Rio Tinto chairman labels climate change as leading threat

Rio Tinto chairman Simon Thompson has cited indifference to climate change as “the greatest long-term threat” to the company.

The chairman, joined by chief executive officer Jean-Sébastien Jacques, this week commented on tackling climate change issues as a sustainable mining business at the company’s annual environmental, social and governance (ESG) seminar in Sydney.

Jacques said climate change was “the starting point of our strategy on sustainability” while Thompson stated that Rio Tinto was “determined to be part of the solution, not part of the problem”.

Rio Tinto has reduced its greenhouse gas emissions by 27 per cent in the last decade and 75 per cent of its current energy needs are met by hydro, nuclear and renewable power sources.

According to Thompson, the company has integrated climate change considerations into the company’s strategy for nearly two decades.

“We think that we have a great position in aluminium and copper, both of which are essential raw materials for a low-carbon world, with applications including electrification and lightweighting,” he said.

Rio Tinto has embarked on a divestment of its fossil fuel assets over the past year.

Yancoal purchased the company’s Hunter Valley operations in New South Wales in 2017, while Glencore purchased its Bowen Basin coal assets in Queensland earlier this year.

Rio Tinto also sold its 80 per cent stake in the Kestrel underground coal mine to a consortium for $US2.25 billion ($2.9 billion) in March.

“The decision to disinvest from fossil fuels was informed by our view on the supply/demand outlook for thermal coal and the opportunity that we saw to sell our coal assets for full value and to redeploy the capital into sectors where the outlook is better, in a carbon-constrained world,” Thompson said.

Rio Tinto eventually returned the proceeds of its Australian coal mines to shareholders via a $US3.2 billion ($4.4 billion) disposal in September.

“The sale of coal gives us a differentiated position versus other mining majors,” Jacques said.

Both Jacques and Thompson admitted that the company still faced issues with regards to its divestment, particularly due to its continued reliance on coal-fired power stations at certain overseas operations.

“We do face some intractable problems, including our reliance on coal-fired power in Mongolia and in South Africa,” Thompson said.

“But in both cases, our operations clearly bring huge economic and social benefits, and play a major role in poverty alleviation in two relatively poor countries.”

Jacques said that company was well positioned to meet the challenges of a low carbon future.

“Mining makes every part of our lives possible: from the minerals used in beauty products and the homes you live in, to the metals needed in transportation such as cars and airplanes…and so on and so forth,” he said.

“So, the world needs mining. And we believe our industry is part of the solution to some of the world’s challenges, starting with climate change.”