New coal royalties for Rio Tinto's climate saints
Ever since releasing its inaugural climate change report in
February 2019, Rio Tinto has excruciatingly belaboured its exit from coal
mining the previous year. Again and again, the company’s leadership has
characterised itself as “well-positioned to contribute to a low-carbon future”
and hyped its newly “fossil-fuel-free portfolio”, one “differentiated from our
industry peers, with a fundamentally changed exposure to environmental, social
and governance risks”.
These claims are, demonstrably, the most egregious
horseshit. Rio remains the biggest polluter of any Australian miner – its
emissions are greater than double those of its closest peers, BHP and Glencore
(the nation’s biggest coal producer).
And only 11 weeks ago, Rio announced it would spend $1.44
billion building a coal-fired electricity plant to run its expanded copper mine
in Mongolia. The extraction of its “fossil-fuel-free portfolio”, therefore, is
to be powered by fossil fuel. And the power station’s construction costs will
almost fully negate the $1.56 billion Rio has committed to “climate-related
expenditures” over the next five years.
Yet with mulish persistence, Rio Tinto chairman Simon
Thompson and chief executive Jean-Sébastien Jacques carry on brandishing their
thoroughly discredited environmental reformation – a pair of climate frauds
who’ve comprehensively lost their audience.
But, quite gloriously, this is merely the tip of Rio’s
melting iceberg. It turns out that when Rio sold its New South Wales coal
business to Yancoal in 2017, the terms of its sale included a deferred royalty
under which Rio is entitled, for the subsequent decade, to $US2 for every tonne
of thermal coal sold while the Newcastle benchmark exceeds $US75 a tonne
(adjusted for CPI and capped at $US410 million). The coal price remained
constantly north of that threshold from September 2017 right through to June
2019, and will doubtlessly return there before 2027.
Thus, on September 1, fewer than four months from now, Rio
will receive $21 million in new Hunter coal revenue. What Thompson and Jacques
really meant to say was they’re “not involved in fossil fuel extraction” except
when it’s exceptionally lucrative, at which time they’ll readily skim the
superprofits of a high-carbon here and now. For intellectual dishonesty, this
company is peerless. Do London’s flourishing ESG firms not read fine print?
It’s not entirely fair, perhaps, to say Rio’s climate fakery
hasn’t worked on anyone. Some extraordinary suckers – the Australasian Centre
for Corporate Responsibility, for one – have been intermittently dupable. Rio
even condemned the Minerals Councils of Australia to secure for itself an ACCR
commendation. Yes, the MCA was damned for speaking in defence of thermal coal
by a member currently investing in it. Complete nonsense.
At last month’s London AGM, Thompson earnestly called for
the urgent adoption of a carbon price that doesn’t apply to mining – this being
the chairman’s non-contribution to a “low-carbon future”, and a cringe-worthy
one at that.
On Thursday, Thompson and Jacques will front the virtual
annual meeting for Rio’s Australian listing, a blockbuster event originally
headed for Brisbane. What brave new falsehood will be uttered?
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