(Bloomberg) -- A decision by Rio Tinto Group to destroy Aboriginal Australian heritage sites dating back more than 46,000 years delivered about $135 million in extra to its iron ore division, according to the miner’s top executive.
Rio rejected three other options that would have avoided damaging two rockshelters in Western Australia in order to access about 8 million tons of high- ore, Chief Executive Officer Jean-Sebastien Jacques said Friday. The company recorded about $4.6 billion in profits from its iron ore unit in the first half.
“The economic at the time of the decision, or the net present , was around $135 million,” when mining plans for the site in the Juukan Gorge region of the Pilbara district were decided in around 2012 or 2013, Jacques told a hearing of an Australian parliamentary committee investigating the blasts.
At the time those decisions were made, the Puutu Kunti Kurrama and Pinikura Aboriginal Corporation, the region’s traditional land owners, were not made aware that Rio had been considering a total of four options, including three proposals that could have avoided the Juukan Gorge sites, Jacques told legislators on the conference-call hearing.
Rio, the world’s second-largest miner, has made decisions on heritage preservation, or environmental grounds, that have removed about 380 million tons of iron ore -- more than a year’s worth of exports -- from mine plans over the past five years, he said.
The producer has faced criticism from investors and lawmakers over the incident in May, when explosions to open up a mining area for the Brockman 4 operation blasted the Juukan Gorge sites. Archaeologists had told the company in a 2018 report the sites were among the most significant of their type in Australia and that evidence had been recovered showing use by humans more than 40,000 years ago.
The incident, along with delays and a budget blowout at Rio’s flagship growth project at Mongolia’s Oyu Tolgoi mine, has stoked investor concern over Rio’s management and about Jacques’ leadership. “The buck stops with me, my focus is on putting this right,” Jacques told the Friday hearing.
On Friday, the Australian Centre for Corporate Responsibility, a shareholder advocacy group, said the CEO should resign.
“At every turn, Rio’s group CEO JS Jacques has sought to deflect blame,” said Brynn O’Brien, executive director of ACCR. “His suggestion today that no single person is accountable for the decision to detonate the Juukan Gorge sites in May is indefensible. The buck always stops with the CEO, and he should resign.”
Still, so far none of the company’s major investors have joined the call for Jacques to go and it is the best performing major miner this year, making bumper profits from iron ore.
Rio and competitors are facing the prospect of tighter regulation that could make it more difficult to win approvals to expand existing sites, or to build new mines, in the Pilbara. It’s the world’s key iron ore hub that generated forecast annual export earnings of A$100 billion ($72 billion) in the 12 months to June 30.
Enhanced scrutiny is particularly significant for Rio, which probably needs about eight replacement mines in its iron ore division by 2026, according to Goldman Sachs Group Inc.
The blasts were legal, permitted under a Western Australian government process that’s used to rule on cases where an impact on Aboriginal sites is deemed unavoidable. That system is scheduled to be replaced by legislation that will offer more protection for heritage areas and give communities rights of appeal.
Repeated chances were missed to recognize the significance of the Juukan Gorge site’s heritage from about 2008 onwards and those problems were exacerbated by miscommunication with traditional owners, Jacques told the hearing.
When Rio belatedly recognized the potential damage that blasting the site would cause, it was already too late -- explosive charges had been laid and couldn’t safely be removed, the company said in a written submission.
“The events at Juukan should not have happened,” Jacques, who has since traveled to meet with Indigenous community leaders in some other regions, told the hearing. “The destruction of the rockshelters has triggered some reflection in our company.”
Rio will fund about $50 million of initiatives aimed at promoting more Indigenous people into leadership positions, he said. About 12% of the residential workforce in Rio’s iron ore unit are Indigenous people, according to the company’s most recent annual report.
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