Rio Tinto’s destruction of heritage landmark excavates directors’ bonus

Rio Tinto’s destruction of heritage landmark excavates directors’ bonus

On 23 August 2020, mining company Rio Tinto plc released an internal board review of the examination of Rio Tinto’s heritage management with the Iron Ore Group, which resulted in cuts to executive directors’ remuneration payments ‘in light of the findings of the review’. The review was initiated as a result of the destruction of heritage rockshelters in Juukan Gorge, Western Australia, for the development of a mine which would generate an extra 8m tonnes of iron ore.

The Anglo-Australian company has declared that Jean-Sébastien Jacques, CEO; Simone Niven, Group Executive, Corporate Relations; and Chris Salisbury, CEO of Iron Ore, will not be receiving their 2020 annual bonus in 2021. Jacques’ 2016 Long-Term Incentive Plan, due to vest in 2021, will also be reduced by £1m despite the review concluding ‘no single root cause or error that directly resulted in the destruction of the rockshelters.’

According to the timeline of events that led to the destruction of the rockshelters, Rio Tinto obtained ministerial consent from the Western Australian government, having consulted the indigenous owners of the land, the Puutu Kunti Kurrama and Pinikura people (PKKP), for the development of the mine. However, significant dispute has arisen given that Rio Tinto was made aware in 2014 of the archaeological significance of the landmark, and again in a 2018 report, in which archaeologist Dr Michael Slack stated that these areas had the potential to ‘radically change our understanding of the earliest human behaviour in Australia’.

In response, the FTSE 100 company has unreservedly apologised on several occasions and has stated in the review that ‘it fell short of the Standards and internal guidance that Rio Tinto sets for itself, over and above its legal obligations’. Rio Tinto has also set out priorities in the review, including ‘to ensure that what happened in the Juukan Gorge in May 2020 is not repeated elsewhere in the future; to re-build a partnership with the PKKP based on respect, trust, mutual benefits and shared understanding; and to ensure that learnings are applied across all of Rio Tinto’s operations worldwide’.

This event has also taken impacted the credibility of environmental, social and governance considerations for the company’s investors. Rio Tinto claim in the review that its heritage responsibilities are based on ‘a clear recognition that the protection of cultural and archaeological heritage is an inherent part of our role as a resources company, and this forms a critical component of our social licence to operate and the sustainability of our operations.’ However, demonstration of these values is yet to be seen.

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