The nation’s largest miners will face shareholder pressure to halt projects on Aboriginal heritage sites and urgently review their agreements with traditional owners in the fallout from Rio Tinto’s Juukan Gorge disaster.
Mining industry leaders including the heads of Fortescue Metals Group and the Minerals Council last week rejected a federal inquiry’s recommendation for a Western Australia-wide pause on activities disturbing sacred sites, saying it would be overly disruptive and harm economic growth.
The industry’s position has put it at odds with prominent institutional shareholders, who say the parliamentary committee’s inquiry into the blasting of the 46,000-year-old Juukan Gorge rock shelters exposed systemic problems that must be urgently addressed. Those investors are calling for miners to review existing plans to ensure they had obtained free, prior and informed consent.
The powerful Australian Council of Superannuation Investors (ACSI), whose 37 members own on average 10 per cent of every ASX200 company, said the need for a “reset” outweighed any short-term financial risks from projects facing delays next year which could affect Australia’s iron ore exports.
“Surely it’s not too much to ask that all organisations would satisfy themselves and other stakeholders that they have got proper consent and their agreements will stand up to scrutiny,” ACSI chief executive Louise Davidson told The Age and The Sydney Morning Herald.
“You can’t just look at this as a 12-month issue, you can’t assess the impacts just over a 12-month period – there is a really strong imperative to get this right for the long term. Now is the opportunity to reset and work out what is going to be an appropriate framework for the next decades.”
A coalition of 81 British public-sector pension funds managing a collective $545 billion threw its support behind the “heavy emphasis” in the committee’s interim report on the means of rectifying the situation, including seeking independent reviews of all agreements with traditional owners.
“In my experience, the entire industry is tone-deaf on the rights of affected community members, and this must change now,” Local Authority Pension Fund Forum chair Doug McMurdo said.
“Mining companies must implement corporate governance processes that effectively incorporate input from affected communities, not just because it is the right thing to do, but also because failure to do so negatively affects the operation and prospects of the companies in which we invest.”
The loss of the Juukan Gorge rock shelters and subsequent inquiry have drawn attention to the power imbalance underpinning relations between resources giants and Indigenous communities. This includes “gag” clauses in contracts preventing traditional owners from objecting to works, and provisions in WA’s outdated heritage-protection laws – known as Section 18 permissions – that afford traditional owners no right to appeal decisions if new information comes to light.
Some miners, including BHP, have already paused some Section 18 works in order to re-consult with traditional owners. The inquiry’s interim report, released last week, sought an industry-wide freeze on new Section 18 permits and commitment not to act on existing ones until the WA government finished modernising its legislation or until miners had conducted reviews into whether they had obtained appropriate consent.
The First Nations Heritage Protection Alliance, representing key Indigenous land councils and native-title groups, said the inquiry’s findings were frank and transparent and should “ring alarm bells” for companies, investors and policy-makers. Alliance member James Christian said the proposed freeze on new Section 18 approvals to review of existing permits was an appropriate recommendation.
“I don’t think it’s overarching, I don’t think it’s an overreaction, Mr Christian said.
Industry and government leaders resisting the recommendation needed to “pull their heads out of their backsides and have a good hard look at themselves and what they are presiding over, because this is a national crisis,” he added.
“There are other sites of significance that could be damaged if Section 18 provisions signed off by the WA government are enforced.”
Analysts said the fallout from the inquiry presented a risk next year for Rio Tinto and other iron ore miners, which are currently benefiting from sky-high prices of $US150 a tonne.
“Rio is facing public and shareholder backlash and may not be able to damage even insignificant sites in the near future,” Credit Suisse analysts said.
Glyn Lawcock of investment bank UBS said the broader mining sector was expected to face “stricter and slower” approvals for projects and mine plans in 2021 due to heightened scrutiny of Section 18 applications.
“We are yet to see the full extent of the fallout from Juukan Gorge but, as a minimum, we expect development timelines in WA to be protracted,” Mr Lawcock said.
Source: Thanks smh.com