Rio Tinto tells the MCA: it’s Coal or Us
Why Rio Tinto’s recent threat to leave the Minerals Council of Australia matters
On Thursday 11 April, Rio Tinto, one of the world’s largest mining companies, published an updated list of six expectations that it had set for its industry associations.
The commitments were privately negotiated with ACCR over the last several months. As part of those negotiations, ACCR agreed to withdraw our shareholder resolutions, planned for the Rio Tinto 2019 AGM.
Rio’s updated expectations
Rio will now require all its industry associations to ensure that their:
- Public commentary on energy policy will be shaped by a technology neutral approach. This means that no technology will be put forward over others.
- Commentary on decarbonisation and carbon pricing will be framed by the same technology neutrality principles.
- Recognise the valuable contribution that renewables make in reducing emissions, and not undermine the role they have in the energy portfolio.
- Support government’s emission reduction targets in line with achieving Paris Agreement goals.
Rio has also singled out its Australian industry associations, including the Minerals Council of Australia (BCA) and the Business Council of Australia (BCA), on the following:
- Any advocacy on the use of coal in the long term will note that it will require advanced technology, and in the medium to long term must be consistent with Paris targets.
- Publicly argue against subsidies for coal and for the development of energy supply to be done in a technology neutral way, consistent with Paris targets.
What this means for industry associations like the Minerals Council
As Guardian Australia’s Lisa Cox reported last Friday, Rio Tinto has said that it is prepared to:
review its financial contributions and membership of those associations if they failed to meet this standard or its expectation…
This puts the Minerals Council of Australia (MCA) — which received a US$1,590,000 membership fee from Rio in 2018 — in an interesting position.
The MCA claims to ‘support (Rio’s) latest commitment to partner and advocate for policies that advance climate goals in line with the Paris Agreement’. But if the MCA are to comply with Rio’s newly announced standards, and retain Rio as a member, then they will have to do an about-face on their recent advocacy, particularly around coal.
Why the Minerals Council could be in trouble
In late 2017, MCA CEO Brendan Pearson was forced out by the MCA’s largest member BHP, following intense investor pressure over the MCA’s pro-coal advocacy. The MCA subsequently updated its Energy and Climate Change Policy, vowing to end its pro-coal agenda, and take a ‘technology neutral’ approach.
But since the appointment of new CEO Tania Constable in July 2018, the MCA has:
- claimed that it does not see a transition away from coal over any timeframe
- argued that so-called ‘High Efficiency Low Emission’ (HELE) coal technologies can assist Australia to meet its Paris Agreement commitments
- argued for government subsidies of carbon capture and storage (CCS)
- supported the federal government’s proposed policy to underwrite new coal-fired power stations
- called for a “measured response” to reducing carbon emissions
- funded a 10-page advertorial on coal in The Australian on the eve of the NSW state election
It seems to us that this sort of advocacy would fall foul of Rio’s new standards. It is not enough for the MCA to just put the words ‘technology neutral’ in a press release anymore.
For example, while Rio now expects that its industry associations will ‘publicly argue against subsidies for coal’, the MCA, with Tania Constable at the helm, continues to support government plans to underwrite new power generation.
The dilemma now facing Rio’s other industry associations
Rio’s statement also poses potential problems for many of its other industry associations, both in Australia and globally. The US Chamber of Commerce and the National Mining Association do not support the Paris Agreement.
The Chamber of Minerals and Energy of WA recently lobbied against a WA EPA recommendation that would have required new projects to offset carbon emissions. And the Business Council of Australia continues to lobby for renewable energy targets to be repealed, and for further investment in Australia’s coal-fired power stations.
