tip off

Rio Tinto’s Gove plant never delivered on indigenous hopes

Rio Tinto will close its Gove smelting plant, which is not necessarily a bad outcome for the Yolngu people. ANU professor Jon Altman says employment opportunities are better sought elsewhere.

On November 29, Rio Tinto announced that it would suspend production of alumina at its Gove refinery. It was hardly a surprise; the smelting plant was reputed to be losing Rio Tinto $20 million to $30 million per month and closure was based on the company’s commercial accountability to its shareholders. It had become increasingly clear that even with access to cheap gas to offset the burden of dependence on heavy fuel oil the Gove operation was commercially unsustainable.

It is ironic that suspension was announced soon after the 50th anniversary of the Yirrkala bark petitions made to the Australian Parliament in 1963. The anniversary was a timely reminder of iconic Yolngu opposition to mining on their traditional lands, an opposition unjustly dismissed by Justice Richard Blackburn in the NT Supreme Court in 1971. The legal principle of terra nullius on which Blackburn relied was later judged wrong in the High Court Mabo judgment of 1992.

The special Mining (Gove Peninsula Nabalco Agreement) Ordinance of 1968 that issued special mineral leases for a period of 42 years, renewable for a further 42 years, was set in legal concrete. This special ordinance was a special deal. The Commonwealth, keen to see the development of the north as part of a nationalist project, would only issue mining leases if a major bauxite treatment plant were constructed. This required a significant area on the Gove Peninsula to be revoked from the Arnhem Land Reserve. And it meant a sweetheart deal on royalties, with a rate struck well below the usual standard.

The Yolngu suffered a double injustice: not only did they see their traditional lands alienated for a minimum 84 years, they were also required to effectively subsidise the national economy and a multinational corporation by receiving less compensation. I first discovered this double jeopardy when researching for a book Aborigines and Mining Royalties in the Northern Territory in 1983.

Fast forward to May 2011, when Rio Tinto welcomed a new era in sustainable development with the signing of the Gove Traditional Owners Agreement between Rio Tinto Alcan and Yolngu Traditional Owners with much political fanfare.

With time there have been changes.

With land rights law, underlying title was now vested with an Aboriginal land trust, although the existing 84-year mining lease was guaranteed. And the mining company was different; Rio Tinto acquired Alcan Gove in 2007.

The new 2011 deal is reputedly worth between $15 and $18 million per annum to Gove traditional owners to 2053, according to the Agreements, Treaties and Negotiated Settlements project website, the only publicly available information on the agreement. Because of confidentiality no-one will confirm if these payments will continue after plant mothballing.

There was also by now more diverse views about mining among with key Gumatj and Rirratjingu land owners seeing the mine, and the alumina refinery that had been significantly expanded with a $3 billion investment, as an opportunity. In December 2012 The Australian reported “the curse of the bauxite mine becomes a late dawning opportunity for the Yolngu clans”; and the Gumatj headed by Galarrwuy Yunupingu planned to establish its own bauxite enterprise to feed the expanded refinery. Even in June 2013 Yunupingu remained optimistic after a memorandum of understanding was signed to investigate bauxite extraction on the Dhupuma Plateau on Gumatj country.

Rio Tinto’s suspension decision came suddenly, despite rhetoric of sustainability just two years earlier: “This agreement is living proof of the great long term benefits that can be secured when mining companies and Traditional Owners work together in good faith for a common purpose.”

In fact, the agreement needed much more than good faith — favourable exchange rates, a high global price for aluminium and secure access to subsidised fuel are also essential.

The mainstream media universally condemned the decision highlighting the loss of over 1000 jobs at the plant with only 350 left in mining, the devastating flow-on impacts on the mainly white township of Nhulunbuy, the negative impact on the regional economy and northern development and the anticipated collapsed value of the township real estate market.

From a broader regional Yolngu perspective things can be seen a little differently. This is because after 45 years, census data show that there have been few employment benefits to the region, only a handful of Yolngu from the townships of Yirrkala and Gunyanarra and from homelands in the region actually work for Rio Tinto Alcan. This fact did not stop The Australian from editorialising on November 27, 2013, that hundreds of employees of Rio Tinto Alcan were indigenous workers and that plant closure would be devastating for their families, local towns and the investments made by companies and governments in enhancing their skills.

The excessive focus by the media, politicians and others on the tragedy of closure overlooks that from a regional Yolngu perspective other factors have also played significant roles in their declining fortunes.

There has been little attempt to ask seriously if the 1960s dream of a giant alumina refinery in remote north-east Arnhem Land actually makes any commercial sense.”

One has been the demolition of the Community Development Employment Program. I recall vigorously debating this issue with Marcia Langton at the 2008 Garma Festival of Traditional Culture, with Phillip Adams mediating: Langton saw CDEP as an “exceptional” welfare trap and destructive, I saw it as productive and its abolition as a terrible mistake. Whichever perspective one supports, there is no doubt that the wellbeing prospects for people in the region have declined as CDEP has been incrementally throttled, replaced for most participants by unemployment, welfare and greater poverty.

Another has been the declining fortunes of the visual arts in the aftermath of the global financial crisis. The production and marketing of art has been a major Yolngu success story that saw sales and returns to artists grow rapidly and uninterrupted for two decades. Art, mainly produced at homelands, is a crucially important source of income, but there was no rescue package for struggling Yolngu artists.

More positively, natural and cultural resource management work by the Dhimurru and Yirralka land and sea rangers in their respective indigenous protected areas has been remunerated far more realistically by the state, Rio Tinto and fee-for-service clients. Indeed, more Yolngu work for community-based ranger groups than for Rio Tinto Alcan Gove. In her Boyer Lectures 2012, Langton warned:

Mining is the only significant industry in remote [indigenous] communities and dependence on it may leave these communities in a precarious position when operations stop. High levels of dependence on mining can be detrimental for indigenous and rural and regional communities, so development aimed at increasing economic diversity is needed.”

I agree. Some 45 years after mining started not only have Yolngu chosen not to directly engage in mine employment, but the sustainable footprint that Rio Tinto extols has never eventuated. It is unfortunate that nascent plans by the Gumatj to mine bauxite might not proceed.

What has recently unfolded at Gove is instructive and replete with sad irony.

First, in 2013 indigenous Chief Minister Adam Giles decided to protect the gas interests of future generations of all territorians and risk Rio Tinto mothballing the refinery, which is precisely what happened — such governmental vacillation can be interpreted as a form of “sovereign risk”.

Second, just as the drama at Gove was unfolding the then-minister for indigenous affairs Nigel Scullion was conducting consultations with Yolngu at Yirrkala for a 99-year whole-of-township lease. Such an arrangement aims to facilitate individual home ownership at the very moment that a real estate market 14 kilometres away at Nhulunbuy is collapsing. This might highlight the risk of home ownership and that capital gains from housing are far from guaranteed.

Third, as the Abbott government is considering how to develop the north and undertaking a review of indigenous employment and training, it is instructive to consider just how difficult enterprise and job creation can be — manufacturing at Gove has failed despite being underwritten directly and indirectly by the Australian taxpayer and Yolngu for decades.

Yet there has been little attempt to ask seriously if the 1960s dream of a giant alumina refinery in remote north-east Arnhem Land actually makes any commercial sense. The answer in today’s globally competitive world screams “no”.

There are parallels here with Henry Ford’s Fordlandia project, an early 20th century attempt to build an artificial township and cultivate plantation rubber deep in the remote jungles of the Amazon that also failed spectacularly. Perhaps it is timely to be more respectful of sustainable Aboriginal businesses like the Buku-Larrngay Mulka Arts Centre; and to consider the areas where Yolngu have comparative advantage in the delivery of environmental services to Rio Tinto, Customs, Australian Quarantine, the Department of Environment, and NT Fisheries.

Let’s hope that the Yolngu not just mine workers are provided structural adjustment transition support, not to cope with the loss of a handful of jobs, but to address the endemic poverty that many have faced as minerals were profitably extracted from their land: mining is not for ever, ever; and what is unfolding at Gove is a timely reminder of this.

*A version of this article was originally published in Tracker

2
  • 1
    Dawson Colin
    Posted Thursday, 13 February 2014 at 4:33 pm | Permalink

    An article with much potential for recycling: substitute “Australian mining industry” for “Rio Tinto”, and “Australia” for Aboriginal Land Council”.

    The wildly overstated community benefits fit every story, it’s just the amounts that change. The breathtaking entitlements are familiar too - 84 years without consent of the custodians!

  • 2
    trash
    Posted Friday, 14 February 2014 at 1:25 am | Permalink

    I had the belief that the licence/grant/agreement for mining the Bauxite was dependent on there being a refinery (not a Smelter! kindly get that bit right) in the NT. So the ‘1960s dream’ was not Nabalco’s (mostly owned by Alusuisse) dream but the cost of doing business with Darwin.

    I do wonder if mothballing the refinery should terminate the ‘dream’ - or is it only the “presence” of a refinery that counts?

    Back in the day, Alcan (the then owners - a *metals* company) were running along a track that had ended Bauxite exports - and hence justified that $3B upgrade - equipment had been removed.

    Pretty much the first thing Rio (a *miner*) did was reinstate that export system - the writing was on the wall 5 years ago, it just needed to be interpreted.

Womens Agenda

loading...

Smart Company

loading...

StartupSmart

loading...

Property Observer

loading...