bad call
Guinea's Simandou iron ore project uncertain after Rio Tinto upheaval
By Christophe Le Bec
Posted on Friday, 18 September 2020 15:54
View of the Simandou deposit in Guinea. ©Rio Tinto
Both the CEO and the iron ore division head will be leaving the Australian mining giant. Their exits could turn the tide of the company's Guinea-based project.
On 11 September, the chairman of the Anglo-Australian mining giant announced the imminent departure of the group's chief executive, Jean-Sébastien Jacques.
At the helm of the company since 2016, Jacques was ultimately unable to withstand the pressure, following four months of turmoil, of being lambasted by human rights organisations, Australian MPs, certain Rio Tinto shareholders and other mining industry professionals.
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His downfall?
The destruction on 24 May 2020 of two 46,000-year-old Juukan Gorge rock shelters – cave-like structures built and used by Aboriginal tribes in western Australia's Pilbara region – during blasting to expand the Brockman 4 iron ore mine, which went ahead despite reports attesting to their significance to local communities.
The French engineer, educated at École Centrale Paris, had previously spearheaded the Oyu Tolgoi copper megaproject in Mongolia and pushed out Rio Tinto's developers in charge of the Simandou iron ore deposit in Guinea, a project he didn't believe in. Jacques will leave the group on 31 March 2021, allowing the company time to find a successor.
Rio Tinto boss is stepping down after the Juukan Gorge incident @abcnews @politicsabc #auspol pic.twitter.com/WiUm1BNFfD
— Matthew Doran (@MattDoran91) September 10, 2020
The destruction of the Juukan Gorge rock shelters has also toppled the Australian national and iron ore division CEO Chris Salisbury, as well as Simone Niven, group executive of corporate relations. They will exit the company by the end of the year.
Shareholders becoming more discerning
The fall of a major mining boss due to relations with local communities living adjacent to a mine site is a first for the extractive industry and a sign that shareholders have become more discerning about such issues, including in Africa.
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In fact, institutional investors – particularly the Australian government-backed Future Fund – were calling for the executives involved to face tougher punishments than just the loss of their bonuses as was agreed upon this past August.
The reshuffling will inevitably impact the group's African assets.
In the iron ore division, whose boss is set to change, the new leader will have to decide the fate of the company's Simandou assets, which Rio Tinto has not managed to sell to its Chinese partner Chinalco.
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The group also has operations on the continent through its mineral sands business, which is active in South Africa (Richards Bay) and in Madagascar (Fort Dauphin) and headed by the Mongolian national Bold Baatar.
Baater is well-known face at Mining Indaba, the world's largest mining investment conference bringing together African mining industry professionals in Cape Town.
Rio Tinto's new boss will have to find a way to calm the situation at the Richards Bay mine, which since the end of 2019 has been the site of several violent incidents involving neighbouring communities, even leading the business to suspend operations.
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