Department of Environmental Quality failed to make public (inadvertently, it said) documents that raised safety concerns about the project. The agency nonetheless gave its approval.

Rio Tinto’s Palabora copper mine in South Africa has had a negative environmental impact on flora and fauna in the adjacent Kruger National Park. A 2004 scientific study notes that, in parts of the park, copper dust from the mine can be found in the topsoil and on the bark and leaves of trees. An earlier study found that exposure to copper contamination was responsible for abnormalities in the sperm of impala (antelope) in the park.

A 2007 report by Friends of the Earth charged that a titanium dioxide mine project launched by a Rio Tinto subsidiary in Madagascar was damaging the local economy, exacerbating poverty, and threatening the unique biodiversity.

In 2008 Rio Tinto announced that its Kennecott Utah Copper subsidiary had been chosen to provide gold and silver for an initiative by Wal-Mart Stores to sell “fully traceable, responsibly-produced jewelry” under the name “Love, Earth.”

 

Labor

There was a long history of antagonistic labor relations at the Spanish mines where Rio Tinto’s original operations were located. As the company expanded internationally after World War II (and returned the Spanish mines to government control), it gained a reputation for harsh treatment of unions and workers. For example, in 1974 its U.S. Borax subsidiary did battle with the International Longshoremen's and Warehousemen's Union (ILWU) when the collective bargaining agreement expired at the company's flagship Boron mine in the Mojave Desert. The company kept production going during the violent 132-day dispute by using supervisory and administrative personnel. In 2010 more than 500 workers at the Boron mine were locked out by management after voting against contract concessions. The dispute ended three months later when the ILWU negotiated a new six-year contract with the company.

Black workers at Rio Tinto's huge Rössing uranium mine in Namibia—which the company operated during the apartheid era in defiance of United Nations decrees—were forced to live in a squalid tent camps and were paid wages that barely allowed subsistence. Labor relations have remained tense at Rössing, resulting in periodic strikes such as a wildcat walkout in April 2008. Similar tensions have existed at the company’s Palabora copper mine in South Africa, where, for example, members of the National Union of Mineworkers staged a three-week walkout in 2001.

Rio Tinto’s Hamersley Iron operation in Australia was the site of a bitter two-week strike in 1992 over union rights. The company later brought suit against the unions, which charged that the company had provoked the walkout. In the wake of the dispute, the unions were forced out. It was not until 2003, after a change in West Australia labor law, that the unions started to regain their status. But the battles continued. In October 2008 iron ore drivers staged industrial actions to press for collective bargaining rights.

The company’s labor relations posture has prompted unions representing its workers in many parts of the world to work together under the auspices of the International Federation of Chemical, Energy, Mine and General Workers’ Union (ICEM). At a 1998 ICEM gathering in Johannesburg, Rio Tinto unions from a dozen countries decided to launch a global pressure campaign against the company. The campaign staged protests at various annual meetings of the companies and filed shareholder resolutions that won support from some institutional investors.

The efforts of the Rio Tinto Global Network intensified in 2003, when the company faced a miners’ strike in Zimbabwe, a major contract dispute at Kennecott Utah Copper in the United States, and large-scale union organizing drives in Australia. The Kennecott dispute was resolved in June of that year, but the company laid off 120 workers just after the pact was signed, exacerbating union relations once again.

In 2012 Rio Tinto locked out aluminum workers at its operations in the southern Quebec town of Alma for six months before backing down in a dispute over outsourcing.

 

Human Rights 

In 2000 a federal lawsuit was filed against Rio Tinto in the United States on behalf of Papua New Guinea residents who charged that a copper mine on the island of Bougainville operated by the company from 1972 to 1988 generated severe environmental violations. The Alien Tort Claims Act suit also charged that the company conspired with the government of Papua New Guinea to violently suppress civil resistance over the mine, and thus violated the human rights of residents. The case has slowly made it way through the courts. The U.S. Court of Appeals has rejected efforts by Rio Tinto to have the case dismissed, but the company continues its legal maneuvers.

Rio Tinto was also accused of cooperating with the military in nearby Indonesia to suppress opposition to its PT Kelian operation in Kalimantan (now closed) and its Grasberg joint venture operation in the area now known as West Papua. A 2003 report by Friends of the Earth Indonesia documented environmental and human rights abuses at these and other mines in Indonesia and demanded a public apology from the company. A 2007 report by War on Want made similar allegations.

In September 2008 the Norwegian sovereign wealth fund announced it was divesting from Rio Tinto stock because of the environmental damage caused by Grasberg. The Norwegian fund had previously blacklisted Freeport-McMoRan, Rio Tinto’s Grasberg joint venture partner.

By often listing the location of the Murowa diamond mine simply as “in Africa,” Rio Tinto plays down the fact that the operation is in Zimbabwe, where the government faces criticism for widespread human rights abuses.

 

Antitrust

In October 2010 BHP and Rio Tinto abandoned plans to create a $16 billion iron ore joint venture after regulators in Australia and other countries indicated they would block the deal as anti-competitive. (Two years earlier, the two companies had abandoned a plan to merge completely.)

 

Other Controversies

In February 2009 Rio Tinto announced plans for a US$20billion capital infusion by the Aluminum Corporation of China, but four months later the deal collapsed in the face of shareholder and political opposition. In July 2009 the Chinese government detained four Rio Tinto employees, accusing them of stealing state secrets and bribery. In March 2010 the employees pleaded guilty to receiving bribes.

 

Watchdog Groups and Campaigns 

Earthworks

Friends of the Earth International

Great Basin Mine Watch

ICEM (International Federation of Chemical, Energy, Mine and General Workers’ Unions)

London Mining Network

People Against Rio Tinto and Subsidiaries (Partisans)

War on Want

 

Key Books and Reports 

Not On Queen Victoria's Birthday: The Story of the Rio Tinto Mines by David Avery (1974)

Plunder! by Roger Moody (PARTiZANS/CAFCA, 1991).

Rio Tinto Company: An Economic History of a Leading Mining Concern by Charles E. Harvey (1981)

River of Tears: The Rise of the Rio Tinto-Zinc Corporation by Richard West (1972)

 

Note: This page draws from a corporate profile originally prepared by the author for the Crocodyl website in November 2008.

Last updated January 19, 2013.