Rio cops fallout of caves error

The London-based board of mining giant Rio Tinto has taken the only viable course in demanding three executives accept personal responsibility to defuse an escalating row over the destruction of an Aboriginal heritage site in Western Australia. Ever since the detonator was plunged in May to blow up a site with evidence of 46,000 years of human habitation, the Juukan Gorge caves debacle has been a textbook case of how not to manage a crisis.

It is also a cautionary tale for all business of how unrelenting lobby groups have worked their way through funds managers to become a potent force to monitor and police a smorgasbord of social justice issues. The bottom line is the Rio board had a tin ear in dealing with the uproar caused by the destruction of the caves. This damaged the company’s relations in WA and will cause further grief for Australia’s mining community more broadly. Having made the fundamental error in blowing up the cave against pleas to save it, the company failed to make management accountable.

For Rio, offering the scalps of chief executive Jean-Sebastien Jacques, iron ore boss Chris Salisbury and corporate affairs chief Simone Niven is the first step on a long road to restoring good social licence. Like all miners, Rio Tinto has been working hard to get on to the right side of an increasingly demanding investment community. Investment funds, with billions of dollars under management, are themselves responding to new pressures that capital be better aligned with socially progressive ideals. This is reflected in the introduction of onerous reporting provisions on climate change action, diversity and environmental performance. Big miners have always been at the forefront of shifts in corporate behaviour in Indigenous relations, workplace reform and foreign investment.

When Rio began its WA journey in the early 1960s through local subsidiary Conzinc Riotinto of Australia, iron ore entrepreneur Lang Hancock was an enthusiastic supporter of using nuclear bombs to transform the Pilbara. The Gorton government gave cautious support to plans to explode nuclear charges but backed down following pressure from environmentalists. Hancock’s plan was to blast an inland harbour, flatten ranges to enable better rail access and blast billions of tonnes of iron ore to be left as a reserve for years to come. At that time, cultural heritage was at the end of the list of concerns. Few supported the nuclear option then and fewer still would today. But it shows how much things have changed.

Rio has mapped out a transition plan. Mr Salisbury will step down from running Rio’s iron ore division with immediate effect, Ms Niven will complete “an orderly transition of her responsibilities” and Mr Jacques will remain until a successor is appointed. Pension funds have emerged as kingmakers or executioners. New Future Fund boss Raphael Arndt said the fund’s attention to sustainable investment meant Juukan Gorge “is exactly the sort of issue we are focused on”. Superannuation fund Hesta, which manages $52bn on behalf of more than 850,000 Australian workers, has warned Rio’s conduct posed a risk for the entire mining sector. The Church of England pension fund added a moral dimension to the criticism of Rio.

Rio had argued that legal approval for the destruction of the caves was given by the Aboriginal Cultural Materials Committee in December 2013 after it considered a host of factors including an absence of “specific ethnographic stories” relating to the area. It proceeded with the destruction against more recent objections from traditional owners after withholding alternative mine plans at the time of the initial approval because blowing up the caves would unlock an additional $135m in ore. It is possible to object to Rio’s handling of the Juukan Gorge issue but still be concerned about what the full cost of a more assertive investment community with a social justice agenda might be. Aboriginal interests, and those of the wider community, have not always been best served when pressure groups have used Indigenous concerns to block development and push their own ideals.