The blacklisting of Rio Tinto – Opinion – Al Jazeera English

Grasberg mine
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The blacklisting of Rio Tinto – Opinion – Al Jazeera English.

Too many invest in companies – such as Australia’s Rio Tinto – without any consideration of the ethics of doing so.
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Papuans protest against Freeport and Rio Tinto’s Grasberg mine outside of Freeport’s office in Jakarta [EPA]

[This is the first of four pieces examining Rio Tinto and mining in Indonesia’s West Papua province]

Investing in conflict-affected and high-risk areas is a growing concern for responsible businesses and investors. Often times companies based in developed countries operate in lesser-developed, foreign markets, where governance standards are lax, corruption is high and business practices are poor.

These pieces focus on one specific Anglo-Australian company that operates in West Papua, one of the poorest provinces of Indonesia. The risks for the company include the potential to contribute to environmental and social damage in a foreign market. The risks for investors include financing a company that does not get its risk management right. This is the story of how the Norwegian Pension Fund blacklisted Rio Tinto.

An ancient copper mine located near Huelva in southernmost Spain changed hands in 1873. A group of opportunistic Anglo-German investors, equipped with modern techniques that favored mining aboveground, acquired it from the Spanish government. The mine’s copper had stained the surrounding water to such an extent that the indigenes named the river Rio Tinto – literally meaning “red river”.

The mine at Rio Tinto had supplied the Phoenicians, ancient Greeks, Carthaginians, and the Roman Empire. Its copper had paid for Carthage’s numerous wars on Rome and had been held by both Scipio and Hannibal. We can only assume that these investors, aware of such indelible marks on the environment and history, missed the irony, because they named their company Rio Tinto.

However, the red river has since flowed a long way from home. The company has expanded its operations through Australia, North and South America, Asia, Europe, and southern Africa – across coal, aluminum, copper, diamonds, uranium, gold, industrial minerals, and iron ore. Rio Tinto is now so large that its dual listing on the Australian and London stock exchanges commands a value of over $100bn.

What’s left behind near the Spanish town of Huelva is a 58-mile-long river flowing through one of the world’s largest deposits of pyrite, or fool’s gold. Because of the mine, the river has a pH reading similar to that of automobile battery acid and contains virtually no oxygen in its lower depths. In the late 1980s, temporary flooding dissolved a power substation, a mandibular crusher, and several hundred yards of transport belts.

More recently, NASA astrobiologists used the conditions of the river to replicate the conditions of Mars. “If you remove the green,” one of them remarked, “it looks like Mars”. The thinking goes that if something could live in such an acidic river, then there is likely to be life on Mars too.

Every Australian – through public monies invested by elected governments, or their choice of superannuation fund, insurer, and bank – is funding this red river now too. Rio Tinto is so large and so profitable that, for the average Australian, investment in it is very near unavoidable.


On September 9, 2008, amid the turmoil of the global financial crisis, the Norwegian government announced that it had liquidated its entire $1bn investment in Rio Tinto for “grossly unethical conduct”. Operating the second largest fund in the world, the Norwegians’ decision focused solely on the Grasberg mine in West Papua on New Guinea, which it believed posed the “unacceptable risk” of contributing to “severe environmental damage” if it were to continue funding the Anglo-Australian mining giant.

Rio Tinto had been blacklisted.

The following day, Rio Tinto’s official statement relayed that the company was “surprised and disappointed”, given both its recognised leadership in environmental sustainability and its noncontrolling interest in the Grasberg mine. As with most claims of sustainability, the truth is otherwise.

Rio Tinto should not have been surprised by the Norwegian stance on Grasberg. Records show that there had been months – in fact, years – of dialogue with the Norwegians about Grasberg’s inadequate environmental and social performance. Rio Tinto had faced a litany of signposts indicating that multinational and Indonesian involvement in West Papua was not meeting various standards, laws, and norms: Institutions such as the World Bank, the Australian Council for Overseas Aid, the International Finance Corporation, the Overseas Private Investment Commission, the United Nations Committee against Torture, the US State Department, and the Indonesian Environment Ministry, as well as many US and European politicians, independent environmental assessments, international media, Papuan leaders, civil society groups, and shareholders had brought the problems to Rio Tinto’s attention.

That an institutional investor should act on environmental, social, and corporate governance considerations is a newly evolving development within the global investment industry, and one in which many Australian institutional investors and service providers have been quick to claim leadership. However, the blacklisting of Rio Tinto by the Norwegian government was uniquely public, transparent, and forward-thinking. Yet this wholesale dumping of one of Australia’s blue-chip stocks received only syndicated coverage in the local media.

Behind the headlines of the global financial crisis is a deeper, more systemic fault line that rewards rampant capitalism. Too many invest in and operate mines such as Grasberg without any consideration of the ethics of so doing.

Part 2 to follow next week.

This is an extract of a chapter from the book, Evolutions in Sustainable Investing: Strategies, Funds and Thought Leadership, to be published by Wiley in December 2011.

Follow NAJ Taylor on Twitter: @najtaylordotcom

LP3BP protests after TV journalist beaten by local district chief in South Sorong

JUBI, 9 September 2011

Once again, violence has been used in Papua, this time against a television journalist  working for the local TV station in South Sorong, TOP TV. Mufriadi who reports on the district of South Sorong was severely beaten  by the bupati – district chief – of South Sorong in West Papua while covering an assault on the office of the district chief by local people.

‘We received information from Mufriardi by phone who said he had been attacked and beaten by the bupati, Otto Ihalauw and his assistant, Marthen who is a member of the police force, along with four other policemen.,’ Amir Siregar  told the press.

Siregar said that  Ihalauw’s action was a crime and he should be detained by the local police force.’It was a criminal act and he can be detained without waiting for the permission of the President, in accordance with the law on regional governance and guidance for police investigations.’

Siregar said that after Mufriardi was beaten, his handy camera was seized  and he was taken to a room at the bupati’s office for questioning.

Mufriadi  explained that he had  received a request by phone to cover the assault being made on the bupati’s office by people who own traditional rights to the  land .’But as soon as  I arrived, I was summoned by  the bupati’s assistant who is a member of the police force. I was taken to the bupati’s office. The bupati came out of his car and slapped me in the face, after which I was subjected to beating by  his assistants which lasted for about ten minutes.I have no idea why I was beaten  but I was subjected to verbal abuse and then they asked me to write a report along the lines that they wanted.’

Viktor Mambor, chairman of AJI, the Independent Alliance of Journalists in Papua,  said that he would support moves by TOP TV to seek legal action and report the incident to the authorities.


The Executive-Director of LP3BH, the Manokwari-based human rights organisation has made a strong protest against the action by the bupati against Otto Ihalauw. Yan Christian Warinussy described the action of the bupati as a crime which should be investigated in accordance with Law/1981.

He went on to describe the bupati’s action as an act of intimidation against the activities of journalists as stipulated in the law on the well as a crime under the Indonesian Criminal Code. He called on the local police chief to arrest the bupati  and his assistants  as well as the members of the police force who were  involved in the incident.

Such activities should not be allowed to happen again, said Warinussy and he said that speaking on behalf of human rights activists throughout West Papua, he called on the chief of police in South Sorong to take firm action against the criminal actions of the bupati. He said that the people of West Papua should strongly condemn such attempts of officials to take the law into their own hands,

Warinussy also called on DAP, the Customary Council of  Papua  and all components of the Papuan people tocall for those responsible for these criminal acts to be brought to account, because a bad precedent  has been set for the activities of the governments in South Sorong and throughout the province of West Papua.
He said that the governor of West Papua should also report the incident to the minister of the interior, to ensure that the matter in dealt with in accordance with the laws in force. All journalists working in West Papua should give their full support to Mufriadi in this matter.

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