Rio won’t quit MCA despite climate policy

Rio Tinto appears unlikely to follow BHP Billiton in reviewing Minerals Council of Australia membership.

Rio Tinto CEO Jean Sebastien Jacques in Melbourne this week. Picture: Paul Jeffers

Rio Tinto chief executive Jean-Sebastien Jacques appears unlikely to follow BHP Billiton in reviewing Minerals Council of Australia membership, despite being targeted by the same activist group that drove his bigger rival to review the lobby group’s position on climate change.

The Australasian Centre for Corporate Responsibility (not to be confused with the Australian Centre for Corporate Social Responsibility, a consultancy), has targeted Rio’s MCA membership.

The group says it doesn’t make sense for Rio, which has sold out of thermal coal, to pay fees to a group that lobbies to keep coal generation an option for new power.

It is seeking support for a resolution at the company’s annual general meeting this year, as it did at BHP’s most recent AGM.

Mr Jacques said Rio was engaging with the ACCR.

“We truly believe industry bodies have a role to play, and we are members of the MCA, the ICMM (International Council on Mining and Metals) and quite a few others,” he told The Weekend Australian.

“It doesn’t mean we always agree with their position ... and if, on some specific policies, we disagree, we have our own voice.”

But he said it was important to have an industry mouthpiece.

“When you think the industry needs to tell its story in a better way, sometimes having all of the companies under one umbrella can be positive,” he said.

“For me, they have a role to play but it doesn’t mean we endorse everything they’re doing.”

The ACCR, a partner of the Australia Institute’s Jubilee Australia organisation, last year put a shareholder resolution to BHP’s AGM asking the board to see how its climate policy compared to that of the industry groups it was a member of.

The resolution didn’t get up but BHP conducted a review that resulted in a decision to leave the World Coal Association and BHP asking the MCA to stop calling for coal subsidies and prioritising cost and reliability over emissions, or face BHP’s exit.

Unlike BHP, Rio has exited its energy coal operations, selling its Hunter Valley mines to Yancoal Australia last year for $US2.69bn.

BHP owns the big Mt Arthur coalmine in the Hunter Valley, from which it draws substantial tax credits, and a stake in the Cerrejon mine in Colombia.

Mr Jacques, whose Australian east coast aluminium assets are heavily exposed to increases in power prices, said Rio was “technology-neutral” on how to deal with the future energy mix.

“Rio Tinto is very, very clear; we believe in affordability, reliability and reduction of emissions,” he said.

“I believe the issue (of fixing the energy system) is clearly on the table, but I would like to see a pathway to improve the situation. Everybody has acknowledged there is a challenge. That’s a good starting point. Now it’s up to everybody to build the road map.”

Mr Jacques said Rio’s exit from thermal coal was asset-specific, not commodity-specific, and not due to investor or internal company perceptions about climate change.

“If there are some assets in the portfolio you know are not going to attract capital expenditure because we are prioritising investment in iron ore, copper and bauxite, you need to try to find a new home for those assets, with some new shareholders who will invest,” he said. He said coal was not attracting investment because Rio had higher-returning options in other commodities.