More Bad News for the Pebble Mine: Rio Tinto Announces It May Divest
Posted December 23, 2013
Today, in yet another sign that the massive Pebble Mine is doomed, the London-based mining giant Rio Tinto publicly announced that it is considering “divestment” from the uniquely reckless project, proposed for the headwaters of the most productive wild salmon fishery in the world.
As one of the largest mining companies in the world and a 19% shareholder interest in the Pebble project, Rio Tinto’s announcement is a surprisingly clear signal that it’s looking for the exit. It follows, and is consistent with, the divestment recommendation made last Friday in a joint letter from California State Controller John Chiang and New York City Comptroller John Liu to Rio Tinto CEO Sam Walsh. Both Chiang and Liu are trustees for large pension funds that are significant long-term shareholders of Rio Tinto.
According to Rio Tinto’s statement:
Rio Tinto has advised the management of Northern Dynasty Minerals Ltd (Northern Dynasty), which owns 100 per cent of the Pebble Project, that it intends to undertake a strategic review, including a possible divestment, of its shareholding in Northern Dynasty. Rio Tinto, through QIT-Fer et Titane Inc., an indirect wholly-owned subsidiary of Rio Tinto plc, owns 18,145,845 common shares of Northern Dynasty, representing approximately 19.1 per cent of Northern Dynasty’s issued and outstanding shares.
The Pebble Project is an undeveloped copper resource located in the Bristol Bay region of western Alaska. As part of its review, Rio Tinto will consider the Pebble Project’s fit with the Group's strategy of investing in and operating long life and expandable assets, and with the strategy for its Copper business, which is focused on its four producing assets (Kennecott Utah Copper, Oyu Tolgoi and its interests in Escondida and Grasberg), and two development projects, La Granja in Peru and Resolution in Arizona. (Emphasis added.)
By explicitly citing its currently producing and developing copper assets, Rio appears to be contrasting the unique environmental risks to the Bristol Bay wild salmon fishery, the overwhelming local opposition to the project, and the inconsistency of those factors with its own economic interests and standards for development.
Over the past four years, as I’ve reported from time to time, Rio Tinto’s top management has met repeatedly with NRDC and Alaskan leaders to talk about the Pebble project, and the company’s announcement today confirms the value and good faith of those discussions. Notably, NRDC has worked productively with Rio Tinto as part of the U.S. Climate Action Partnership (USCAP), where Rio Tinto proved to be the mining industry’s leading – indeed only -- voice for concrete policies in the United States to address climate change. In 2011, Rio Tinto sold the last of its U.S. coal mining operations.
We welcome Rio Tinto’s announcement today as a significant step toward abandoning its interest in the Pebble project. It is encouraging news for the people of Alaska and Bristol Bay. But we emphasize that actual divestment, as opposed to consideration of divestment, must be the company’s ultimate outcome – an outcome necessary to bring Rio Tinto’s investment portfolio into line with its stated environmental standards while at the same time allow it to focus on projects that are more likely to provide a return on investment for its shareholders.
The Pebble Mine promises no such return. The head of the watershed of the greatest salmon fishery on the planet – supporting a $1.5 billion annual commercial fishing industry and tens of thousands of jobs -- is no place to gamble on one of the largest mining operations ever conceived. If that fragile area and the salmon population that depends on it are damaged – a risk that EPA has characterized as potentially “catastrophic” -- it would be devastating not just to the region’s economy but to its communities, its people, and its entire ecosystem, including the bears, eagles, seals, whales and other wildlife that depend on it.
It’s no wonder that polls show 85 percent of commercial fishermen in Bristol Bay, 81 percent of the Bristol Bay Native Corporation’s shareholders, and 80 percent of Bristol Bay residents oppose the Pebble Mine.
The mining industry, too, has reached a resounding consensus of “no confidence” in the Pebble Mine. Anglo-American walked away last September, leaving an investment of some $540 million; Mitsubishi Corporation sold out in 2011, citing a re-evaluation of its copper assets; and Rio Tinto, too, is now considering its own departure.
Only the small Canadian mining company Northern Dynasty Minerals remains as the owner of 100% ownership of the Pebble prospect. In a news conference this morning, Northern Dynasty’s CEO Ron Theissen expressed “complete surprise” at Rio Tinto’s announcement, admitting that he was “at a loss to understand why [Rio was] announcing it publicly.” It has committed to move forward and is actively looking for a new major mining company partner, while saying nothing about its unsuccessful attempt in 2011 to sell its own interest in Pebble.
And so the battle will continue.
Under these circumstances, and with the support of an astonishing 84 percent of the comments filed by individuals in Alaska and 98 percent among Bristol Bay residents, it is urgent that the U.S. Environmental Protection Agency promptly initiate proceedings under the federal Clean Water Act to prohibit the Pebble Mine or any other large-scale mining project that would threaten the Bristol Bay fishery.
The time is now to stop the Pebble Mine. Rio Tinto’s announcement today is just the latest proof.