Joint Standing Committee on Northern

Inquiry into the destruction of 46,000 year old caves at the Juukan Gorge in the region of

Submission following the release of the inquiry’s interim report

14 January 2021

Emeritus Professor Andrew Hopkins, Australian National University Professor Deanna Kemp, University of Queensland Professor John Owen, University of Queensland Rodger Barnes, University of Queensland

We have written four articles in The Conversation that are relevant to this inquiry (Appendix 1). These articles are packaged into this single submission.

Two articles written by Hopkins and Kemp concern ’s corporate structure:

 Corporate dysfunction on Indigenous affairs: Why heads rolled at Rio Tinto, 11 September 2020. See: https://theconversation.com/corporate-dysfunction-on-indigenous-affairs-why- heads-rolled-at-rio-tinto-146001

 Juukan Gorge: how could they not have known? (And how can we be sure they will in future?), 14 December 2020. See: https://theconversation.com/juukan-gorge-how-could- they-not-have-known-and-how-can-we-be-sure-they-will-in-future-151580

These two articles describe how Rio Tinto’s corporate structure failed to prevent the destruction of the Juukan Gorge rock shelters, and suggest how the company could reorganise to reduce the risk of recurrence.

An article written by Kemp, Owen and Barnes reinforces the argument that social specialists and Indigenous people must hold positions of authority that provide them with the necessary avenues and influence to prevent the occurrence of exactly these types of incidents:

 Juukan Gorge inquiry puts Rio Tinto on notice, but without drastic reforms, it could happen again, 9 December 2020. See: https://theconversation.com/juukan-gorge-inquiry-puts-rio- tinto-on-notice-but-without-drastic-reforms-it-could-happen-again-151377

These matters are relevant to the inquiry’s terms of reference: (c) … decision-making processes… and (j) any other related matters, specifically Rio Tinto’s corporate structure.

Accordingly, we recommend that in the final stages of the inquiry, the committee should investigate:

(i) why the site-level communities and indigenous affairs function was incorporated into a corporate affairs portfolio, and whether this structural arrangement undermined decisions about cultural heritage at corporate level

(ii) whether the new corporate structure announced by Rio Tinto will be able to overcome this problem, and facilitate the transmission of concerns from the site-level cultural heritage staff to the executive committee, effectively

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(iii) how the system of bonus and incentive payments to Rio Tinto executives and senior managers drives and/or inhibits social performance and cultural heritage management

(iv) how the group executive now responsible for communities will champion social performance under circumstances where there is a conflict between production targets and social safeguards – noting that this group executive is also responsible for Rio Tinto’s commercial “projects”.

Rio Tinto had numerous opportunities to disclose information about these and other related matters, including through:

 company submissions to the inquiry  oral testimony during public hearings  responses to questions on notice  a board-led review of cultural heritage.

The inquiry’s interim report concluded that information provided by Rio Tinto executives during the inquiry was unreliable, and that Rio Tinto’s board-level review did not fully grapple with deficiencies in its internal protocols and practices.

In an earlier article written by Kemp, Hopkins and Owen, we provided eight (8) recommendations for Rio Tinto in conducting its board-level review:

 How Rio Tinto can ensure its Aboriginal heritage review is transparent and independent, 22 June 2020. See: https://theconversation.com/how-rio-tinto-can-ensure-its-aboriginal- heritage-review-is-transparent-and-independent-141192

We encourage the committee to consider the implications of the Rio Tinto board’s failure to conduct an inquiry that provided an adequate level of transparency and corporate accountability.

/ends.

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Appendix 1 Articles in The Conversation (chronological order)

June 22, 2020 5.00pm AEST

How Rio Tinto can ensure its Aboriginal heritage review is transparent and independent

Deanna Kemp, Andrew Hopkins & John Owen

Rio Tinto has committed to an internal review of its heritage management processes in the wake of its destruction of a 46,000-year-old Aboriginal heritage site in Western Australia last month.

After intense pressure from stakeholders and the announcement of a Senate inquiry, Rio Tinto has pledged to complete the review by October and make the findings public.

The board has appointed Michael L’Estrange, an independent non-executive director of Rio Tinto and former Australian high commissioner to the UK, to conduct the review.

The process will focus on Rio Tinto’s internal heritage standards, procedures, reporting and governance, and its relationship with the Puutu Kunti Kurama and Pinikura peoples in Western Australia.

But there are many questions about the inquiry that remain unanswered. For one, there is no indication L’Estrange will step aside from normal board duties to focus on the review, or that an independent investigating body will be created to support the process.

The credibility of the process hinges on a number of other factors, as well. These include the scope of the review, how it will be conducted, what will be disclosed publicly and who will be protected, and how will the company respond to the review recommendations. How other mining companies have conducted public inquiries

This is not the first time a mining giant has been thrust into the public spotlight and effectively forced to commission an independent inquiry on the impact of its operations on local communities.

Our preliminary research indicates public-private inquiries in mining can bring much-needed transparency to the industry’s typically closed approach to investigating contentious issues. They can also bring to light information that would have otherwise been invisible to the public.

The impact and effectiveness of such inquiries, however, relies on transparency over the scope, process and output itself.

For example, the global mining industry has another, very public inquiry currently underway: the Global Tailings Review (GTR).

The review was commissioned after a series of catastrophes involving “tailings” – a byproduct of mining that comes from crushing ore before mineral extraction. In early 2019, a tailings dam in Brazil collapsed, resulting in the release of 12 million cubic metres of tailings and the deaths of some 270 people.

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After that disaster, the International Council on Mining and Metals, representing 27 of the world’s largest mining and metal companies, the United Nations Environment Program and the Principles for Responsible Investment agreed to co-convene the review.

They appointed an independent chair from outside the industry to oversee the process of identifying lessons learned from past failures and developing a new industry standard.

The chair was given a dedicated secretariat to support his mandate and the power to appoint a multi- stakeholder advisory group and panel of disciplinary experts who were familiar with the industry, but did not work for a mining company. The inquiry also allowed for public submissions and consultations.

The process certainly suggests a separation of power between those conducting the review and the mining industry itself.

In 2015, another mining company, Newmont, launched an independent fact-finding mission in Peru following persistent allegations by local and international stakeholders of human rights violations as part of a land dispute with a local family.

Newmont and a US-based non-government organisation, RESOLVE, jointly appointed an independent mission director to head the inquiry, who in turn selected a team to collect evidence. An advisory group was also appointed to observe and provide outside perspectives on the process as it was being conducted.

The review was completed over a 12-month period and details were available for public scrutiny on a dedicated website during the process, including the final report.

In a statement after the report was released, the company explained why transparency and independence were so important.

While some of the findings in the report do not correspond with our view of the dispute, we recognise that in order to move beyond the current stalemate we must be open to understanding all perspectives, not just our own.

These and other inquiries have all emerged rapidly in response to pent-up public pressure for action from mining companies. But there is limited evidence they lead to lasting change.

This is one reason Newmont is now partnering with the University of Queensland, Australian National University and the US-based non-government organisation RESOLVE in a three-year ARC Linkage project to study the impact and effectiveness of public-private inquiries in the mining sector. What should Rio Tinto do?

Calls for the public release of Rio Tinto’s review findings are important. Equally as important are calls for a sound process that guarantees independence and protects against corporate capture.

Here are our recommendations for what Rio Tinto needs to do to ensure its inquiry is fair and transparent:

1. Ensure the review is conducted independently and avoids conflicts of interest.

2. Appoint a review secretariat to guarantee a confidential avenue for informants to contribute evidence and testimony, at arms length from the company.

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3. The scope should be co-designed with impacted parties – in this case, the Puutu Kunti Kurama and Pinikura peoples – and include a process for stakeholders to track the review and the company’s response.

4. The scope should include the systems and structures of Rio Tinto PLC, and not be limited to Rio Tinto .

5. The review should focus on identifying systemic and structural issues within the organisation, and making recommendations for improvement, rather than seeking to assign blame to individuals.

6. Interview transcripts, field reports and other evidence should be made accessible to the public (for example, via a dedicated website), where they are not deemed confidential or commercial in confidence.

7. The chair should have unfettered access to advisers and experts of their choosing in matters relating to the review.

8. The chair should issue a public report at the conclusion of the process.

If company-commissioned inquiries are to become the norm for investigating contentious issues and incidents in mining, it is essential we ask how they are conducted and to what end.

September 11, 2020 2.06pm AEST

Corporate dysfunction on Indigenous affairs: Why heads rolled at Rio Tinto

Andrew Hopkins & Deanna Kemp

Outraged investors have forced the board of Rio Tinto to sack its chief executive Jean-Sebastien Jacques along with two of the senior executives partially responsible for the destruction of the Juukan Gorge caves in the Pilbara region of Western Australia, which contained evidence of human habitation more than 46,000 years ago.

Why did the company commit this egregious act of cultural vandalism?

There are several layers to the answer.

First, Rio Tinto’s iron ore division was under extreme production pressure.

The iron ore in the vicinity of the caves was very high grade and the company needed as much of it as possible to mix with other grades so as to supply the market with its trademark Pilbara blend.

Its reputation as a reliable supplier depended on it. Rio Tinto was siloed It was authorised under West Australian law to mine the area, even though this would destroy the caves, and it intended to exercise this legal right, regardless of any opposition.

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Second, Rio has a segmented organisational structure.

Its product divisions – iron ore, aluminium, copper and diamonds, minerals and energy – operate as autonomous business units with relatively little control from the corporate centre.

When things go well, such an organisational structure is highly profitable for the corporation as a whole, because it leaves each product division free to take advantage of whatever opportunities there are in its particular market.

But there is a downside. It leaves the corporation vulnerable to poor decision making by any one of its product divisions, decisions that may have disastrous human and environmental consequences that threaten the social license of the whole corporation.

That is what has happened in the Juukan Gorge case. Organisational weakness

Of course, Rio was aware of this downside of its organisational structure and had taken steps to deal with it.

It had various functional lines – chains of command – external to the product divisions, providing services into the divisions and exercising some degree of control over their decision making.

At the lower end of these chains were people working within the product divisions and at the top, an executive sitting on the executive committee of the corporation, that is, at the same level as the heads of the product divisions.

These functional executives were thus in a position to challenge the product division heads about the decisions they were making.

One of these external functions was called communities, or Indigenous relations. It had staff located within Rio Tinto Iron Ore whose job was to assess and manage the company’s impact on indigenous people and where necessary, to negotiate with them for access to land.

The chain of command for this function led upwards to an executive for corporate relations, on the executive committee of corporation. Corporate relations had not always had a seat at this table. For decades it had reported to the head of either human resources or legal, both of whom sit on the executive committee. Indigenous relations were ‘corporate relations’

When Jacques became chief executive in 2016, he elevated the head of corporate relations to sit on the executive committee, “to ensure that ‘social license’ areas were reflected as an area of specialisation around the executive committee.”

Theoretically this function should have been able to pass the word up the line about the impending destruction of the Juukan Gorge caves, so that either the executive for corporate relations or the chief executive himself might have intervened.

This didn’t happen. The function that should have acted as a watchdog in this situation failed to do so.

The explanation lies in part in how the executive committee is structured. It consists of all those who report directly to the chief executive.

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It would make the job of the chief executive too unwieldy if every area of activity was directly represented on this committee, so only the most important are.

Less important areas are grouped together and collectively represented. Structure matters

This means the makeup of the executive committee sends a signal about relative importance.

It consists of the heads of the four product divisions, plus the head of human resources, the chief legal counsel, a chief commercial officer, a chief financial officer, a single head for a grouping consisting of growth, innovation, and health safety and environment, and the aforementioned London-based head of corporate relations, Simone Niven, who is now departing.

This is the team of direct reports to the chief executive.

It means that Indigenous relations is not represented directly at this level. It is grouped with several other specialisations in the portfolio managed by corporate relations.

That portfolio consists of external affairs, sustainability, communities (Indigenous relations), brand, media, government affairs and employee communications.

This is a massive span of concerns, each of which is potentially very demanding.

Indigenous relations must compete with all these other concerns for the attention of the head of corporate relations, and not surprisingly, it did not always get the attention it deserved.

Indeed, Niven had not heard about the Juukan Gorge caves until just days before the destruction, and even then, she was apparently unaware of extraordinary significance or age of the caves.

The situation was worse.

Her direct reports did not include anyone with dedicated accountability for Indigenous relations. The way it worked was that people with a particular responsibility for Indigenous relations at Rio’s iron ore operations in Australia reported to an Australian head of corporate relations, who in turn reported to the global head.

This Australian head had the same diverse portfolio of concerns as did his global boss, which again meant it was difficult for Indigenous relations to get the attention it deserved. Moreover, a look at his resume suggests that Indigenous relations was not a significant part of his professional experience.

As well as a primary reporting line to global head of corporate affairs, the Australian head had a secondary or dotted reporting line to the head of Rio Tinto iron ore.

As head of the Indigenous relations function it would have been his role to elevate the Juukan Gorge matter to the senior leadership team of Iron Ore, well before preparations to blast the area began.

However, it seems he had very little awareness of the issue and was himself briefed about it at a meeting just three days before the blast occurred. Even then, the briefing paper “did not identify the exceptional significance of the sites or their age”.

In short, the indigenous relations function failed dismally to alert top management because it had lost its influence and been swallowed by a corporate relations function with a much wider remit. This is the fourth and critical level of level of explanation.

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Has Rio learnt its lesson?

The changes which the Rio board has announced suggest it has learnt this lesson.

First, it announced that a “social performance” function will be established that reports to an executive on the corporate executive committee.

Social performance is broader than Indigenous relations, but it is far more focussed on the rights of project-affected people than is the broad concept of corporate relations.

Second, the board specifies that the executive concerned is also be the culmination point for heath, safety and environment, as well as technical and projects.

The inclusion of “projects” might be a serious drawback, since that role is likely to be production- oriented. It conflicts with the thrust of the health, safety and environment and social performance roles, which aim to ensure these issues are not sacrificed in the interests of production.

Third, as well as being part of a specialised function that reports up to the executive committee, social performance staff will be “embedded” within local mine management.

They will have secondary reporting lines within Rio Tinto Iron Ore which will enable them to exercise more influence than previously.

The critical question is whether the social performance function will retain its identity to the top of the hierarchy.

Specifically, will it be headed by a corporate social performance specialist who answers directly to the relevant executive on Rio’s executive committee.

If not, the social performance will be swallowed, just as was Indigenous relations before it.

Companies tend to implement major organisational changes after a disaster that affects the whole corporation.

The Juukan Gorge matter was, among other things, a corporate public relations disaster for the whole company.

Now is the time to fix the organisational failings that contributed to it.

If Rio Tinto fails to implement the lessons effectively, the sacrifice of three of its corporate chiefs to appease investors will have been in vain.

December 9, 2020 9.41pm AEDT

Juukan Gorge inquiry puts Rio Tinto on notice, but without drastic reforms, it could happen again

Deanna Kemp, John Owen & Rodger Barnes

On the eve of Reconciliation Week this year, news broke that Rio Tinto had destroyed ancient rock shelters at Juukan Gorge in Western Australia to expand one of its 16 iron ore mines in the Pilbara.

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The public was appalled to learn that a mining company could legally destroy such sacred Aboriginal heritage. Rio Tinto mishandled its response, and a national and international outcry prompted a parliamentary inquiry.

Today, the joint standing committee released its interim report into the incident, entitled “Never Again”.

The inquiry lifts the lid on a deeply flawed regulatory system. While the report is scathing of Rio Tinto, it concludes that the issues “are not unique” to the company. Flaws in WA law and the native title system

The interim report recommends major legislative reform to prevent this happening again.

The report details significant deficiencies in WA’s outdated Aboriginal Heritage Act, passed in 1972. By excluding Aboriginal peoples from decisions about land development, the law undermines their right to manage their cultural heritage.

The report recognises progress made on public consultation of a draft bill that would remove Section 18 of the act, which allows developers to apply for consent to legally damage or destroy Aboriginal sites.

The committee recommends any new legislation ensure Aboriginal people have meaningful involvement in and control over heritage decision-making, in line with the internationally recognised principles of free, prior and informed consent.

The interim report recommends placing a moratorium on any new Section 18 applications until new legislation is passed. It also encourages companies with existing permissions not to proceed with the destruction of heritage sites, but to have them assessed under the new legislation.

The findings highlight shortcomings in federal law and recommends major improvements in the statutory protection for Indigenous groups seeking to protect their significant sites.

The report calls for the removal of the so-called “gag clauses” in land use agreements, which prevent Aboriginal peoples from speaking out against developers.

In a public hearing, the traditional owners of Juukan Gorge, the Puutu Kunti Kurrama and Pinikura peoples, explained how their agreement with Rio Tinto prevented them from objecting to the company’s Section 18 application, or seeking an emergency injunction under federal heritage legislation.

The report recommends all companies operating in WA undertake an independent review of their land use agreements, in line with calls from investors in mining companies.

The deep flaws in Australia’s native title system are described in the report as “another means to destroy Indigenous heritage”. These flaws are so alarming that Labor Senator Patrick Dodson, a committee member and senior Aboriginal leader, had earlier called for a royal commission.

Australia’s current regulatory system approves mining developments on a project-by-project basis. The approvals process does not consider the cumulative impacts to cultural landscapes, such as Juukan Gorge, from multiple and expanding mines. The committee will likely hear more about these issues next year.

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Corporate responsibility beyond legal compliance

After the Juukan Gorge tragedy, Rio Tinto conducted an internal, board-led review of its heritage policies, but did not deliver meaningful recommendations on accountability and fell well short of stakeholder expectations.

The inquiry report concluded that Rio Tinto’s review did not fully grapple with the root causes of the Juukan Gorge debacle and its effects.

Rather than letting this slide, inquiry chair and the rest of the committee doubled down on their interrogation of the company’s senior management.

Through persistent questions in public hearings, the committee probed Rio Tinto’s generic explanations of “missed opportunities”.

Seeing that other mining companies had “taken advantage” of the weak regulatory system, the committee also pressed BHP and Fortescue Metals Group on their cultural heritage policies and practices. This unearthed information that was not included in the companies’ public submissions. Some of this information aligns with our research.

For example, many mining companies have not kept pace with their social policy commitments. Across the industry, community relations departments have seen sizeable reductions. Our research has flagged the risks associated with these issues, but most companies have failed to adequately respond.

In many mining companies, the work of community relations and Indigenous affairs units remains peripheral to mine planning and production processes.

Mining engineers, lawyers and media managers routinely overrule the advice of social specialists — including local experts and Indigenous advisers who work directly with communities on the ground.

It is entirely normal for company personnel with a limited understanding of customary land tenure to dominate decisions about land access and cultural heritage. This knowledge gap is a known point of failure in mine-community relations.

The inquiry process has revealed a deep reluctance within mining companies to thoroughly investigate major social incidents and the impacts of their operations.

We have learned that companies don’t share these findings with the public – unless forced to do so. The report rejects the idea that companies can “feign ignorance” in order to avoid accountability. What are the prospects for change?

The inquiry has laid bare the overwhelming challenges faced by First Nations peoples when mining occurs on their land. It highlights the urgent need for a rebalancing of power to avoid mining production priorities dominating at the expense of all else.

The report confirms that legislative reform is crucial. But this can be painfully slow and notoriously piecemeal. For example, the industry has already pushed back on aspects of WA’s heritage law review. For Aboriginal groups, these and other proposed reforms do not go far enough.

Pressure may have to come from other places. The report strengthens investor demands for better corporate management of the impacts of mining on communities and cultural heritage. Shareholder and investor advocacy at annual general meetings is only likely to intensify.

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Aboriginal leaders and new Aboriginal alliances are also primed to take collective action and push for national best practice standards.

The inquiry’s findings will likely be leveraged internationally, as well. The Apache people in the US have already linked Juukan to their campaign to protect the sacred Oak Flat site in Arizona. This is where Resolution Copper, jointly owned by Rio Tinto and BHP, is proposing a new mine.

Having been put on notice, global mining companies are bolstering their communities and cultural heritage teams. But it is not enough to just increase head count. Social specialists and Indigenous people must hold positions of authority and have influence internally to contain corporate self- interest.

Mining companies like Rio Tinto must do better. To avoid future catastrophes, industry leaders must internalise the lessons from Juukan and radically overhaul the way they do business.

December 14, 2020 6.04am AEDT

Juukan Gorge: how could they not have known? (And how can we be sure they will in future?)

Andrew Hopkins & Deanna Kemp

How could they not have known?

That was the question on everyone’s lips after leaders of the Australian defence force claimed not to have known about the atrocities committed by special forces in Afghanistan.

It is now being asked about the leadership of Rio Tinto after that company ignored the wishes of the Puutu Kunti Kurrama and Pinikura (PKKP) peoples and destroyed caves containing priceless Aboriginal heritage dating back 46,000 years.

Three of Rio’s most senior executives, including the chief executive, apparently knew nothing about what was happening until it was too late. This was:

 despite a detailed archaeological report about the heritage value of the caves which the company had commissioned

 despite representations of traditional landowners about the significance of the caves, and that they be preserved

 despite the concerns of Rio’s own cultural heritage staff in Western Australia.

How could they not have known? The parliament’s joint standing committee inquiry into the destruction of the Juukan Gorge caves is a golden opportunity to get an answer.

Unfortunately, this month’s interim report only touches on this question, and none of the eight recommendations it addresses to Rio Tinto deal with it.

The closest it comes is an observation that Rio had

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a structure which sidelined heritage protection within the organisation, lack of senior management oversight, and no clear channel of communication to enable the escalation of heritage concerns to executives based in London

Coalition committee member Dean Smith, Senator for Western Australia, went further in additional comments appended to the report

it is my view that … board members … enabled a culture to develop at Rio Tinto where non- executive level management did not feel empowered to inform the executive of the significance of the rock shelters

The problem is that bad news about what is happening at lower levels of large organisations travels up slowly, if at all. Matters get “stuck”, and are not addressed. Bad news doesn’t travel up

Paedophile priests, money laundering by banks, fraudulent misrepresentation by auto companies, corruption in police departments, unacceptable safety risks taken by mining companies – in each case when these sort of issues come to light, those at the top say they knew nothing about it.

There are reasons for this failure to know: the people at the top would rather not hear about it, and so those below avoid telling them; whistleblowers get ostracised; people ‘"in the know" remain silent out of self-interest or misplaced loyalty; bonuses encourage a focus on profit at the expense of all else.

So what should leaders do to change things? The first thing is to acknowledge that there is likely to be bad news – problems, challenges and things that are not right.

Indeed, if they are not hearing bad news, something is wrong.

Chief executives and board members need to develop a sense of “chronic unease” about whether they are really getting the full story from their subordinates or whether there are hidden time bombs ticking away that will eventually explode. They need to personally seek out and reward the bearers of bad news. Bad news needs to be sought out

Second, they need to structure their organisation to maximise the chance of bad news reaching the top. What is required in large commercial organisations like Rio Tinto is someone on the executive committee whose job is ensuring non-commercial environmental, social and governance risks are managed.

That executive should neither be responsible for, nor rewarded for, any aspect of commercial performance and should be given a direct line to board members.

Specialist staff reporting to that executive need to be embedded at lower levels of the organisation and in each of the company’s divisions.

The interim report concludes that Rio Tinto’s board review has not fully grappled with these issues.

Yet Rio Tinto has made some positive changes following the catastrophe.

First, it has acknowledged that its cultural heritage staff in Western Australia have had no reporting line to higher-level social performance staff. Indeed, there have been no higher-level staff exclusively responsible for impacts to communities.

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Rio is making an (uneven) start

The company is creating a “social performance” function, reporting to a group executive on the corporate executive committee.

Second (and of concern) Rio Tinto has specified that this executive will also be the culmination point for reports on new mining “projects”.

Projects are commercially and engineering oriented and might come to be seen as more important to the company and requiring greater focus from the group executive than health, safety, environment and social concerns.

Third, social performance staff will be “embedded” within local mine management and product groups.

The critical question is whether reports from these social performance specialists will get diluted by the time they reach the top. The best chance is a direct line to a specialist in corporate headquarters who reports to a “group executive social performance” on the executive committee.

Rio Tinto has appointed a chief adviser Indigenous affairs who will report to the chief executive, although it is unclear what authority the position will hold.

The announced changes leave much uncertain. The inquiry will hold further hearings next year. It will get the chance to insist on proper structures.

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