By Melanie Burton
MELBOURNE (Reuters) – Global mining giant Rio Tinto (NYSE:), which sparked outrage after destroying an ancient Indigenous site in Australia in 2020, faces new pressure from socially conscious investors and lenders, this time on water practices at two of its mines.
A group representing UK pension funds, Local Authority Pension Fund Forum (LAPFF), has raised concerns about the company’s water management at its Oyu Tolgoi mine in Mongolia and an ilmenite mine in Madagascar.
It’s a burr in the saddle for CEO Jakob Stausholm, who was brought in to restore the company’s social license after it blew up an Aboriginal rock shelter at Juukan Gorge.
Questions around Rio Tinto’s environmental credentials could complicate its efforts to secure government approvals to build a lithium mine in Serbia and dig a giant copper mine in Arizona, both projects long delayed by local protests.
“Rio Tinto already has significant reputational risk stemming from Juukan Gorge, so its water challenges in Madagascar and Mongolia (as two pressing examples) pose a huge threat of further reputational damage,” LAPFF Chair Doug McMurdo told Reuters.
Given growing incidents of litigation around water management globally and tougher regulations coming into place, these challenges are also a highly financially material issue, he said.
Rio Tinto said it recognised the importance of water to its host communities and that it was “committed to driving effective water stewardship and enhanced transparency for stakeholders.”
LAPFF, whose members hold more than GPB 350 billion ($445 billion) in UK pension funds, has been trying to build support for a resolution that would press Rio Tinto to undertake independent water impact assessments at its mine sites.
“There is a sense that companies have been greenwashing and that they need to face a reckoning. Shareholder resolutions are a good way to bring that reckoning,” McMurdo said, speaking about companies in general. Water practices in the mining industry were of particular concern, he said.
Rio Tinto was graded an “F” by environmental adviser CDP for failing to disclose its water data to the group since 2016. Other major miners, too, have been given fail ratings for non-disclosure.
LAPFF circulated an investor briefing late last year that said Oyu Tolgoi’s copper operations have affected ground water quality outside the mine lease and questioned whether its tailings dam was watertight.