Mining giant Rio Tinto may pull out of Pebble Mine in Alaska
12/23/2013 1:52 PM
12/24/2013 4:20 AM
Global mining giant Rio Tinto said Monday it is considering dumping its stake in Alaska’s Pebble Mine, a huge open pit mine planned for the best remaining wild salmon stronghold on Earth.
Rio Tinto’s statement comes just four days after the chief financial officers of California and New York City wrote the London-based mining company and urged it to pull out of the Pebble project. New York City Comptroller John Liu and California State Controller John Chiang said they oversee pension funds that are substantial, long-term shareowners in Rio Tinto.
The officials from California and New York told Rio Tinto it was risking its reputation through involvement with Pebble, given the risk to the wild salmon of Alaska’s Bristol Bay region.
“Any association with Pebble Mine could result in substantial adverse public relations and potential customer and investor backlash,” they wrote to Sam Walsh, Rio Tinto’s chief executive.
Rio Tinto, through a subsidiary, owns 19 percent of Northern Dynasty Minerals Ltd., the owner of the Pebble project. It’s a world-class copper prospect that could be the largest open pit mine in North America.
Rio Tinto said Monday in the statement, posted on its website, that it was rethinking its involvement in Pebble. The company said it advised Northern Dynasty “that it intends to undertake a strategic review, including a possible divestment” of its shares.
Rio Tinto said its review will consider how the Pebble project fits with the strategy for its copper business, which is focused on four producing mines across the globe and development projects in Peru and Arizona.
The Pebble project suffered a blow in September when British mining company Anglo American pulled out, leaving a financial hole. Northern Dynasty said it will continue to pursue the project and expressed confidence that it could find a new partner within the next year.
The Environmental Protection Agency, meanwhile, is weighing whether to use its powers under the Clean Water Act to shut down the project before it gets moving.
New York City Comptroller Liu and California State Controller Chiang told Rio Tinto that the potential EPA action, along with the possibilities of lawsuits and harm to the salmon, make Pebble too risky an investment.
“Northern Dynasty has lost roughly 80 percent of its market value over the past two years. With Rio Tinto’s stake now valued at less than $25 million, we believe the reputational risks the investment poses to Rio Tinto now outweigh its market valuation,” they wrote.
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