Rio Tinto PLC (NYSE:RIO) reportedly faces pressure from socially conscious investors and lenders related to water practices at two of its mines.
Notably, a group representing U.K. pension funds, Local Authority Pension Fund Forum (LAPFF), has raised concerns about Rio’s water management at its Oyu Tolgoi copper mine in Mongolia and an ilmenite mine in Madagascar, reported Reuters.
Such protests are likely to hinder Rio Tinto’s efforts to attain government approval to build a lithium mine in Serbia and dig a giant copper mine in Arizona; local protests have delayed both projects, as per the report.
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LAPFF Chair Doug McMurdo told Reuters, “Rio Tinto already has significant reputational risk stemming from Juukan Gorge, so its water challenges in Madagascar and Mongolia (as two pressing examples) pose a huge threat of further reputational damage.”
Given growing incidents of litigation around water management globally and tougher regulations coming into place, these challenges are also a highly financially material issue, the report further cited McMurdo.
LAPFF and advocacy groups say Rio Tinto’s water audits don’t give the full picture of the impact of its operations in both locations. The pension fund group has decided to wait to file the proposed resolution until April 2025 after Rio Tinto engaged with it and acknowledged in a December report that it could do better at its Madagascar site.
LAPFF, whose members hold more than GPB 350 billion ($445 billion) in U.K. pension funds, has been trying to build support for a resolution that would pressurize Rio Tinto to assess independent water impact at its mine sites.
Environmental adviser CDP graded Rio Tinto an “F” for failing to disclose its water data to the group since 2016, as per the report.
Earlier in 2020, the global mining company faced outrage after destroying an ancient Indigenous site in Australia.
Rio Tinto will report fourth-quarter FY23 results on February 21, 2024.
Price Action: RIO shares are trading lower by 0.54% at $67.55 premarket on the last check Monday.
