The Rio Tinto AGM in Brisbane on Friday was an unusual affair. No shareholder raised the issue of Rio’s failure to engage with BHP and my patriotic attack on the London-based company and its English blue-blood board went down like a lead balloon.
Whilst BHP runs the patriotic national champion argument for its takeover bid, Skinner’s defensive address last Thursday included the following lines about Australia:
In Australia Rio Tinto is in the forefront of national wealth creation that adds value to the economy in the form of wages, taxes, royalties and interest, as well as profits distributed to shareholders. Brisbane hosts our global Technology and Innovation group where we are developing a global position of technical leadership through our Mine of the Future programme. We also have a strong base in Melbourne, and Perth hosts Rio Tinto’s dynamic global Iron Ore business.
Rio Tinto’s focus on its Australian operations has intensified over recent years — with approximately $30 billion in investment since 1998. Last year our value added in Australia amounted to $10 billion. Even more importantly we employ 17,000 people in well paid jobs in Australia and are the largest private sector employer of Aboriginal people.
We firmly believe that, through our stewardship and development of Australia’s natural resources, we have demonstrated a full commitment to Australia. A truly global company will seek to achieve that objective in every country in which it operates.
None of this addresses the fundamental issue: with a majority of its assets in Australia and a total value exceeding $100 billion, the board is treating our nation with contempt by having its headquarters in London, only two Australian-based directors and a collective Australian shareholder base that is now down to just 15%.
Surely it would be in the interests of Rio shareholders to shift the headquarters now that we have wall-to-wall Labor Governments.
The Weekend Australian splashed with the story that the Rudd government has quietly asked 10 Chinese companies to withdraw FIRB acquisitions to buy into Australian mines, although Resources and Energy Minister Martin Ferguson played this down on Insiders yesterday.
It was all very well for Rio Tinto to hire John Howard’s nephew Lyall to look after government relations over the past few years but things are different now.
Key issues such as uranium mining, the dispute over the Shovelanna iron ore deposit in WA, industrial relations, third party rail access, carbon taxes and the like will all be easier to negotiate if Rio is more Australian-owned, Australian-run and Australian-based.
One shareholder asked about a restart of the Bougainville Copper mine in PNG and this just demonstrates the point — Rudd and Labor will be far better placed to deal in the immediate region than Howard’s crowd and would do more on the Bougainville issue if Australia as a nation had some skin in the game. Indeed, six Federal Ministers were in PNG last week.
Check out this full account of the Rio AGM.