In May, Rio Tinto blew up the 46,000-year-old Juukan Gorge rock shelters to make way for the expansion of an iron ore mine.
The public was shocked. Rio’s employees were angry. Shareholders demanded change. Rival mining giant, BHP, quickly paused demolition plans for 40 Aboriginal sites in the same iron-rich region. Rio Tinto launched an internal review and the federal parliament launched an inquiry into the circumstances that led to this event. Four months on, Rio Tinto’s CEO and two senior executives have resigned.
While people were outraged, and rightly asked how this could happen, the fact is destruction of Indigenous sites by mining companies is not new. It is a practice enabled by law and repeated around the world.
What is new are the shifting goal posts of societal expectations. It is no longer acceptable for a company to destroy sacred Indigenous sites, dodging transparency and accountability for maximum profit. It is no longer acceptable for a government to neglect its duties to protect Indigenous culture and heritage.
Moving forward, the silver lining to this devastating event may be some much-needed reform. To ensure Indigenous cultural heritage is protected, companies and governments must act with greater transparency and accountability and fully respect and uphold Indigenous people’s rights to free, prior and informed consent (FPIC).
These principles are applicable to both governments and companies, in Australia and across the globe. These principles mean:
- negotiations and agreements with Indigenous peoples must be free from coercion or improper influence,
- Indigenous peoples’ consideration and consultation must be given prior to any developments, and
- all members of the Indigenous group need to be well informed about mining and other large projects with the opportunity to give or withhold consent.
The problem with corruption
In Australia – and indeed many other countries, communities living near mining sites are not provided with the full information they need and deserve. They are not consulted and engaged in a meaningful way about the impact mining will have on their lives; and too often the rules are not adequately followed or enforced.
This problem is compounded for Indigenous communities. Indigenous people often live in the remote regions where mining companies operate; they have a special historical, cultural and spiritual connection to the land, and they often suffer disproportionately from being marginalised - with poorer access to health and education, economic opportunities and political voice.
Transparency International Australia’s research, published in 2017, found some critical corruption risks in the way mining rights have been awarded in Western Australia:
1) Negotiations and agreements between Aboriginal groups and mining companies are often marred by a lack of transparency and a significant power imbalance.
Without transparency, Aboriginal custodians of the land cannot see what beneﬁts they were promised, or what environmental, social or heritage impacts were negotiated. This also hinders peoples’ ability to monitor the implementation of those agreements and hold mining companies to account.
2) Generous political donations, well-oiled lobbying campaigns, and revolving doors between public office and company payroll, all contribute to a culture of mateship that would make requests from mining companies hard to refuse.
This contributes to a regulatory environment tainted by policy capture, a type of corruption where public decisions over laws, regulations and policies are consistently or repeatedly directed away from the public interest and towards the interests of a narrow interest group or person.
In a state like Western Australia - where one third of gross state product comes from mining; and the mining sector is a major donor to political parties - this could go some way toward explaining why none of the applications to destroy more than 463 sites over the past decade were ever refused by the government.
Transparency International’s global research found corruption risks in mining approvals to be present in numerous jurisdictions. No country, no matter how wealthy or experienced, has a robust enough process for awarding mining rights that guarantees the public’s best interest will always come first. The consequences, especially for Indigenous people, can be devastating.
Business as usual is no longer acceptable
The public outcry and shareholder alarm prove that the goal posts of societal expectations have shifted.
An Australian Financial Review poll soon after the blast found 74 per cent of readers believed the company had damaged its reputation.
Months on, the fallout continues for Rio Tinto. The board’s decision to cut the multi-million-dollar bonuses of some senior executives did not satisfy its critics. On September 11, due to investor and community pressure, the CEO and two top executives resigned.
One of Australia’s biggest superannuation funds, Hesta, has demanded a public inquiry into all agreements Rio Tinto has made with Aboriginal traditional owners in the region. It explained a failure to negotiate in good faith with traditional owners exposes mining companies to reputational and legal risk.
Other miners are in the spotlight, including BHP and Fortescue Metals Group. The Australasian Centre for Corporate Responsibility filed shareholder motions demanding the companies stop undertaking activities that would disturb or destroy cultural heritage sites until relevant laws are strengthened; remove gag orders on Indigenous traditional owners so they can speak publicly about cultural heritage concerns on their lands; and disclose lobbying on cultural heritage issues.
“Shareholders, in the wake of Juukan Gorge, know that business as usual is absolutely unacceptable.” (Australasian Centre for Corporate Responsibility)
Social licence matters
This reaction further validates EY’s research that points to social licence to operate as the number one business risk facing mining and metals – for the third year in a row. If a company fails to gain the trust and acceptance of the community in which it operates, its operations risk being contested, delayed or halted by community and investor criticism. This year’s report also advised miners to consider that ‘local communities will have greater expectations around how miners respect indigenous rights and native title.’
Meanwhile Deloitte’s research earlier this year found responsible investment to be a defining trend for the future of the mining sector. While in the past, mining companies could get away with a narrow, profit-driven business model, ‘the pace is accelerating’ in Environmental, Social and Governance (ESG) investing and companies cannot afford to ignore critical issues like indigenous rights.
ESG investment is estimated at over $20 trillion and growing
Raising the bar
Mining companies often operate in multiple jurisdictions. Companies should work to consistently high standards regardless of jurisdiction and should follow international best practice. This means adhering to the principles of Free, Prior and Informed Consent (FPIC).
Governments have a duty to protect Indigenous culture and heritage
While decision-makers within companies have a role to play, governments are ultimately responsible for strengthening policies and practices to protect communities – and their environments and culture.
In August, the Western Australian Government released draft legislation to bring the almost 40-year-old Aboriginal Heritage Act in line with community expectations. While this review was already being planned, the public outcry has led to new protections and transparency and accountability measures.
However, the state Minister of Aboriginal Affairs continues to have discretionary powers, there is no specific reference to FPIC in the Bill and the requirements for companies to perform due diligence to identify, mitigate and prevent real and potential adverse impacts appears weak. A more detailed analysis of the problems with the current legislation can be found here. As the author states: ‘[The draft] still contains a Ministerial over-ride ‘in the interests of the State’ (…) Thus, it remains to be seen whether there really will be ‘a fundamental shift in the approach to, and protection of, Aboriginal heritage in Western Australia’
To fully ensure Aboriginal heritage and culture is protected, the West Australian government - and indeed other state and national governments, need to uphold the principles of free, prior and informed consent.
This blog was first published by Transparency International Australia.
Transparency International is working across our global network of local Chapters to look at where and how corruption can get a foothold in the mining sector. Our Accountable Mining Programme is shining a spotlight on the process of obtaining a mining or exploration permit and asking: who gets the right to mine? And under what conditions?
A common and critical corruption risk identified by a number of our Chapters is the lack of transparent, accountable and meaningful engagement with communities affected by mining operations.