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12 August, 2005ICEM News release No. 44/1998
Rio Tinto is the world's biggest mining company. But is it the best?
That is the stark question confronting Rio Tinto shareholders as they go into the company's Annual General Meeting in London this morning.
Things have been going anything but smoothly for Rio Tinto, which faces one of the most sophisticated campaigns ever mounted to call a global company to order.
Rio Tinto has come in for massive criticism from a coalition of trade unions, environmentalists, human rights organisations, indigenous people’s representatives and other campaigners worldwide. They cite the company’s breaches of UN resolutions, its environmental pollution and its abuse of human rights - notably trade union rights and the rights of indigenous peoples.
In campaigning for major reform of Rio Tinto's business ethics and practices, the 20-million-strong International Federation of Chemical, Energy, Mine and General Workers' Unions (ICEM) and the whole of the world trade union movement are allying themselves with organisations such as Oxfam, Greenpeace and the World Development Movement.
Rio Tinto has also recently been the subject of highly critical motions and questions in the British and Australian parliaments. Similar parliamentary moves are likely in a number of other countries where the mining multinational operates.
STAKEHOLDERS' REPORT
Shareholders arriving for the AGM in London this morning were handed a glossy 56-page book which bears a more than passing resemblance to the company's own annual report.
But this is the Stakeholders' Report: RIO TINTO - TAINTED TITAN - now also available online.
And stakeholders are not only those who put money into the company. At least as important are the people who contribute their labour and the people whose lives and environment are deeply affected by Rio Tinto's worldwide operations.
None of these groups is at all happy with Rio Tinto's behaviour. Nor, the stakeholders argue, should shareholders be particularly delighted about the company's prospects.
Among those handing out the stakeholders' report was British Member of Parliament Michael Clapham. Last month, backed by fellow-parliamentarians Eric Clarke, Tony Benn, Ken Purchase, Ernie Ross and Ann Clwyd, Clapham tabled a highly critical House of Commons motion about Rio Tinto. More than 20 other British legislators have signed up to the motion, which describes Rio Tinto as "probably the most uncaring and ruthless company in the world" and urges shareholders to drum some ethics into the multinational.
In-depth analysis of a different kind was provided this morning by a JCB mechanical excavator cruising in front of the AGM venue. "Rio Tinto Dumps On Human Rights," a banner on the JCB proclaimed. Hardly a scoop - but it was hanging from the scoop.
FINANCIAL PROSPECTS
Rio Tinto's profit for 1997 - an increase of 11 percent over 1996 - is a "creditable financial performance," the stakeholders' report says. But future profits could be at risk because "there are relatively few commodities and regions in which the company is performing well in terms of profitability."
More significantly, the report cites a number of growing risks for Rio Tinto, including:
a focus on cost-cutting rather than value-adding
costly technical problems associated with very large-scale project
exposure to Asian markets which are expected to either contract or fail to grow over the coming years
increasing financial exposure at head office to environmental and occupational health and safety problems in subsidiary operations
politically and financially costly conflicts with indigenous peoples
numerous and lengthy industrial disputes caused by a reluctance to recognise the legitimate role of trade unions and collective bargaining in its operations (disputes in the Australian coal industry alone have cost Rio Tinto up to 70 million US dollars so far).
The financial section of the report also questions the level of Rio Tinto's financial commitments to the communities in which it operates: "The [company's] 1997 Annual Report states that US$31.9 million were 'invested in the community', a significant increase on its 1996 contribution (US$22.7 million) but still only 0.4 percent of turnover and 2.6 percent of net profits. In sharp contrast, the band of 15 men who are Rio Tinto's directors received total remuneration in 1997 of 15.1 million Australian dollars (US$11.2 million at average 1997 exchange rates) ... The level of remuneration of directors has led to Rio Tinto being considered to be amongst the worst corporate offenders in the 'fat cat' league table."
In a detailed analysis of Rio Tinto's assets and prospects, the stakeholders' report warns shareholders: "With limited prospects for either new investment or greater profits from existing operations in 1998, the easiest way for the company to increase share prices is through its proposed share buy-back. Fewer shares for the same amount of assets leads (other things being equal) to an increase in share price." But this strategy "is also contingent on debt financing costs remaining low... Increasing debt levels purely for the purpose of massaging the balance sheet is a highly artificial manoeuvre unrelated to operational performance and has caused concern amongst some analysts."
The report goes on to examine some of the problems confronting Rio Tinto:
HUMAN RIGHTS
"The most serious indictment against Rio Tinto is that the company has allowed, or even actively collaborated in, the denial of basic human rights enshrined in international conventions. Rio Tinto has passively accepted the intervention of the military or police using brutal and repressive actions to quell legitimate protest against some of its mining operations."
Indigenous peoples' land rights are a particular concern here, and the report includes detailed case studies from Indonesia, the Philippines and Australia. In addition to land grabs, Rio Tinto is accused of destroying indigenous peoples' sacred sites. "How would you consider it if Rio Tinto were to suggest a diamond mine under Cologne Cathedral?" asks the stakeholders' report. "What if gold was found under Westminster Abbey? These are not facetious questions, but important issues for shareholders to confront."
Trade union rights are another big issue.
In Australia, its largest area of overseas operations, Rio Tinto is well-known as the biggest anti-union company in the country. It has been repeatedly found by independent bodies to have actively de-unionised its workplaces, to have discriminated against workers who bargain collectively, and to favour workers who surrender their right to be represented by a union.
A senior Rio Tinto executive, Mike Angwin, was seconded to the Australian federal government to draft anti-union legislation which was subsequently adopted. That legislation was seriously discredited by the recent court rulings in favour of unfairly dismissed Australian dockers. It has also been condemned by a panel of international legal experts within the UN’s International Labour Organisation.
Other countries where Rio Tinto has had industrial disputes in the last two years are Norway, Portugal, Chile and Indonesia. South African, Zimbabwean and Namibian unions also have a series of grievances against the company.
ENVIRONMENT AND HEALTH & SAFETY
In the past year, Rio Tinto has expanded or embarked on mining projects in a number of environmentally sensitive regions. The report includes critical case studies of the company's environmental impact in Indonesia, Papua New Guinea, the United Kingdom and Madagascar.
Rio Tinto's record on occupational health and safety is also scrutinised. In particular, the stakeholder's report cites the case of Edward Connelly, a Scots engineer who is currenly suing Rio Tinto in the British courts. He alleges that lax safety procedures at the company's Rössing uranium mine in Namibia caused him to contract cancer.
The stakeholders' report is already drawing considerable attention from shareholders and the media.
QUESTIONING CONTINUES
The questioning of Rio Tinto's activities will continue today. Campaigners, including international trade union leaders, have acquired company shares that should permit them to raise questions inside the AGM.
And from 13.00 UK time today, the campaigners will hold a Factual General Meeting of their own nearby - in London's Methodist Hall. The Factual General Meeting will be open to the public. Various guests have been invited to attend and give their views. One invitation went to Rio Tinto CEO Leon Davis, who is unfortunately otherwise engaged. Speakers will include indigenous people’s representatives and trade union leaders from various countries in which Rio Tinto operates. A documentary on Rio Tinto, called Naked Into The Jungle, will be screened continuously in the FGA entrance hall.
ICEM UPDATES on the AGM questions and the Factual General Assembly will be issued as details become available.
That is the stark question confronting Rio Tinto shareholders as they go into the company's Annual General Meeting in London this morning.
Things have been going anything but smoothly for Rio Tinto, which faces one of the most sophisticated campaigns ever mounted to call a global company to order.
Rio Tinto has come in for massive criticism from a coalition of trade unions, environmentalists, human rights organisations, indigenous people’s representatives and other campaigners worldwide. They cite the company’s breaches of UN resolutions, its environmental pollution and its abuse of human rights - notably trade union rights and the rights of indigenous peoples.
In campaigning for major reform of Rio Tinto's business ethics and practices, the 20-million-strong International Federation of Chemical, Energy, Mine and General Workers' Unions (ICEM) and the whole of the world trade union movement are allying themselves with organisations such as Oxfam, Greenpeace and the World Development Movement.
Rio Tinto has also recently been the subject of highly critical motions and questions in the British and Australian parliaments. Similar parliamentary moves are likely in a number of other countries where the mining multinational operates.
STAKEHOLDERS' REPORT
Shareholders arriving for the AGM in London this morning were handed a glossy 56-page book which bears a more than passing resemblance to the company's own annual report.
But this is the Stakeholders' Report: RIO TINTO - TAINTED TITAN - now also available online.
And stakeholders are not only those who put money into the company. At least as important are the people who contribute their labour and the people whose lives and environment are deeply affected by Rio Tinto's worldwide operations.
None of these groups is at all happy with Rio Tinto's behaviour. Nor, the stakeholders argue, should shareholders be particularly delighted about the company's prospects.
Among those handing out the stakeholders' report was British Member of Parliament Michael Clapham. Last month, backed by fellow-parliamentarians Eric Clarke, Tony Benn, Ken Purchase, Ernie Ross and Ann Clwyd, Clapham tabled a highly critical House of Commons motion about Rio Tinto. More than 20 other British legislators have signed up to the motion, which describes Rio Tinto as "probably the most uncaring and ruthless company in the world" and urges shareholders to drum some ethics into the multinational.
In-depth analysis of a different kind was provided this morning by a JCB mechanical excavator cruising in front of the AGM venue. "Rio Tinto Dumps On Human Rights," a banner on the JCB proclaimed. Hardly a scoop - but it was hanging from the scoop.
FINANCIAL PROSPECTS
Rio Tinto's profit for 1997 - an increase of 11 percent over 1996 - is a "creditable financial performance," the stakeholders' report says. But future profits could be at risk because "there are relatively few commodities and regions in which the company is performing well in terms of profitability."
More significantly, the report cites a number of growing risks for Rio Tinto, including:
a focus on cost-cutting rather than value-adding
costly technical problems associated with very large-scale project
exposure to Asian markets which are expected to either contract or fail to grow over the coming years
increasing financial exposure at head office to environmental and occupational health and safety problems in subsidiary operations
politically and financially costly conflicts with indigenous peoples
numerous and lengthy industrial disputes caused by a reluctance to recognise the legitimate role of trade unions and collective bargaining in its operations (disputes in the Australian coal industry alone have cost Rio Tinto up to 70 million US dollars so far).
The financial section of the report also questions the level of Rio Tinto's financial commitments to the communities in which it operates: "The [company's] 1997 Annual Report states that US$31.9 million were 'invested in the community', a significant increase on its 1996 contribution (US$22.7 million) but still only 0.4 percent of turnover and 2.6 percent of net profits. In sharp contrast, the band of 15 men who are Rio Tinto's directors received total remuneration in 1997 of 15.1 million Australian dollars (US$11.2 million at average 1997 exchange rates) ... The level of remuneration of directors has led to Rio Tinto being considered to be amongst the worst corporate offenders in the 'fat cat' league table."
In a detailed analysis of Rio Tinto's assets and prospects, the stakeholders' report warns shareholders: "With limited prospects for either new investment or greater profits from existing operations in 1998, the easiest way for the company to increase share prices is through its proposed share buy-back. Fewer shares for the same amount of assets leads (other things being equal) to an increase in share price." But this strategy "is also contingent on debt financing costs remaining low... Increasing debt levels purely for the purpose of massaging the balance sheet is a highly artificial manoeuvre unrelated to operational performance and has caused concern amongst some analysts."
The report goes on to examine some of the problems confronting Rio Tinto:
HUMAN RIGHTS
"The most serious indictment against Rio Tinto is that the company has allowed, or even actively collaborated in, the denial of basic human rights enshrined in international conventions. Rio Tinto has passively accepted the intervention of the military or police using brutal and repressive actions to quell legitimate protest against some of its mining operations."
Indigenous peoples' land rights are a particular concern here, and the report includes detailed case studies from Indonesia, the Philippines and Australia. In addition to land grabs, Rio Tinto is accused of destroying indigenous peoples' sacred sites. "How would you consider it if Rio Tinto were to suggest a diamond mine under Cologne Cathedral?" asks the stakeholders' report. "What if gold was found under Westminster Abbey? These are not facetious questions, but important issues for shareholders to confront."
Trade union rights are another big issue.
In Australia, its largest area of overseas operations, Rio Tinto is well-known as the biggest anti-union company in the country. It has been repeatedly found by independent bodies to have actively de-unionised its workplaces, to have discriminated against workers who bargain collectively, and to favour workers who surrender their right to be represented by a union.
A senior Rio Tinto executive, Mike Angwin, was seconded to the Australian federal government to draft anti-union legislation which was subsequently adopted. That legislation was seriously discredited by the recent court rulings in favour of unfairly dismissed Australian dockers. It has also been condemned by a panel of international legal experts within the UN’s International Labour Organisation.
Other countries where Rio Tinto has had industrial disputes in the last two years are Norway, Portugal, Chile and Indonesia. South African, Zimbabwean and Namibian unions also have a series of grievances against the company.
ENVIRONMENT AND HEALTH & SAFETY
In the past year, Rio Tinto has expanded or embarked on mining projects in a number of environmentally sensitive regions. The report includes critical case studies of the company's environmental impact in Indonesia, Papua New Guinea, the United Kingdom and Madagascar.
Rio Tinto's record on occupational health and safety is also scrutinised. In particular, the stakeholder's report cites the case of Edward Connelly, a Scots engineer who is currenly suing Rio Tinto in the British courts. He alleges that lax safety procedures at the company's Rössing uranium mine in Namibia caused him to contract cancer.
The stakeholders' report is already drawing considerable attention from shareholders and the media.
QUESTIONING CONTINUES
The questioning of Rio Tinto's activities will continue today. Campaigners, including international trade union leaders, have acquired company shares that should permit them to raise questions inside the AGM.
And from 13.00 UK time today, the campaigners will hold a Factual General Meeting of their own nearby - in London's Methodist Hall. The Factual General Meeting will be open to the public. Various guests have been invited to attend and give their views. One invitation went to Rio Tinto CEO Leon Davis, who is unfortunately otherwise engaged. Speakers will include indigenous people’s representatives and trade union leaders from various countries in which Rio Tinto operates. A documentary on Rio Tinto, called Naked Into The Jungle, will be screened continuously in the FGA entrance hall.
ICEM UPDATES on the AGM questions and the Factual General Assembly will be issued as details become available.