Rio Tinto investors welcome chair's decision to step down after Juukan Gorge scandal
Investors and First Nations groupshave welcomed the Rio Tinto chair Simon Thompson’s decision to leave the company after accepting he was “ultimately accountable” for the mining company’s decision to blow up ancient rock shelters at Juukan Gorge in the Pilbara.
Thompson will not stand for reelection to the board next year in a decision that follows the resignations in September of the chief executive Jean-Sébastien Jacques, the head of corporate relations Simone Niven and the iron ore boss Chris Salisbury.
Separately, the non-executive director Michael L’Estrange will retire after this year’s shareholder meeting. Rio Tinto said he needed to reduce his workload after “significant surgery”.
L’Estrange wrote the internal review of the Juukan Gorge disaster, which was later criticised by Senator Pat Dodson as an “unsatisfactory piece of work” that was “full of mea culpas and corporate lingo”.
The National Native Title Council welcomed the announcement but said if Rio Tinto was serious about cultural change it would replace at least one of the outgoing executives or directors with at least one Aboriginal or Torres Strait Islander person.
“They are in desperate need of First Nations voices in there and First Nations leadership,” NNTC chief executive Jamie Lowe said.
“And whether that be from an executive perspective or board level or other, that needs to happen … Because Rio Tinto is not going anywhere, they are a multinational company, they have got a large footprints in Australia, so it’s critical we get those First Nations voices in there to make sure they are doing the right thing.”
Lowe said that while the turnover in senior leadership was significant, he would wait to see if the company’s actions changed.
“It’s no mean feat to get rid of your CEO, your chairman, other executives, other board members, all in the space of a six month period,” he said. “They are signalling the right intent but the proof will be in the pudding, in the action that they deliver.”
Ian Silk, the chief executive of Australia’s biggest superannuation fund, AustralianSuper, said the resignations of Thompson and L’Estrange provided Rio with an opportunity to appoint more Australians to the board.
He said it was “appropriate and timely” for Thompson to assist with the transition from Jaques to Jakob Stausholm, who was appointed CEO in December.
“However, as Mr Thompson has said, he is ‘ultimately accountable’ for the failings that led to the Juukan Gorge incident, and as a result his resignation is an appropriate acknowledgement of that governance failure,” Silk said.
Super fund Hesta, which campaigned heavily for change at Rio after Juukan Gorge, also welcomed the departures.
“Investors need confidence Rio, throughout the organisation, will act in good faith with all stakeholders,” chief executive Debby Blakey said.
“The decision today allows for a fresh perspective and a renewed board focus on repairing and building stronger links with Indigenous communities in the countries in which Rio operates.
“Rigorous board oversight and governance will be crucial to achieving future progress in this regard.”
The activist shareholder group the Australasian Centre for Corporate Responsibility welcomed Thompson and L’Estrange’s departures but said other directors including Sam Laidlaw should also consider their positions.
Laidlaw, who chairs a remuneration committee that approved payouts for the departing executives, and another senior independent director, Simon McKeon, are to act as joint chairs while Rio Tinto searches for a permanent replacement for Thompson.
“I am proud of Rio Tinto’s achievements in 2020, including our outstanding response to the Covid-19 pandemic, a second successive fatality-free year, significant progress with our climate change strategy, and strong shareholder returns,” Thompson said.
“However, these successes were overshadowed by the destruction of the Juukan Gorge rock shelters at the Brockman 4 operations in Australia and, as Chairman, I am ultimately accountable for the failings that led to this tragic event.”
ACCR’s legal counsel, James Fitzgerald, said that there was “no realistic prospect of Rio Tinto rebuilding its relationships and its reputation while those responsible for the degradation of its culture remained on its board”.
“The departure of Thompson and L’Estrange suggests that Rio Tinto is also well aware of this.
“News of their departure is welcome but other directors like Sam Laidlaw need to reflect on whether their continuing as directors is the interests of the company and its shareholders.”
Labor’s Indigenous affairs spokesperson, Linda Burney, said Thompson’s acknowledgement that the destruction of Juukan Gorge was “a source of personal sadness and deep regret” was “important”.
“I sincerely hope this acknowledgement is a further step towards substantive cultural change – not only within Rio Tinto, but the mining sector as a whole – which sees companies work more closely and constructively with Traditional Owners to ensure incidents like this never happen again.”
L’Estrange’s review found Rio received four separate reports detailing the significance of the Juukan Gorge rock shelters to the Puutu Kunti Kurrama and Pinikura peoples (PKKP) in the years between receiving government approval to destroy the site in 2013 and detonating the blast last May.
They included: a 2013 ethnographic survey stating the site was “of high significance to Puutu Kunti Kurrama, in the old days and still today”; a 2014 draft report of an archeological survey, paid for by Rio, which detailed signs of continuous occupation over 46,000 years including a 4,000 year-old hair belt which DNA testing revealed showed a direct genetic link to PKKP living today; the 2018 final report of that archeological survey which said the site has “the amazing potential to radically change our understanding of the earliest human behaviour in Australia”; and an ethnographic survey in 2020 further outlining the significance of the site to the PKKP.
At a Senate inquiry last year, Rio Tinto’s vice-president of corporate relations in Australia, Brad Haynes, said no one in the senior executive team had read any of those reports before May 2020 “because we were always operating on the basis that there was consent”.
At the same hearing, Jacques said Rio had not told the PKKP that it had considered, and dismissed, options for expanding the mine that would have left the sacred sites intact.
The destruction of the site was outlined in a lengthy and complicated partnership agreement in 2011. Once permission to destroy the site was granted under WA’s outdated Aboriginal heritage laws, it was removed as an obstacle from Rio’s operational maps.
Evidence presented to the Senate inquiry showed the PKKP repeatedly voiced their concerns directly to the company. The partnership agreement contained non-disparagement clauses that prevented the PKKP from publicly expressing their concerns about the site.
Minutes from meetings held by Rio in the days before the site was destroyed show that the company hired lawyers for a potential injunction against the PKKP in the event the gag clause was breached. The PKKP issued a media release the day after the sites were destroyed.
The PKKP and the Indigenous affairs minister, Ken Wyatt, both declined to comment on Thompson’s resignation.