Iron in the Soul: Looking forward at Rio Tinto’s diamond mining lease in India

March 6, 2010

March 5, 2010

It has been reported in The Wall Street Journal that India’s Mines Ministry will soon approve a diamond mining lease for global miner Rio Tinto Ltd. in the central state of Madhya Pradesh. The Madhya Pradesh government has already recommended the mining lease and an approval from the federal mines ministry is expected within a fortnight. The lease will be Rio Tinto’s first for diamond mining in India, after nearly a decade’s hunt in the country. India’s government has been looking for investments from global miners as only 10% of the country’s ancient landmass has been explored for its mineral wealth. Rio Tinto plans to invest 22 billion rupees ($480.3 million) in the Bunder diamond project through its local arm, Rio Tinto Exploration India Ltd. Production is scheduled to start from 2016, depending on procedural clearances. The new mine is located close to Panna, India’s sole hardrock diamond mine, and may yield 30 times more because of greater reserves, according to estimates.

In this scenario, it is relevant to review Rio Tinto’s environmental and human rights track record.

Iron in the Soul – Roger Moody
Rio Tinto: Global Compact Violator – Danny Kennedy


Iron in the Soul: Rio Tinto – Benchmarker for sustainable development?

By Roger Moody. A selection from Rocks and Hard Places: The Globalization of Mining

Twenty years ago, while researching Rio Tinto-Zinc (RTZ), then the world’s biggest mining company, I was struck by a curious anomaly. All three chief architects of the company between 1954 and the late eighties had listed “gardening” as a favoured pursuit in Who’s Who, the UK dictionary of biographies. Here were these captains of a highly dangerous and destructive industry regularly retiring to their rose beds, even as (as I knew fully well) their company was conniving with the South African apartheid and Pinochet regimes; violating a United Nation’s decree forbidding extraction of Namibia’s natural resources; and turning an entire Australian Aboriginal homeland into a “moonscape”.

How did they sleep at night? Would they one day be compelled to face their accusers and confess their sins, or simply, take to their spades and forks, muttering (if pressed) that they “didn’t know” what was going on?

Much water has gone down many rivers since that research was completed in 1991. [1] But so has an awful lot of toxic junk. More than 200,000 tonnes of it still plunges daily into the Ajikwa river system of West Papua from the Grasberg copper-gold mine, the responsibility for which Rio Tinto (as RTZ is now known) shares with Freeport of the US. Until the dawn of the new century, some 120 community workers and NGO representatives had turned up at various Rio Tinto annual shareholders’ meetings to recite a litany of its derelictions and deceit, usually backed by solid documentary evidence. All of them went away bitterly disappointed.

Now Rio Tinto presents a very different image to a significantly different audience. Several well known environmental groups consider the company to lead the “natural resources extraction” sector (an inadequate term that’s nonetheless become synonymous with mining and mineral processing) by offering “multi-stakeholder partnerships” and an ever-rolling log of “dialogues” with sceptics. Former United Nations Secretary General Kofi Annan was certainly grateful for the support Rio Tinto gave him when he launched the Global Compact in 1999 to “lead the world in promoting corporate social responsibility”. Three years later the British prime minister proffered Rio’s chairman, Robert Wilson, a warm handshake for helping launch the Extractive Industries Transparency Initiative (EITI) at the second World Summit for Sustainable Development.

However, all these were outmatched by Rio Tinto’s biggest public relations achievement, the establishment of the Global Mining Initiative (GMI) in 1999. [2]

This spawned the Mining, Minerals and Sustainable Development (MMSD) study project, which is probably the broadest critical examination of an industrial sector yet performed. When MMSD segued into the International Council on Mining and Metals (ICMM) in October 2001, it was a triumph for the company and Robert Wilson in particular. Almost inevitably, he became the first chair of this new vanguard for the minerals industry.

But the disturbing fact remains that Rio Tinto never apologised for a single one of its misdeeds stretching back 130 years and on which its prowess as the most diversified of global miners is based. The nearest it has come to contrition was an expression of vague regret for its stark neo-colonial stripping of a huge copper-gold deposit on the Papua New Guinean island of Bougainville. Leased in 1966, when the territory was under Australian control, the Panguna mine became the most commercially successful of all the company’s operations within six years. Costs were savagely cut by dumping all the mines’ wastes (tailings) into the nearby river. By 1988, a few of Panguna’s indigenous landowners, led by a former Rio Tinto mineworker, Francis Ona, demanded US$ 10 billion compensation for the ruination of their gardens, forests and waterways. The company jeered at the claim and refused to negotiate. Ona set up a nucleonic “Bougainville Revolutionary Army”, declaring independence from Papua New Guinea. Backed by Australian helicopter gunships, troops from the mainland invaded the island. In the bloody civil war that ensued, up to a fifth of the island’s population (between
15,000 and 20,000 villagers, many of them women and children) died before peace was brokered in early 1998. Rio Tinto belatedly confessed that it could have “done things otherwise” on Bougainville and, over the succeeding eight years, broadly hinted it would never resume mining on the island. Then, in 2006, as copper and gold prices reached a record high, rumours began spreading through the mining media that the company was planning a possible

Rio Tinto’s self-promotion as the mining industry’s “bench marker” for sustainable development has given it entry to numerous, mainly European, conferences on “ethical investment” that these days fall upon our heads like confetti. It’s a very different story for scores of communities and many trade unionists — from Australia to Zimbabwe — who continue to view the company with the deepest suspicion. But it isn’t only Rio Tinto that faces such antagonism, although in recent years the company has attracted more grassroots opprobrium than any other. These days every big mining company vigorously pushes its own envelope on “improved practices” and “transparency” while having to face serious accusations that it fails to respect cultures, protect the environment, and return fair shares of its profits to the
countries where it operates. As I write this, my desk is cluttered with alerts and alarums.

CVRD, the Brazil iron-ore giant, is about to sue the Xikrin tribespeople for “invading” what is actually their own ancestral land, ripped from them 20 years ago. [3] The Canadian government is now permitting miners to use freshwater lakes on First Nation (native peoples’) lands to dump toxic wastes. [4] Inco, the world’s second biggest nickel producer, is building a smelter in New Caledonia, despite a court order obtained by local Kanaks prohibiting the company from doing so.

So is all this talk about industry reform, with which we’re now regularly regaled, a sham? The answer is both yes and no.

BHPBilliton has vowed never again to use rivers or oceans for the disposal of its tailings, and the odds are that it will not. (The international outcry would be deafening, and local reaction would verge towards sabotage.) But BHPBilliton, the world’s leading “diversified resources” resources corporation, has also said it will refrain from mining in “protected areas”, and that particular promise must be strongly doubted — not least in the case of its lease at Karlapat in Orissa.

Three years ago, in the wake of an international campaign by the Aboriginal Mirrar people of northern Australia, which included sending a spokeswoman to the company’s annual general meeting, Rio Tinto pledged not to enter their traditional territory without obtaining their consent. [5] If the Mirrar remain strong and united, then the company will hardly dare break the agreement.

However, several years ago, Rio Tinto also promised not to invest in Burma while the country’s vicious regime was still in power. The US gold miner, Newmont, had just been forced to withdraw from the country under threat of US sanctions. But then, in October 2006, Rio pledged up to US$ 1.7 billion to a “junior” miner called Ivanhoe, in order to access a huge copper lode in Mongolia. Ivanhoe also mines Burmese copper in a 50/50 partnership with the military. The UK company had broken its word. [6]


1. Moody, R “Plunder: Presented by a global network of people opposed to the activities of the RTZ corporation” People against RTZ and its Subsidiaries (Partizans) and Campaign Against Foreign Control of Aoetearoa/New Zealand, London and Christchurch (NZ), 1991

2. The Global Mining Initiative (GMI) was the brainchild of Rio Tinto’s chairman, Sir Robert Wilson. By 1998, his company was certainly the most heavily criticised of all global miners; its standing had suffered through a wave of disininvestments by local authority pension funds (over its key role as a uranium producer) during the 1980s, followed by constant attacks from indigenous communities in the 1990s and (almost the straw that broke this particular camel’s back) the decision in 1997 by the global mineworkers’ union, the ICEM, to ally itself with the UK “dissident” shareholders group, Partizans. Wilson gathered about him seven other corporate mining leaders to forge a three-pronged attack on the industry opposition — the GMI. The first of these was the launch of the Mining, Minerals and Sustainable Development initiative (MMSD), put under the aegis of leading London NGO, the International Institute for Environment and Development. The second phase was to be the presentation of the MMSD final report just as a new industry body, the International Council on Mining and Metals (ICMM), was founded (also based in London). Finally the ICMM would go, replete in its new clothers, to the WWSD in Johannesburg in late 2002, where it would propagate the virtues of “tri-sectoral” partnerships between industry, government and “civil society”. (Today virtually all global mining companies are members of the organisation.)

3. “Brazilians nvade company town of iron ore mine CVRD” Associated Press, October 18, 2006

4. “Environment Canada flings door wide open to toxic waste dumping in Canada’s lakes” Press release, MiningWatch Canada, October 24, 2006

5. “Finished Business – Jabiluka goes to ground” Sydney Morning Herald, April 29, 2006

6. “Rio Tinto’s latest fall from grace” London Calling, Nostromo Research, London, October 28, 2006


Rio Tinto: Global Compact Violator

Rio Tinto could be a poster child for corporate malfeasance. The largest mining company in the world, Rio Tinto has headquarters both in Melbourne, Australia and London, England and operations on all continents except Antarctica. For years, Rio Tinto has had a reputation for being responsible for environmental and human rights violations at its mines and smelters. Prior Rio Tinto corporate incarnations (most immediately Rio Tinto Zinc and Conzinc Riotinto Australia) were regularly embroiled in controversy. Accusations of corporate misdeeds include suppressing trade unions at their Australian operations, exposing workers in a uranium mine in Namibia to radiation, and negligence and complicity in the civil war in Papua New Guinea where Conzinc Riotinto used to operate a major copper mine.

Rio Tinto executives are conscious of the need to clean up the company’s tarnished image. Their efforts range from joining a business organization that promises to create models of business/community partnerships, to signing United Nations’ Global Compact in July 2000. Our research, which covers the period since last July, raises serious doubts as to whether Rio Tinto lives up to the principles outlined in the Compact.

We focus on Rio Tinto’s record in Indonesia, specifically on a gold mine known as PT Kelian Equatorial Mining (PT KEM or PT Kelian) in Kalimantan, one of several mines the company operates in Indonesia. We find that just at this one mine alone (90% owned by Rio Tinto) there are disturbing human rights and environmental abuses that violate the principles laid out in the Global Compact.

In particular, there is evidence that Rio Tinto, at its PT Kelian mine in Kalimantan, has violated Principle 1 (“support and respect the protection of internaiotna human rights with in their sphere of influence”) and Principle 8 (undertake initiatives to promote grreater environmental responsibility) of the Global Compact.

Human Rights at the PT Kelian Mine

Last year, the Indonesian government’s National Human Rights Commission investigated allegations of abuses at the Kelian mine and found egregious violations. The Commission’s report reveals that the Indonesian military and company security forcibly evicted traditional miners, burned down villages, and arrested and detained protestors since the mine opened in 1992. Local people have systematically lost homes, lands, gardens, fruit trees, forest resources, family graves and the right to mine for gold in the river, according to the Human Rights Commission. PT KEM employees have also been named in a number of incidents of sexual harassment, rape and violence against local women between 1987 and 1997. These included abuse and rape committed by senior company staff against local Dayak women.

The Spring of 2000 saw unprecedented direct action by local people and mine workers protesting against these injustices at Rio Tinto’s PT Kelian gold mine (as well as similar protests at the Kaltim Prima coal mines in Kalimantan.) These protests were the culmination of a two year old, escalating human rights campaign by the community. Hundreds of Dayak villagers blockaded access to the mine, preventing supplies of lime (used to treat acid waste) and diesel fuel oil getting through to the mine site on the Kelian river. The blockades continued for several weeks in April, May and June, forcing the company to suspend operations for the first time since the mine started production in 1992. Several community leaders were detained by police and brought downriver for interrogation. One man was imprisoned for several weeks for “initiating a blockade.”

The direct action stemmed from a 1998 agreement by PT Kelian to negotiate with a community organization known by the acronym LKMTL, following community demands presented at annual shareholders’ meetings in London and Melbourne. Rio Tinto and the Indonesian Forum on the Environment, known by its acronym WALHI, were parties to this agreement. Government officials (who historically have sided with foreign corporations in Indonesia) were to be kept out the process. The negotiations — to cover land compensation, the human rights abuses by mining staff and Indonesian security personnel, pollution and mine closure plans — reached deadlock in April last year.

“In the name of the Kelian community of West Kutai district, East Kalimantan, Indonesia, we state that PT Kelian Equatorial Mining has not been genuinely committed to settling the issues and demands raised by the people. The company has only paid lip service to various activities — community development projects, recruitment of local workers, environmental management and mine closure plans — as a form of propaganda,” states a message from the community presented to Rio Tinto’s Annual General Meeting in England last year. “PT Kelian has attempted to prolong the settlement of local peoples’ demands by introducing delays and not sticking to schedules it has drawn up for various reasons which are not logical.”

Negotiations reached a stalemate when PT Kelian had systematically refused to meet community demands for fair compensation for land appropriated by the company for its operations. Then Kelian, after dragging its feet on this issue for two years, reneged the terms of the negotiations with LKMTL by bringing the local district head into the meetings and by opening separate negotiations with a group backed by him. Unlike LKMTL, which was established through a community meeting of 2000 people, the government-backed team had no mandate from most local residents.

The blockades were finally lifted in mid-June of 2000 when mediation took place. It was agreed that the new group should also be allowed to negotiate, but only on land compensation. PT Kelian favored the new team led by village officials, who were prepared to settle for much less than the grassroots organization. The company’s tactic successfully divided the community and by August LKMTL was forced to accept terms for compensation for land taken for access roads for the mine site, a river port and land used for company housing.

As negotiations moved into human rights issues PT Kelian continued to undermine LKMTL’s position as the community’s representative by working with district officials to settle the dispute. In October last year, the Indonesian environmental group WALHI issued a strongly-worded statement announcing its withdrawal from the negotiations on the grounds that Rio Tinto had sought to split the community for its own advantage, had misled and insulted LKMTL and were not genuinely committed to the terms and spirit of the original agreement.

Soon after WALHI pulled out of the negotiations, Rio Tinto’s Indonesian director, Noke Kiroyan, announced the corporation’s commitment to improving community relations “The time has come to be more flexible, to allow the smaller voices to be heard, to be more democratic and to be more fair,” he declared in an address to the Indonesian Investment Summit on Mining and Energy in Jakarta.

However, no real progress has been made in resolving the dispute over the last year, despite Rio Tinto’s commitment to respect human rights made through the Global Compact.

Rio Tinto’s Environmental Record at PT Kelian

Rio Tinto also is accused of environmental abuses affecting the health of the surrounding community. The Kelian mine produces over 14 tons of gold per year using the cyanide heap-leaching process which produces contaminated tailings. The tailings are held in a dam and treated in a polishing pond near the Kelian River. Water from the polishing pond pours into the river through an outlet. The company claims that the water is clean while the community says that people cannot drink or bathe in the water because it causes skin lesions and stomach aches.

By contrast, Rio Tinto’s environmental policy — posted on the corporation’s website — promises its mining operations will minimally affect the environment. “We will maintain high standards in environmental protection while complying with Indonesian and International environmental legislation,” according to the policy.

PT Kelian promises to “communicate openly with the community and other stakeholders” and hopes to be “at the forefront of the Indonesian mining industry in environmental performance.”

But activists tell a different story. “The Kelian mine has consistently manipulated environmental reports,” says Mohammed Ramli, spokesperson for the Indonesian Mining Advocacy Network, known as JATAM.

“Locals suffer from skin rashes when the bathe in the river,” he adds. “They can no longer catch the fish they rely upon as a protein source, and the water is so contaminated with insufficiently treated mine wastes that it’s too dangerous to drink.”

The Mineral Policy Institute, an Australian watchdog group, accuses Rio Tinto of operating overseas to avoid environmental regulation. “They would never get away with it here in Australia-so why should they over there?” says Institute director Geoff Evans, referring to Rio Tinto’s operations in Indonesia.

Unfortunately the human rights and environmental violations at the PT Kelian mine are typical of Rio Tinto operations. But even if we look at the mining giant’s record at this one mine alone, it provides sufficient reason for the United Nations Secretary General to suspend Rio Tinto’s membership in the Global Compact until the company has seriously cleaned up its practices.