sharing in governance of extractive industries
Q&A with Rio Tinto: the first mining company to adopt contract transparency policy
Mining giant Rio Tinto was the first major mining companies to announce that they will support the public disclosure by countries of their mining contracts and licenses. By coming out in favour of contract transparency, the company is joining ranks with Total, as well as smaller oil companies Kosmos Energy and Tullow Oil. In a statement, EITI Chair, Fredrik Reinfeldt “welcomed and commended Rio Tinto’s policy, as a transparency leader in mining.” Simone Niven, EITI Board member and Group Executive, Corporate Relations at Rio Tinto explains the thinking behind the decision below:
Can you briefly explain why Rio Tinto decided to start publishing contracts?
We think it is critically important that we are transparent about our arrangements with local, regional and national governments in the countries where we have operations. So publishing the details of our contracts with those governments was a natural step for us to take. Publishing contracts allows us the opportunity to enter into open, fact-based, conversations with stakeholders at every level, giving interested parties a clear understanding of everyone’s roles and responsibilities in a project.
It also enables voters in our host countries to see how much money (in the form of taxes, royalties, dividends, etc.) will flow from our projects to the relevant government entities, and to hold them to account for how it is spent.
In addition to publishing contracts we also publish an annual report on our Taxes Paid and economic contributions to communities where we operate. The full report can be found online.
How were you able to meet concerns about confidentiality and commercial sensitivity?
Of course we have to be careful about disclosing confidential information, including that which is commercially sensitive. We must also get approval from host governments before publishing contracts. It has not, however, prevented us from disclosing a vast majority of our contracts with governments as most of them do not contain commercially sensitive information.
What do you hope to achieve through this policy?
It is important to us (and may be critical to our ability to continue finding and developing mining prospects) that society understands that the old image of the extractive industry - arriving, extracting resources, and leaving (without clearing up the mess) - is not the Rio way. We play a part in producing materials essential to human progress.
In addition to what our materials are used for, including electric vehicles, electricity grids, electronics, etc.; our mining operations bring many benefits to our host countries. By being open about the terms of our contracts with governments everyone can see what we are contributing to our host societies and how we are more than just a miner.
Rio Tinto has been disclosing contracts since 2014, including its one with the Mongolian government covering the massive Oyu Tolgoi mine. What has been the impact on the ground of publishing nationally important contracts?
As I mentioned before, by being transparent with our contracts we have a better opportunity to engage openly with possible business partners, members of the community, and regional governments.
Have you noted any other national or international impact, with other companies or governments?
Overall, publishing our contracts with governments has had a positive effect on our reputation. While we are certainly not the only company that publishes contracts, being counted as one of those companies has allowed us to engage more confidently with certain members of civil society.
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