Tuesday, September 09, 2008

Norway sells $853 million Rio stake on ethics grounds

Marketwatch reports that Norway's state pension fund is divesting from the miner Rio Tinto on environmental grounds. The main cause for concern seems to be gold mines. I've previously posted on how the US violated the sovereignty of the Western Shoshone people to steal their land for gold companies. Norway's divestiture is primarily about environmental concerns, but many gold and other mines worldwide are on land owned or occupied by indigenous peoples.

LONDON (MarketWatch) -- Norway's state-run fund that is funded by oil proceeds on Tuesday said it's divested its entire $853 million (4.8 billion Norwegian kroner) stake in mining giant Rio Tinto on ethical grounds.

The Government Pension Fund -- Global sold its stake on concerns that Rio Tinto is contributing to severe environmental damage.

The fund in 2006 had excluded Freeport McMoRan Copper & Gold, and Rio's exclusion was mainly due to its partnership with Freeport in the Grasberg copper mine in Indonesia.
According to the government fund, 230,000 metric tons or more of trailings are discharged into a natural river system, and that discharge will grow as the mine expands.

There also is a high risk that acid rock drainage from the company's waste rock and tailings dumps will cause lasting ground and water contamination.
The mine is deemed to remain profitable until 2041, the fund noted. See external link to fund's report.

"There are no indications to the effect that the company's practices will be changed in future, or that measures will be taken to significantly reduce the damage to nature and the environment," the fund said.

Rio Tinto disputes the notion that it has a bad environmental record.

According to the fund, Rio Tinto replied that it "engages with Freeport and positively influences outcomes on a wide range of operational, community and environmental issues."

Rio Tinto said the tailings consist of ground natural rock and are not harmful to the environment. The fund maintained that even if the tailings contain high levels of ground rock, this does not mean that the discharge is harmless.

[Editor: gold mines use cyanide to extract gold from ore, and the mine tailings, or waste left over after extraction, are usually laced with cyanide. Additionally, cyanide stored in ponds may be accidentally discharged into lakes if the dams break, or the cyanide may leach into groundwater.]

The fund said there was destruction of most aquatic life in the waters and elevated levels of heavy metals in the sediment have been detected.

The fund has chosen not to invest or divest stakes in a variety of companies on ethics considerations, ranging from Wal-Mart Stores on human rights and labor allegations and GenCorp, United Technologies and Honeywell on their roles in nuclear weapons production.

Separately, two private-equity firms as well as Australian packaging firm Amcor ( and U.S. packager Bemis are vying for Rio Tinto's $5 billion packaging business, Reuters reported, citing sources familiar with the situation.

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