The Multinational Monitor


C O R P O R A T E   P R O F I L E

Rio Tinto Zinc:

The British Mining Monster

by Roger Moody

In 1981, the Canadian subsidiary of the Rio Tinto Zinc Corporation (RTZ), along with Denison Mines, negotiated a ground-breaking agreement with the United Steelworkers of America, empowering the union to appoint safety inspectors at its Elliot Lake uranium mines. For RTZ, the agreement was a rare concession to demands that human needs be given consideration in the company's operations. Even so, the compact was reached only after a government commission revealed that Elliot Lake miners were laboring regularly under radioactive exposures seven times higher than is considered safe and three subsequent years of union agitation.

RTZ is a truly global corporation, however, and many of its operations affect communities more vulnerable and less able to protect themselves than the Canadian mineworkers. With 52 mines in 40 countries, RTZ is one of the world's most powerful mining companies. According to investment analysts Morgan Stanley Capital International, RTZ's market capitalization stood at $5.7 billion in June 1988, putting it head and shoulders above its competition. In addition, RTZ's 40 percent-owned Australian associate, CRA, Ltd. ranked sixth with assets of almost $4 billion.

Having acquired a large number of properties in related industries, RTZ with its subsidiary companies--known as the Group--has interests in almost every major metal and fuel, including aluminum and its products, borax, coal, copper, gold, industrial chemicals, iron ore, lead, silver, specialty steels, tin, uranium and zinc. A 1989 purchase brought RTZ most of British Petroleum (BP) Minerals' mines and prospects, including Kennecott Copper with its plum asset, the Bingham Canyon copper mine in Utah, as well as several important North American and Asian gold interests. The London-based Financial Times now rates RTZ as the third most important gold producer outside of South Africa. But this is only a small side-venture for RTZ; even collapsing gold prices would leave the company's fortunes largely intact. RTZ's core assets are sunk in minerals which, while subject to cyclical fluctuations that have seen the downfall of smaller miners, regularly return huge profits to a company large enough to wait out the downturns.

RTZ excels in mining and marketing a range of minerals from one lode, persisting in exploiting mines not generally viewed as prospective money-makers and in overcoming political obstacles to its projects. RTZ's financial success also stems from low labor costs, inadequate environmental regulations, generous tax allowances and leases which are literally dirt cheap.

The Rossing uranium mine

The site of some of RTZ's greatest successes as well as the source of some of its most strident opposition, the Rossing uranium mine in Namibia exemplifies many RTZ practices. The mine enjoys the unenviable distinction of being the most condemned mining project of the twentieth century. No other mine has been the subject of UN resolutions, a UN-sponsored court case and scores of demonstrations throughout Western Europe.

The Rossing mine, which by the early 1980s had become the world's biggest uranium project, was constructed by hundreds of Ovambo laborers who were separated from their families and housed in what the Economist magazine called "appalling temporary camps." Even when a more permanent black township was constructed, conditions hardly improved; in 1979 (six years after mine construction started) South African researchers Gillian and Suzanne Cronje found them "akin to slavery." In a speech delivered in early 1980, the General Secretary of the Mineworkers Union of Namibia (MUN), Ben Ulenga, observed that "92 percent of all black and 51 percent of all colored workers still remain in the company's lowest income bracket, [which does not] constitute a living wage.... [B]lack workers in the Exploration Department have no house [and] no housing allowance." Ulenga charged that the miners' living "conditions in crowded army-style tents are, in fact, among the worst in the mining industry." Under the spotlight of international pressure, RTZ made a show of cleaning up its act in the 1980s, but the changes were largely cosmetic.

Until South Africa's recent withdrawal from Namibia, RTZ's Rossing operations violated the United Nations' Decree on Namibia's Natural Resources and numerous other resolutions prohibiting the exploitation of Namibia's resources. But because Namibia' s economic fortunes are so dependent on mining, RTZ gambled that the longer it held on in the territory, the more likely it was that it would be invited to remain after independence.

The illegality and immorality of RTZ's operations in Namibia notwithstanding, the company gained a seal of approval from successive British governments. When she visited the Rossing mine last year, Prime Minister Thatcher said, "It makes me proud to be British." Her uncritical view was hardly surprising, considering the history of protection that several British administrations (including her own) have afforded RTZ to plunder Namibian uranium. Officials within the British Ministry of Technology signed a secret contract enabling Rossing to supply the country's uranium needs, although the British cabinet was told that Britain would obtain the uranium from Canada.

Once Britain was committed to the illegal source, both Labor and Conservative governments defied United Nations decrees in order to maintain the supplies. The British government promulgated a Protection of Trading Interests Act which not only prohibited British corporations from supplying documentation to a potentially hostile foreign interest (a Chicago court investigating the uranium cartel) but entitled British courts to seize the assets of any overseas power which impounded British corporate assets.

Government relations

Though RTZ unceasingly exploits the resources of many regions, it gives little or nothing back. The company has paid no taxes on the Rossing mine during most of the mine's existence even though, at one point in the 1980s, the Namibian mine was the company's biggest money-spinner. Similarly, the Bougainville copper mine in Papua New Guinea enjoyed a five year tax holiday (until the then-newly-independent government of Michael Somare forced a renegotiation in 1974). The Weipa mine in north Queensland, Australia, the largest bauxite mine in the world, is functioning on land which was seized from Aboriginal people who have never received any compensation.

With the Weipa project, RTZ was able to extract extra financial support from the local government. Weipa's bauxite is converted into aluminum in Australia and refined at the Tiwai Point Smelter in New Zealand (Aotea-roa). Although RTZ and its partner Kaiser agreed in 1960 to build a power station to run the smelter, within two years they backed away from the promise, pleading poverty. The New Zealand government, eager to promote industrial development, not only constructed the power station at the taxpayers' expense but sold electricity to the two companies at one thirteenth of the rate charged to New Zealand citizens and one twentieth of that charged to other industries and farmers.

By sharing bits of its wealth with those in a position to help them, RTZ and its subsidiaries and partners maintain an extraordinary capacity to influence domestic power brokers in the regions where they operate. When Conalco (the joint RTZ- Kaiser company formed to exploit the Weipa mine) was publicly floated in 1970, for example, only 10 percent of its shares were offered to the Australian public. A significant portion had been offered secretly the day before to friends of RTZ in high office in Queensland; these friends included the state Treasurer, the Ministers of Aboriginal Affairs, Industrial Development, Local Government and Electricity, and the Premier of Western Australia. Acting Premier of Queensland Gordon Chalk distributed the ill-gotten gains to his entire family, leading one journalist to comment that "only the dog" had failed to benefit. When the value of RTZ skyrocketed upon its public offering, these politicians saw the value of their investments double in a day.

No national government has proven immune to RTZ's influence. In the late 1970s, a U.S. subsidiary of RTZ, U.S. Borax, overcame the opposition of President Jimmy Carter and gained access to nationally protected lands. In 1977, U.S. Borax located a massive molybdenum deposit at its Quartz Hill property in Alaska. To the company, the find promised a "valuable diversification into a market where prices have continued to rise even during recession." Unfortunately for RTZ, the deposit lay in an area which had recently been designated as inviolable. Despite opposition from the Sierra Club, Representative Morris Udall and Carter himself, RTZ/Borax mounted a well-funded lobby of Congress, arguing that its exploration of the deposit was in the "national interest." By December 1980, the company had prevailed: the Alaska National Interest Lands Conservation Act was passed, allowing RTZ to mine in the world's largest national park.

Remarkably, even while Congress was legislating exceptions for RTZ, a Congressional investigation was citing the company and several subsidiaries as prime movers in the world uranium cartel whose contract and price-fixing in the early 1970s boosted the mark-up for "free world" supplies of yellowcake by a factor of five. One calculated result was to justify the development of the Rossing mine, whose low-grade refractory ore had not previously been considered profitable to mine.

The company's masterminding of the cartel, euphemistically dubbed the "Uranium Producers' Club" by its members, consolidated and extended RTZ's influence over key government personnel in South Africa, Canada and Australia. It sat as an equal among representatives of sovereign states--leading one commentator, Stephen Ritterbush, then an advisor to the White House, to declare at the 1980 United Nations (UN) Hearings on Namibian Uranium: "Rio Tinto Zinc is in the position of acting in many respects as a uranium producing and exporting nation."

Indigenous people against RTZ

RTZ has not been able to act with impunity, however. Its actions have generated resistance among the people it has affected, especially among indigenous peoples. In a rare acknowledgement of the opposition to the company in his 1984 Annual Report, RTZ's chair Sir Anthony Tuke wrote "We are conscious that some people hold deep and strong beliefs that our activities are in themselves damaging." "Some people" includes the UN Commission on Namibia, President Mugabe of Zimbabwe, the one-time Greater London Council, the National Federation of Aboriginal Land Councils, the Guaymi Congress of Panama and a whole battery of community groups stretching from northern Ireland to New Zealand.

Indigenous land claims have been the bane of RTZ's expansionist policies for two and a half decades. Indigenous people and their supporters have had some success in curbing the company's actions. For example, RTZ was forced to put its huge Cerro Colorado copper project in Panama on hold during the mid-1980s. International support for the Guaymi Congress in its struggle to gain land rights, combined with opposition from Panamanian Bishops and CEASPA, the country's leading radical think-tank on development, proved too much for the top brass at RTZ's corporate headquarters in London. "We have had more opposition to this project than anything else we've done," confessed Tuke to a private meeting with members of Survival International. He added that he found the degree of opposition "quite astonishing." Nonetheless, RTZ continues to hold 49 percent of the Panamanian mine's equity, pays the salaries of workers from the state mining company and keeps a substantial contingent of its own staff in and around the "copper mountain."

Most often, RTZ has been able to expand its operations, even at the costs of displacing native people or jeopardizing their lives. The view of RTZ and its associate company, CRA. on the validity and importance of indigenous land claims is best captured by a callous statement CRA chair Sir Roderick Carnegie made at the 1984 annual general meeting of RTZ: "The right to land depends on the ability to defend it." Two entire Aboriginal communities, for example, lacking sufficient defensive capabilities, were forcibly removed from their land during the construction of the north Queensland bauxite strip-mine at Weipa in the early 1960s. The Bougainville copper mine in Papua New Guinea has ravaged vast areas of Nasioi and Rorovana farmland and forest. The Elliot Lake uranium mines in Canada, while not situated on Indian territory, leach poisonous heavy metals and acids into lakes and rivers essential to the livelihood of the Serpent River Band.

The encroachment and destruction proceeded apace during the 1980s. A sacred women's dreaming site was levelled to uncover the lucrative kimberlite diamond pipe at Lake Argyle, Western Australia. Test drilling for uranium has been carried out near water supply sources on Mardu land in the desert to the south of Lake Argyle. CRA is operating one of Asia's major new coal mines upstream of Dyak settlements in East Kalimantan in Indonesia, while both CRA and RTZ have been accused of engineering the removal of indigenous miners and their families further inland. One of the Group's most important future mines--a wet-dredge mineral sands project in southeastern Madagascar--is likely to affect profoundly the coastal areas used by the Antonosy, one of the island's largest tribal communities. And, earlier this year, CRA announced a 30 percent stake in a gold mine on Igorot land, high in the Filipino Cordillera. Its partners in the Philippine gold mine are Galactic of Canada and Lepanto Mining, a domestic company which has banned organizing by the broad-based National Federation of Labor Unions (NAFLU) and uses it own private army to silence dissidence.

RTZ has had to expend a disproportionate amount of time and energy in counteracting the growing strengths of indigenous people and their supporters. It has even been willing to resort to violent threats. An RTZ board member once threatened to "squash Survival International like a fly, if we didn't get off their backs," says Survival International President Robin Hanbury-Tenison. And an Aboriginal activist who helped expose CRA's links with Anglo-De Beers of South Africa over the marketing of Lake Argyle diamonds swears he was nearly run over on a Melbourne street by a company car.

But these are exceptions to the general RTZ Group policy for dealing with land-based peoples: keep a low profile and foment division within indigenous organizations. This technique was born in Cape York (where an RTZ-sponsored Council has often been at odds with other Aboriginal people), honed at Lake Argyle (where a small family group was separated from the rest of the community and inveigled into signing away its land rights) and most recently employed in Australia's Western Desert. As one close observer of events in Australia's Western Desert summarized the company's ploys, "CRA early on established that the majority of the Western Desert people--the Mardu--were adamantly opposed to uranium mining. Instead of sitting down with the Western Desert Land Council ..., the company sought to undermine them by signing deals with another community whose claims on the area were weaker but whose organization was stronger. This group also operated [its] own mining projects in the past and [was] therefore considered [a] softer target by the company." Ultimately, CRA failed to get the go-ahead to open the mine after Australian Prime Minister Bob Hawke banned the project earlier this year.

Expanding to new territories: Asia and the United States

Conflicts between the RTZ Group and indigenous peoples are bound to continue well into the twenty-first century, although the field of combat is likely to shift as the company expands in the mainland United States and forages further into Asia. Since the 1989 takeover of BP Minerals, just over half of RTZ's investments are in the United States, although a mere 3 percent of its shares are held by North Americans. This may soon change, however. The Mining Journal reported in March 1990 that "the group is aiming for a share listing on the New York Stock Exchange in June this year. This is expected to attract the institutional investors. The medium-term target is for around 10 percent of RTZ's equity to be held in North America."

At the same time, RTZ's chief executive, Derek Birkin, is determined not to let any opportunity slip by in Asia. "The Pacific Rim is a region of growing importance," he said earlier this year. "By the turn of the century, ... there will be a southerly shift in world economic power away from the old axis of Northern Europe and North America. [Already] between 20 percent and 25 percent of current metals demand ... comes from developing countries, especially those in South East Asia." Birkin expects these nations to perform "the same function for overall growth rates as Japan did in the 1960s."

A few years ago, RTZ might justifiably have regarded the opposition in these two regions as malleable: North America as an area starved of new investment where the power of the mining unions has been broken; Southeast Asia as an eldorado of untapped reserves where pliable governments (such as Indonesia, the Philippines and even Vietnam) are content to leave the running of their mines to heavyweight outsiders. Certainly RTZ has made enviable headway in the Pacific Rim: it recently became the first multinational to conclude a mining agreement with the People's Republic of China and it is the only foreign concern which is permitted to manage a major coal mine in Indonesia.

But two developments shook the company's confidence last year. The first, and most important, was the growth of a guerilla army on the island of Bougainville, Papua New Guinea. The Bougainville Revolutionary Army (BRA) is led by Francis Ona, a former employee of the huge Bougainville Copper mine which RTZ established in the 1970s while Papua New Guinea was still an Australian protectorate. The guerillas campaigned for compensation for traditional land owners who were dispossessed by the company's operations and who suffer the effects of massive pollution. As Perpetua Serero, leader of the island's matrilineal landowners told a visiting reporter in 1988, "We don't grow healthy crops any more, our traditional customs and values have been disrupted and we have become mere spectators as our earth is being dug up, taken away and sold for millions." Serero says the BRA developed as the people awoke to the severity of the exploitation. "Our land was taken away from us by force; we were blind then, but we have finally grown to understand what's going on."

Regular attacks by the BRA against mine installations, mine workers, visiting politicians and expatriates forced the mine to close in May 1989. The Papua New Guinea government of Rabbie Namaliu was incensed, since Bougainville copper generated up to 20 percent of the country's internal revenue and was its biggest export earner. CRA, operator of Bougainville Copper, was also greatly disturbed, fearing a market-share loss. While the company's copper contracts could be filled by other RTZ mines, business was more likely to go to competing companies, such as Freeport in West Papua. Other CRA projects in the country were also jeopardized.

Finally, in the closing days of 1989, CRA packed up, told its Australian personnel to leave the island and put the mine in mothballs. Only two months later, as a result of a political shift by the central government, a cease-fire was signed with the BRA. Within a week, all Papua New Guinea forces had pulled out of Bougainville. Sam Kauona, military chief of the BRA, urged his forces not to damage the abandoned mine, in case it could be "re opened in an independent Bougainville." The prospects of that, however, are slim.

The term "to bougainville" is now common currency among indigenous people in the Pacific region; it is synonymous with the increasingly militant stance adopted by traditional landowners who confront exploitation by multinational mining and natural resource corporations and collusion between their central governments and the corporate villains. For example, major blockades were mounted by Highlanders in Papua New Guinea last year to gain a renegotiation of the Ok Tedi mining agreement. Ok Tedi is managed by Australia's biggest company, BHP, along with Amoco, several West German companies and the Papua New Guinea government.

The ripples from Bougainville spread beyond the Pacific Rim. Last January, at a "shop window"called by RTZ to sell itself to institutional investors in New York, the company found its activities in Papua New Guinea sharply challenged. Said an investment advisor, "They expecting to talk gold and ended up talking rebellion."

The latest challenge to RTZ's well-laid plans has erupted in North America. When RTZ took over BP Minerals in 1989, and with it complete control of Kennecott Copper, it immediately took Kennecott's Flambeau mine in northern Wisconsin off the back burner. According to Al Gedicks of the Center for Alternative Mining Development Policy, Kennecott and Exxon went directly to work promoting legislation conducive to mining development in the region. Gedicks says that the companies "determined the precise wording of key pieces of legislation," while Exxon lobbyist James Klauser helped reframe the state's groundwater protection bill so that mining companies could be permitted to pollute previously unpolluted groundwater to the level of federal drinking standards.

The farmers around Flambeau and the Lax du Flambeau band of Chippewa, in an unprecedented move, have now joined the protests against the mine as an official party. For perhaps the first time ever, a coalition of farmers, environmentalists, treaty rights supporters and indigenous people has mobilized to defeat a mining proposal in the continental United States. Such a potent mixture has derailed RTZ elsewhere in the past and now threatens to do so again.

Though the power and arrogance of RTZ are overwhelming, the company is not unassailable. Those who get the short end of the stick in regions where RTZ operates mines are usually those with little power to protect their interests. By working together, however, and putting a spotlight on the corporation's high- handed disregard for the land, people and laws of the world, opponents have been able to create some semblance of accountability and to protect themselves against some of RTZ's worst deeds.

Roger Moody is director of Minewatch, a new community-based consultancy on mining, land-rights and the environment. His full-length study of RTZ, Plunder, will be published this fall.

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