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Iron ore giant pays $125m to Pilbara Traditional Owners

David Prestipino -

A charitable trust representing three Traditional Owner groups in Western Australia's eastern Pilbara region has received $125 million in unpaid royalties.

Iron ore giant Rio Tinto made the massive payment to major Aboriginal Pilbara group The General Gumala Foundation and is likely to contribute more in future after underpaying royalties over several years.

The windfall payment to the charity, which is distributed to the Gumala Aboriginal Corporation that represents the Banjima, Yinhawangka and Nyiyaparli traditional owners in the eastern Pilbara, comes after more than three years of negotiations after Rio admitted in July 2020 it had identified historical underpayments in royalty payments under its Yandi land use agreement, which commenced in 1997.

The $125 million payment, which was made in December 2022 but only revealed in Gumala foundation's recently published annual report, is the first indication of how big underpayments from Rio have been, with further payments expected.

"We note the final amount remains unresolved," the foundation's report stated.

"Gumala is committed to resolving the matter and negotiating to modernise the Yandi Land Use Agreement."

Rio Tinto on Thursday confirmed the payment to GAC in December 2022 and said it greatly valued its relationship with Gumala and its members.

"Rio Tinto confirms $125 million was paid to the Gumala Aboriginal Corporation to address a payment discrepancy under the existing Yandi Land Use Agreement," a spokesperson said.

"We are continuing to engage with our Traditional Owner partners in the Pilbara to both modernize our existing agreements and discuss new protocols for the co-design of future operations on their country."

The negotiations with Rio have proven costly for GAC and trustee company Gumala Investments, with GAC's annual report showing the corporation incurred legal costs of $1.06 million in the arbitration of the Rio Tinto dispute in the year to June 2023.

Gumala stated in its 2023 annual report it "continues to engage with Rio Tinto to finally resolve the matter" and had previously commissioned an audit that put the total underpayment figure as high as $400m.

The foundation's 2023 annual report highlighted the volatility in royalty payments under the Yandi agreement, which is based on the amount of ground disturbance at the Yandicoogina iron ore mine.

The foundation has for six years tried to update the agreement because the current one results in a large degree of volatility in royalty payments.

Royalty payments are tied to the amount of ground disturbance at Rio's Yandicoogina mine rather than the volume or value of ore sold by the company.

Rio's payment represents another step in the company's efforts to improve its relationships with First Nations groups in the Pilbara after destroying sacred rock shelters at Juukan Gorge in 2020.

It is seeking to finalise a co-management agreement with the PKKP Aboriginal Corporation, which represents traditional owners of the Juukan Gorge land.

It also recently finalised an updated land use agreement with Yindjibarndi Aboriginal Corporation and entered into a clean energy partnership with them.

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