No reward without risks, reminds Rio Tinto CEO Jacques
Speaking at the International Mining and Resources Conference (IMARC) in Melbourne, Australia, Rio Tinto CEO Jean-Sebastien Jacques will challenge governments to accept more project risk if they want a greater share of wealth from the mining industry, the Australian Financial Review (AFR) reported...
Speaking at the International Mining and Resources Conference (IMARC) in Melbourne, Australia, Rio Tinto CEO Jean-Sebastien Jacques will challenge governments to accept more project risk if they want a greater share of wealth from the mining industry, the Australian Financial Review (AFR) reported.
Although he is expected to not single out any one country, his comments are speculated to be targeted towards Mongolia and Western Australia, both of which have had significant disagreements with Rio Tinto. In Australia’s case, a proposal by the Western Australia National Party to increase the rental fee on iron ore leases in the state was a major test for Jacques, who was appointed in July 2016.
Other remarks by Jacques focused on the need to rethink how big mining projects are funded and will raise the prospect of mining companies becoming mere service providers to those that fund mines, rather than the current situation where big miners fund, build and operate mines. He will suggest more debate is needed on the "trade-off between profit and risk taking".
The AFR reportedly has knowledge on what Jacques is expected to say. A lot of his remarks were thought to be geared towards ways in redefining the way it partners with communities, customers, suppliers and governments.
"If a community or government wants a bigger share of the pie, they may need to be willing to take on more of the risk that's a really important part of our very capital intensive industry. So maybe there needs to be a new way of funding mining projects. As an industry, perhaps, it is time to think about a different business model where we provide mining as a service and let other people finance projects that need billions in upfront investment, before the benefits can be shared,” AFR expects him to say.
"We need to start to have honest and grown-up conversations with all of our stakeholders on some very challenging topics like the trade-off between creating jobs, and economic and social progress versus doing an activity that does impact the environment," he is expected to say.
"At Rio, we are keen to have these debates, we are open to all ideas and we do not have all the answers. In fact, we would like to kick off a piece of work with partners like the World Bank, like Harvard University and others, to really get to the bottom of this; what is the best way to share value from mining projects in a way that preserves and grows investor returns, creates lasting value for host governments and communities and provides the metals the world needs in an environmentally sustainable way,” the AFR quoted Jacques.
Similar to Ivanhoe Mines boss Robert Friedland’s remarks at IMARC in 2014, the AFR said Jacques is set to criticize James Cameron’s 2009 film “Avatar” for fostering a negative image of the mining industry. The film, recognized as the highest grossing film in history, centers a futuristic company that destructively and unethically mined a rare substance called "unobtainium" from a distant planet populated by a quasi-human community.
"Our industry is one of the least trusted on the planet and unfortunately it is a mainstream idea. You only have to take a look at how mining is portrayed in the ‘Avatar’ movie. What the heck? And it makes me sad, or, depending on the day, mad," Jacques is expected to say.