Copper
Feature Articles
Rio Tinto Faces Another Cultural Battle
February 2021
Rio Tinto is headed for another cultural battle over Indigenous mining land after it was granted approval by the US government for a land swap in Arizona on grounds sacred to Native Americans.

The US Forest Service (USFS) published a final environmental impact statement (FEIS) on Jan. 16, that finalizes a land swap at Oak Flat in Arizona for Rio's Resolution Copper mine, which has faced increased scrutiny from Native American tribes on the grounds that it will destroy sites of cultural and religious significance. The agency also published a draft record of decision indicating it will issue, pending review, permits for use of power lines, pipelines, and roads in the area.

The scrutiny comes less than a year after Rio provoked public and investor outrage when it blew up 46,000-year-old Aboriginal heritage sites in Western Australia during a mine expansion. This led to the departure of the firm’s then-CEO Officer Jean-Sebastien Jacques and two other key managers.

The swap, part of a 2014 deal engineered by former Republican senator John McCain and approved by Congress, will give Rio and BHP 2422 acres of government land, including 760 acres known as Oak Flat in the Tonto National Forest. In exchange, the companies will hand back 5459 acres of other land around Arizona to the US government. The government must execute the land swap within 60 days of the environmental statement’s publication, a stipulation laid out in a 2014 law signed by then-President Obama.

The mine, which is 55% owned by Rio with the rest held by rival BHP, could supply a quarter of US copper demand if developed and generate more than US$280m in annual taxes, according to the US Forest Service. Rio and BHP say that the project could produce as much as 40Blbs of copper over the next four decades and create thousands of jobs. “We have to balance demand for mineral extraction and the related economic benefits with our commitment to environmental stewardship and sustainability,” said the Forest Service’s Tom Torres. “This project is complex, and the impacts were rigorously analysed.” This sentiment was echoed by Arizona Governor Doug Ducey, a Republican, who praised the decision, saying the state “can have a robust mining sector while protecting our environment and cultural history.”

Resolution is set to pose an early challenge for new CEO Jakob Stausholm, who was tasked with improving ties to local communities. The mine is caught between the wider struggle between the preservation of the environment and historical lands and miners desire to extract more copper, needed for the clean energy technologies to reduce global emissions. The project may also present a task for President Biden, who has pledged to both preserve the environment and speed up the transition to clean energy, which will require more copper.

Mr Stausholm will also need to made headway in resolving an increasingly messy situation in Mongolia, where Rio’s most important growth project, the US$6.75bn Oyu Tolgoi copper mine, has been hit by delays and cost blowouts that have led to disputes with the country’s government and the company’s minority partners. The mine, set to be the world's fourth-largest copper mine when completed, could make up 7% of Rio’s attributable cash profits in 2028, when it ramps up to 480kt of copper per year.

In an attempt to avoid repeating mistakes of the past, Rio said it would continue to engage with Native American tribes and seek consent before any decision on the development of the project. Resolution Copper’s project manager Andrew Lye wrote to 11 Native American tribes in December, seeking to increase direct engagement with the groups. Resolution is committed to “careful and respectful treatment” of any Native American artifacts or ancestral remains found on the property, Mr Lye said in the letter. “We will comply with all laws related to Native American cultural heritage and will strive to do more,” he added. Meanwhile, BHP said it recognizes the land “has historical cultural significance for Native American tribes” and plans to monitor Resolution’s tribal negotiations. The vice chairman of the White Mountain Apache Tribe, Jerome Kasey III, in a November letter acknowledged its inclusion in the consultation process, with the project "ensuring the inclusion of the tribal voice".

Some Native Americans work for and support the Resolution project, though many others have vowed to forcefully oppose it. Prior to the publishing of the environmental study, Native American groups, such as the San Carlos Apache tribe, requested a restraining order that would have prevented the government from publishing the report. US District Judge Steven Logan denied the request, given that the two sides did not talk, which is required under legal stature. San Carlos Apache tribe chairman Terrry Rambler previously told an Australian parliamentary that: “Like the rock shelters at Juukan Gorge, Oak Flat is a sacred and holy place that Resolution Copper greedily seeks."

Following the FEIS release, the public has 45 days to object to the draft decision on the mine plan, and the USFS must respond and address any concerns within 90 days. Despite all the attention the project has received, it is not being fast-tracked and remains in the permitting and study phase. The Biden administration will oversee permitting that must be approved in the next few years, during which time the companies will decide whether to invest in construction. “BHP funding decisions in relation to Resolution Copper will be contingent upon the project satisfying both commercial considerations and alignment with our values, policies and practices in relation to the rights of indigenous peoples.”

Copper's importance is set to grow on the global shift towards decarbonisation, which will fuel huge demand for the commodity used in grid electrification, renewable power and electric vehicle batteries. But this will coincide with increasingly stringent environmental and cultural considerations, which are increasingly dominating the zeitgeist, and companies will need to learn to adapt.