Miners like Rio Tinto could have their credit ratings downgraded should they fail to maintain good relationships with Traditional Owners whose lands they operate on, according to a new report from ratings agency Moody’s Investor Services.
Moody’s Senior Vice President Matthew Moore said the agency was closely monitoring relationships between Traditional Owners, mining companies and other community groups for signs of troubled or fracturing relationships.
He said compliance with the law did not guarantee a social license to operate, and that social license to operate was becoming critically important in credit assessments.
This is due in particular to the climate following the events at Juukan Gorge, when Rio Tinto blew up a 46,000-year-old sacred site within the confines of the law but against Traditional Owners’ requests.
“Compliance with the law neither guarantees an enduring social license to operate, nor does it prevent credit-negative events from occurring.”
The report also warned of “long-lasting negative credit implications for miners and projects” should resource companies fail to manage the risks around cultural heritage disturbance or destruction of sites.
Moody’s advised it would also be factoring in miners’ previous relationships and histories with Traditional Owners when considering credit risks.
As Rio Tinto remains tight-lipped on the activities at its Marandoo operation that led to the accidental and then deliberate disposal of heritage material at the Darwin tip in the 1990s, the mining giant now has at least two strikes on the public record documenting its wilful destruction of Indigenous heritage.
“The impact on credit from an organisation’s inability to obtain and maintain social license from Indigenous communities is difficult to assess prior to a claim or action from an affected community taking place,” the report said.
“As a result, we often treat failure to obtain or maintain social license to operate from Indigenous communities as an event risk in our credit analysis.
“To assess the likelihood of a credit-negative event occurring, we often look to a company’s or project sponsor’s past actions and current policies as an indication of the potential for an event to occur.”
By Hannah Cross