Activist shareholders claimed three executive scalps over the destruction of the Juukan rockshelters in May 2020.

Juuken Gorge encroachment by Rio Tinto before blasting. Image ~ Puutu Kunti Kurrama And Pinikura Aboriginal Corporation.

After strong “concerns” with accountability for the failings to either acknowledge the cultural and archeological significance of the site, or the likely consequent outrage and publicity, the three will depart in an attempt to assuage opinion and salve the company’s reputation.

Jean-Sebastien Jacques will step down from his role as an executive director and Chief Executive of the Group. A process to identify his successor is underway. He will remain in his role until the appointment of his successor or 31 March 2021, whichever is earlier.

Chris Salisbury will step down as Chief Executive, Iron Ore with immediate effect and will leave Rio Tinto on 31 December 2020. Simone Niven will step down as Group Executive, Corporate Relations, and will leave the Group on 31 December 2020.

“What happened at Juukan was wrong and we are determined to ensure that the destruction of a heritage site of such exceptional archaeological and cultural significance never occurs again at a Rio Tinto operation,” said Rio Tinto chairman Simon Thompson.

We are also determined to regain the trust of the Puutu Kunti Kurrama and Pinikura people and other Traditional Owners. We have listened to our stakeholders’ concerns that a lack of individual accountability undermines the Group’s ability to rebuild that trust and to move forward to implement the changes identified in the Board Review.”

Fall guy

Warren Staples, RMIT School of Management, said Rio will hope this is a circuit breaker, but Rio Tinto boss JS Jacques is walking away with a generous financial package. So, whilst he has paid a price as the public fall guy – he has been paid to walk the plank.

Native Title and other mining legislation are critical for bringing Indigenous land owners to the bargaining table before a mining operation begins. However, once it’s underway they become dependent and when a miner wants to further develop an existing mining site, we’ve seen they will do just that and hope to ride out the negative PR storm.

While shareholders might vent publicly, they don’t exit profitable firms. Research shows investors largely refrain from using their voice in trying to influence firms to seriously tackle social issues.

I doubt shareholders will exit Rio even while other highly significant sites remain under threat.”

Welcomed news

The Northern Australia Committee has welcomed news of the resignations of senior Rio Tinto executives in the wake of the destruction of Indigenous heritage sites at Juukan Gorge.

Committee Chair, Warren Entsch, said that the need for high level accountability for the Juukan Gorge incident had become obvious to all interested stakeholders.

The evidence received by the Committee has made clear that the internal culture at Rio Tinto was a significant factor in the destruction of these sites,’ Mr Entsch said.

New leadership, new structures and new operating principles within the company are essential to preventing such catastrophes in the future.’

The Committee welcomed the commitment made by Rio Tinto Chairman Simon Thompson, to ensuring that ‘the destruction of a heritage site of such exceptional archaeological and cultural significance never occurs again at a Rio Tinto operation’. Mr Entsch expressed the hope that similar commitments would be forthcoming from other mining companies.

The Committee also expressed a desire to meet at the earliest opportunity with the outgoing executives to further discuss Rio Tinto’s previous evidence to the inquiry and explore the implications of the announced changes at the company.

Earlier this week, the Committee announced the inquiry into the destruction of the Juukan Gorge sites will continue, despite having to postpone its planned visit to Western Australia because of difficulties associated with interstate travel.

Pyrrhic victory

Andrew Linden, RMIT corporate researcher, said it was a pyrrhic victory for institutional shareholders – they have three high profile executive heads on pikes, but the Juukan Gorge is gone.

While it looks like shareholders are getting their way and holding senior executives to account, what we haven’t seen is institutional shareholders taking a principled stand much earlier.
Rio has a chequered history in indigenous relations, labour relations and foreign bribery, and extensive lobbying and interference in politics. It was even blacklisted by Norway’s sovereign wealth fund for a decade.
For years Australian institutional shareholders have loved Rio Tinto for its high and consistent dividends and have not exited the company despite its poor governance track record.
The mining industry invented the ‘social licence to operate’ concept to convince governments and the community they could regulate themselves but have again fallen short.”