New Rio Tinto boss Jakob Stausholm has used the company’s latest production report to underline his understanding of the remediation efforts needed in the wake of the Juukan Gorge disaster.
Rio’s destruction of ancient caves in the Pilbara led to the exit of Mr Stausholm’s predecessor Jean-Sébastien Jacques.
In a note to staff on Tuesday, Mr Stausholm said “Juukan Gorge has taken its toll on many of us and, understandably, many of you are disappointed and feel let down.
“For this I am truly sorry. We are working hard to heal and rebuild our relationships, credibility and reputation – both internally and externally.
“I do not underestimate the time and effort it will take to achieve this. I have met many of you who care deeply about Rio and our host communities. We each have a role to play and, collectively, we will learn from this sad incident and put ourselves in the shoes of others to better understand diverse views, improve the way we do things, and work hard to make this a better, more caring company which is more in tune with society.”
In his formal release to the market Stausholm said: “We are also developing additional measures to strengthen our partnerships with traditional owners, including a commitment to modernise and improve agreements, particularly in the Pilbara.
“More broadly, we are determined to improve Rio Tinto’s approach to stakeholder engagement globally by embedding a more inclusive approach that strengthens our overall thinking, decision-making and performance”.
Last year Rio put Mark Davies as head of heritage and community relations splitting the functions from corporate relations.
Former corporate relations boss Simone Niven has left the company and a replacement is yet to be named.
There is much corporate speak involved but it seems Stausholm does understand the trust deficit the company faces and the urgent need to repair the damage.
In the middle of a boom in iron ore boom there are other issues with Rio Tinto’s annual production which is stuck on a plateau of between 330-340 million tonnes a year below nameplate capacity at 360 million tonnes.
At a time when prices are at $US115 a tonne Rio along with the rest of industry would be aiming to boost production output to get the returns when it can.
Some say supply is being held back to maximise prices but now is not the time for those games and Rio Tinto would be wanting to bank the profits now.
There are obvious reasons for the shortfall including natural caution in the wake of the Juukan Gorge tragedy, COVID and issues with autonomous haulage, but it is an issue for the new boss to address.
Shaw & Partners’ Peter O‘Connor noted Tuesday: “System capacity and delivery should line up to 360mt over the medium term.”
Australian iron ore companies are in the best of times with iron prices around the $US115 a tonne mark amid strong Chinese demand.
They are in the fortunate position of being one of the few products on which China actually relies on Australia and hence won’t touch.
Amid the present debacle in Australia-China trade relations with everything from education to barley to wine under attack it is worth noting China is attacking only those products which it can’t source elsewhere.
Brazil’s Vale has had its issues and undoubtedly China is working overtime to find alternate supplies because that’s just what any smart buyer would do and with the Rio Simandou project in Africa a viable solution is possible.
Many in WA rightly believe the China situation is far more worrying for Australia’s economic future than even the pandemic.
Frankly the federal government has handled it badly and companies like Rio Tinto need to work overtime to balance the ledger.
Given the Chinese government has a 15 per cent stake in Rio Tinto the imperative is even greater.
APRA vacancy
Josh Frydenberg is close to unveiling who will be his replacement for Geoff Summerhayes at the Australian Prudential Regulation Authority.
One name doing the rounds is UK-based PwC global regulatory boss Margaret Cole, whose partner works in Australia and reportedly is keen to get a job down under. The Treasurer’s office declined comment but Cole would be ideal, given her legal background on a regulator dominated by economists and her experience as the former director of enforcement and financial crime at the FSA in Britain.
Waste not, want not
Australia’s first hazardous waste player, Tellus Holdings, is now collecting waste at its Sandy Ridge facility north of Kalgoorlie.
Its first intake started last quarter and revenue is starting to flow on the 10 year project.
It is based on a 70 million year old clay bed, and the betting is if the geology stays firm for that long it is likely to continue. The unlisted company is backed by Melbourne-based billionaire Peter Scanlon, who owns just under 20 per cent and has nominated former Seek executive Joe Powell to the board, chaired by infrastructure guru Phil Garling.
He likens the project to a toll road with big upfront costs then a long tail of collecting monopoly rents.
Hazardous waste is a given and for companies faced with carrying the material on their balance sheets Tellus offers so-called permanent isolation certificates which take the product off their books and on to Tellus’s.
After founder Duncan van der Merwe returned home to South Africa last year, former US lawyer and US executive Nathanial Smith took over as chief executive.
His job, among other issues, is to handle community relations as the company develops other sites around the country, including near Broken Hill in NSW and Alice Springs in the Northern Territory.
There is one billion tonnes of hazardous waste around Australia and Tellus wants to be the “Australian leader in geological repository waste solutions”.
It won’t touch explosives, nuclear and medical waste or international waste, but is open to opportunities by recovering the material in the hope of reusing the waste in a so-called circular economy.
The company, which will look at a possible sale or listing in three years once it is fully operational, has $100m in debt on its books.
The delays in Melbourne’s West Gate tunnel project due to contaminated soil highlight the opportunities ahead, as do the increased rare earth projects.