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Rio Tinto Faces Strain From Traders Over Water Contamination Claims

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World mining big Rio Tinto, which sparked outrage after destroying an historical Indigenous website in Australia in 2020, faces new stress from socially acutely aware buyers and lenders, this time on water practices at two of its mines.

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A gaggle representing UK pension funds, Native Authority Pension Fund Discussion board (LAPFF), has raised issues concerning the firm’s water administration at its Oyu Tolgoi copper mine in Mongolia and an ilmenite mine in Madagascar.

It’s a burr within the saddle for CEO Jakob Stausholm, who was introduced in to revive the corporate’s social license after it blew up an Aboriginal rock shelter at Juukan Gorge.

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Questions round Rio Tinto’s environmental credentials might complicate its efforts to safe authorities approvals to construct a lithium mine in Serbia and dig an enormous copper mine in Arizona, each tasks lengthy delayed by native protests.

“Rio Tinto already has important reputational threat stemming from Juukan Gorge, so its water challenges in Madagascar and Mongolia (as two urgent examples) pose an enormous risk of additional reputational injury,” LAPFF Chair Doug McMurdo advised Reuters.

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Given rising incidents of litigation round water administration globally and more durable laws coming into place, these challenges are additionally a extremely financially materials problem, he stated.

Rio Tinto stated it acknowledged the significance of water to its host communities and that it was “dedicated to driving efficient water stewardship and enhanced transparency for stakeholders.”

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LAPFF, whose members maintain greater than GPB 350 billion ($445 billion) in UK pension funds, has been attempting to construct help for a decision that will press Rio Tinto to undertake impartial water impression assessments at its mine websites.

“There’s a sense that corporations have been greenwashing and that they should face a reckoning. Shareholder resolutions are a great way to convey that reckoning,” McMurdo stated, talking about corporations generally. Water practices within the mining trade have been of specific concern, he stated.

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Rio Tinto was graded an “F” by environmental adviser CDP for failing to reveal its water knowledge to the group since 2016. Different main miners, too, have been given fail rankings for non-disclosure.

Tailings Seepage

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LAPFF circulated an investor briefing late final yr that stated Oyu Tolgoi’s copper operations have affected floor water high quality exterior the mine lease and questioned whether or not its tailings dam was watertight.

Civil society group Accountability Counsel, which works with Mongolian herders, advised Reuters that some livestock grew to become ailing and died after mine operations started, which herders blame on worsening water high quality.

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Their issues haven’t been adequately addressed by Rio Tinto, it stated.

Rio Tinto stated Oyu Tolgoi has a rigorous water monitoring program in place and outcomes have been persistently shared with communities, lenders, regulators and in public reports. It stated it’s taking motion to repair the seepage.

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“The seepage has not impacted the water high quality of herder wells or of any customers to any extent as confirmed by monitoring knowledge,” Oyu Tolgoi stated in a November 2023 report.

Reuters was unable to quantify the variety of livestock affected or whether or not they died on account of poor water high quality.

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Nevertheless, the seepage which has been ongoing since 2018 has been declared an environmental incident by the mission’s lenders, which embody the European Financial institution for Reconstruction and Growth (EBRD), Oyu Tolgoi stated in a report in November.

That requires the Oyu Tolgoi mine to undertake a remedial motion plan.

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To make sure, lenders are unlikely to drag funding for the $7 billion mission, however given the valuable nature of water within the arid area, EBRD spokesman Anton Usov stated the financial institution is intently monitoring Rio’s remedial motion plan.

“Lenders have to make sure that OT is held accountable for its failure to adjust to lenders’ environmental and social framework,” stated Julio Castor Achmadi, communities affiliate of Accountability Counsel.

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In Madagascar, an area advocacy group says tailings dam failures in 2010, 2018 and 2022 at Rio’s QIT Madagascar Minerals (QMM) ilmenite mine, which produces titanium dioxide for paints, have worsened water high quality, contributed to fish deaths and spurred battle within the Anosy area.

The Andrew Lees Belief is pushing for “impartial audits … as a way to present the transparency and accountability required to resolve the present QMM challenges and meet worldwide requirements.”

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Rio Tinto stated it had compensated native fisherfolk, that an impartial report it commissioned discovered no conclusive hyperlink between its mine actions and noticed lifeless fish, and it has supported native leaders and authorities to resolve unrest.

Impartial Stories Questioned

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In each areas, LAPFF and advocacy teams say Rio Tinto’s water audits don’t give the total image of the impression of its operations.

Critics of Rio’s deliberate mines in Serbia and Arizona say they’re additionally anxious concerning the firm’s practices, in accordance with the investor briefing.

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The pension fund group determined to carry off submitting its proposed decision till April 2025 after Rio Tinto engaged with it and acknowledged in a December report that it might do higher at its Madagascar website.

Within the Madagascar report, Rio Tinto stated it acknowledged better transparency and fairness round its water administration was required.

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“We should deal with these issues,” Rio Tinto stated.

($1 = 0.7868 kilos)

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(Reporting by Melanie Burton; extra reporting by Simon Jessop; enhancing by Sonali Paul)

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