As mining giant Rio Tinto battles its latest public relations nightmare, former Rio Tinto chief executive turned Aboriginal corporation director Sam Walsh AO has said mining companies must overhaul the way they engage with Traditional Owners.

It was revealed earlier this month that in July 2020 Rio Tinto wrote to Gumala Aboriginal Corporation (GAC), which represents Banjima, Yinhawangka and Nyiyaparli Traditional Owners, to inform them of an underpayment issue dating back to the 1997 agreement over the Yandicoogina mine near Newman, Western Australia.

Rio Tinto reportedly enclosed a cheque for $40 million plus interest to Traditional Owners — larger than the total royalties received by the corporation for the entire 2019-20 financial year.

It’s understood GAC returned the cheque and requested a full forensic audit of the miner’s payments to the corporation since the agreement came into force 24 years ago.

According to The Australian, the audit report has identified almost $400 million in underpayments over the life of the agreement.

The Yandi Land Use Agreement is one of the oldest land use agreements between Native Title holders and a major mining company in WA. It is calculated on ground disturbance at the mine site and surrounding areas and is not a royalty agreement based on the extraction and selling of iron ore.

As disputes over the Aboriginal Cultural Heritage Bill 2021 (WA) continue, Walsh, who recently joined the board of Banjima Native Title Aboriginal Corporation (BNTAC), has said it is time to review the way miners interact with Indigenous communities.

“I think there’s got to be more consultation. I think that there’s got to be more engagement, involvement. There needs to be more sharing of mining plans and intentions,” he told the Australian Financial Review.

“Water use is a critical issue in the Pilbara. Rehabilitation is a critical issue, where tailings are deposited. And obviously, sacred sites and heritage areas are incredibly important.”

Walsh was chief executive of Rio Tinto Group from 2013 and 2016 before being replaced by Jean-Sebastien Jacques.

Since it was revealed Rio Tinto may owe Banjima, Yinhawangka and Nyiyaparli Traditional Owners up to $400 million, Labor Senator Pat Dodson has called for a widespread audit of Indigenous Land Use Agreements.

The Senator, who also sits on the committee leading the Juukan Gorge inquiry, said Aboriginal Corporations and Traditional Owners need to be better resourced to detect potential underpayments.

“It is disconcerting that this incredible underpayment was only discovered as a result of an audit that was prompted by the Traditional Owners,” he told Guardian Australia.

“In light of this, and due to the power imbalance between mining companies and Traditional Owners, doubt is cast over similar such royalties arrangements, and it’s time for us to consider the need for audits of arrangements across the board.”

By Hannah Cross