No re­ward with­out risks, re­minds Rio Tinto CEO Jac­ques

The UB Post - - Front Page - By B.CHINTUSHIG

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.

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