The Rio Tinto Group is a multinational metals and mining corporation founded in 1873. Their head office is in London, England and their major management office is in Melbourne, Australia. Although their primary focus is on the extraction of minerals, The Rio Tinto Group has operations in refining, particular bauxite and iron ore.
The case
In July 2009, four senior executives from Rio Tinto were arrested in Shanghai, China and accused of espionage and bribery. They were suspected of taking bribes regarding the sale of iron ore at a time when the practice didn’t take place in an open market. They later admitted to these charges in court. They were also accused of having information relating to the iron ore negotiations which were too detailed to be obtained legally and therefore must have been stolen trade secrets. These charges were later dropped at the court case however.
One of the arrested men, an Australian named Stern Hu, was sentenced to 10 years imprisonment for bribery and all four men were fired from Rio Tinto.
The effects
After the Rio Tinto court case, shares in the company plummeted in value and their reputation was tarnished. Chongqing Evening News claimed that the damaged caused by the bribery and espionage scandal caused Rio Tinto damages to its reputation worth $17.4billion.
After the case, the BHP decided that iron ore was to be traded on an open market like other commodities like copper. This would make transactions much more transparent and make cases like the Rio Tinto case much less likely to happen again in the future.
Modern controversy
Rio Tinto is still centre of controversy today. The closure of the bauxite mine on the Grove peninsular in the Northern Territory has left many of the local residents full of uncertainty.
Rio Tinto built an entire town in Nhulunbuy, which was designed to house the mines workers. This town solely relies on energy supplied by Rio Tinto and imports the company bring in. With the closure of the mine, the residents of the town now face the prospect of their lifelines being cut off by the global giant.
The bauxite mine was originally campaigned against by the indigenous Yolngu people who inhabited the land. But they were unsuccessful in trying to make sure the mine never opened. But years later, these people now are worried about Rio Tinto abandoning the area and those who live there. The town’s power station, ports, warehouses, fuel storage facilities and airport are all under Rio Tinto’s leasehold.
With Rio Tinto closing the mine, the residents of Nhulynbuy are concerned that much of their infrastructure will leave the town such as the banks and supermarket.
For the past 40 years, the federal government has compensated the Yolngu people for having their land forcibly removed and torn apart. However, just 3 years ago, Rio Tinto agreed a remarkable new deal, which was to provide the Yolngu people with between $15million and $18million a year until 2053. The money was to fund medical, retail and residential developments.
Although Rio Tinto insists that the agreement with the indigenous Yolngu people stands as it did before the mine closure, the confidentially of the deal’s details and fine print mean that it is unclear whether the payment will stand as they did before.
The latest controversy sees Rio Tinto challenging a compensation order for Zorko Zabic, for his exposure to asbestos during his time working in the Gove alumina refinery. He now suffers from what is thought to be terminal Mesothelioma. The compensation, which was awarded earlier this year, amounts to approximately $425,000, but Rio Tinto have convinced the courts to allow them an appeal. This could open the gates for further asbestos related claims, that could threaten the future of Rio Tinto, in addition to the problems above.
All in all, Rio Tinto have a lot of people relying on them for their livelihood; all of whom are living with the uncertainty of what the future will hold for them.