Rio Tinto chairman links coal exit to climate action

Rio Tinto’s chair has linked the big miner’s exit from coal assets to concerns about climate change at today’s AGM.

Rio Tinto chairman Simon Thompson addresses the company’s AGM in Melbourne earlier today.

Rio Tinto chairman Simon Thompson has for the first time linked the company’s exit from New South Wales thermal coal mines to climate change concerns, saying the decision was influenced by the implications of climate change on coal supply and demand.

The statements were made at the company’s Melbourne AGM this morning, where Rio (RIO) faces shareholder resolutions brought by the Australasian Centre for Corporate Responsibility to review its membership of business lobby groups, such as the Minerals Council of Australia, based on their climate change positions.

Rio has advised shareholders to vote against the resolutions, which have gained support from investors including Local Government Super, and it is expected to be voted down.

Despite that advice, Mr Thompson said he thought Rio had “absolutely supported the substance of the resolution.”

“We have had a clear public policy position on climate change for 20 years. used carbon pricing for 10 years ... since 2008 a 38 per cent reduction in greenhouse emissions (and a) reduction in intensity of greenhouse gas emissions.,” he said.

“We are in the process of divesting all our interests in fossil fuels.”

Rio has previously said it sold its Hunter Valley thermal coal assets (which supply power stations) and its Queensland coking coal mines (which supply steel mills) for a combined $US4 billion because it had better investment options in iron ore, copper and coal.

When pressed on what was behind the sales, Mr Thompson said it was purely a commercial decision but that climate change played a role.

“(It was) based purely on value (but) we very much took into account the implications of climate change for the supply and demand of the commodity going forward,” he said.

He added Rio was very happy with the prices it achieved.

The comments came after the chairman admitted legal action from US and Australian authorities over its disclosures in relation to a past acquisition in Mozambique and a Guinea bribery probe from Britain has hit the company’s reputation.

But he has denied the company did anything wrong in delaying an impairment on Mozambique, as alleged by the Australian Securities and Investments Commission yesterday.

“We strenuously deny these allegations and will vigorously defend ourselves in court,” Mr Thompson said of both the ASIC action and a fraud case on the same matter brought by the US Securities and Exchanges Commission.

Mr Thompson was speaking at Rio’s annual general meeting in Melbourne this morning.

“Over the past two years, our reputation has been called into question, by allegations of accounting fraud in relation to former assets in Mozambique and of bribery in Guinea,” he said.

On Guinea, where Britain’s Serious Fraud Office is investigating a $US10.5 million payment to a consultant in 2011, Mr Thompson repeated statements made at last month’s London AGM.

“After an independent investigation, the board concluded that the proper internal procedures had not been followed in relation to this payment,” he said.

As reported previously by The Australian, Rio has found no evidence of wrongdoing by Rio in its internal investigations but it cannot say what happened to the money once the payment was made.

This lack of certainty is believed to be partly a result of procedure not being followed.

At the AGM, Rio chief Jean-Sebastien Jacques said he was optimistic about commodities demand.

“We remain positive about the outlook for the industry and your company,” Mr Jacques said.

“While we see some emerging inflationary and input cost pressure in the near term — as well as increasing volatility driven by trade and protectionism — mid to long-term global growth is solid.”