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Odisha: Rio Tinto builds diplomatic pressure for revival of its mining operations  

Monday June 09, 2014

RIO TINTO, AUSTRALIA HIGH COMMISSION, PETER VERGHESE, MINING, ODISHA, OMC, NAVEEN PATNAIK  
 

"Australian Company Rio Tinto has a poor track record on Corporate Social Responsibility (CSR) front as well. While the company claims to have CSR as a core component of its business operations, the real situation in its mining sites are always the opposite. In Odisha, negligible CSR activities by the company has resulted in strong discontentment among workers of Rio Tinto operated Suakati Mines in Keonjhar and, also, among the people living in the periphery villages.

 

Basudev Mahapatra

 
 

With the 17 year old agreement between Odisha Mining Corporation (OMC) and the Australian mining company Rio Tinto facing a possible end as OMC is not very much keen on the renewal of the agreement, the Australian government has entered the scene to ensure revival of Rio Tinto business in the resource rich eastern Indian province of Odisha. As the Chief Managing Director (CMD) of OMC was quoted by the ‘Business Standard’ newspaper, ‘The JV pact with Rio Tinto presently stands null and void and OMC is no longer willing to revive the project. We have already informed the state government regarding our intent. It is now going to be the government's call whether it wants to renew the project or not.’

Realising that the situation is not in favour on Rio Tinto, the Australian government through its Indian High Commission has intervened and pursued Rio Tinto interests in mining in the state of Odisha.

 

In this regard, the High Commissioner of Australia Peter Verghese visited Odisha and met the Chief Minister Naveen Patnaik on October 19, 2012 and discussed the issues to mobilise the situation in favour of Rio Tinto. ‘We talked about the broader outlook for the mining sector and the legislation (MMDR Bill) which is pending at the centre. And I did raise the issue of Rio and Chief Minister indicated that the government is looking at that and, obviously, some of its examinations will be influenced by where the final legislation on the mining bill ends up. So, we will continue our discussion,’ said Verghese after meeting the Chief Minister.

It was on February 24, 1995 that Rio Tinto had entered into a $2 billion joint venture deal with OMC to develop Suakati Gandhamardhan and Malangtoli iron ore deposits in Keonjhar and Sundergarh districts in Odisha that have a total reserve of about 3.6 billion tonnes.

As per the original agreement, Rio Tinto was to hold 51% equity in the JV while OMC was to own the rest 49%. Now, when there is growing demand for the mineral ore within the state of Odisha and the country as well, OMC's reluctance to renew the deal and revive the project seemed to have pushed Rio Tinoto’s interests into uncertainty forcing the Australian mining major to use diplomatic pressure for revival of its business.

Recently, in an interview to India’s leading political and economic newspaper ‘The Economic Times’, Chief executive of Rio Tinto Sam Walsh said while replying to a question if he was still optimistic about the company’s business in India that ‘We are engaging with the local community and with the state government and the federal government as well. We can see the benefits of the project to the local economy, to the state of Odisha and also to the country as a whole, and are hopeful that when the time is right, the project will be cleared. We are not going to go away, we are here for the long term. We understand that in a country like India, there are a range of forces that work, and we want to be good corporate citizens, and want to work with existing legal system and community expectations and won't take shortcuts, or get involved in any corruption because that's not the way we do business.’

However, the global reputation of Rio Tinto as on date doesn’t complement to the claims made by Walsh.

A report titled ‘Rio Tinto poisons Steel Industry Sustainability’, published in the website of International Metalworkers’ Federation, accuses the company of endangering sustainability of steel industry by exercising monopoly in supply of iron ore. About reputation of Rio Tinto, the report mentions that, ‘Rio Tinto also has a poor reputation as a corporate citizen and is currently conducting an illegal lock out of workers in Alma, Quebec. Rio Tinto's reputation is so bad that local community groups and unions are working together to prevent its US$12bn investment in India.’

‘Rio Tinto has been the subject of allegations and reports about human and labour rights abuses, and about environmental devastation around the world, including in Papua New Guinea, Indonesia, China and elsewhere,’ says the aforementioned report while appealing the governments and policy makers to ‘act to break up the mining monopoly or to adopt policy solutions that would force companies like Rio Tinto to become good corporate citizens.’

The Australian Company has a poor track record on Corporate Social Responsibility (CSR) front as well. While the company claims to have CSR as a core component of its business operations, the real situation in its mining sites are always the opposite. In Odisha, almost no CSR activity by company has resulted in strong discontentment among workers of Rio Tinto operated Suakati Mines in Keonjhar and among people living in the periphery villages.

International mining companies like Rio Tinto are interested in Odisha because of its huge reserve of minerals. But the companies hardly spend a proper share of their profit for the welfare of local people. From land to their home and socials amenities, people are to lose only while the companies thrive by pursuing their business interests. This is the reason why people are afraid of mining and industrial projects in their area. So, the government must not succumb to any diplomatic pressure but take a decision by thorough examination of Rio Tinto’s proposal and verification of arguments placed by OMC.

 
 

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