The California State Controller and New York City Comptroller's offices refused to back down from their request that mining giant Rio Tinto divest from the Pebble Mine, even in the face of an aggressive response from Northern Dynasty Minerals - the company behind the controversial gold and copper mining project proposed at the headwaters of Bristol Bay, Alaska. Instead of backing away from their request last December that Rio Tinto divest its shares in Northern Dynasty, the offices recently released another letter to the company citing two additional reasons for Rio Tinto to abandon the project: first, EPA's Bristol Bay Watershed Assessment and, second, Northern Dynasty Minerals' "confrontational" response to that assessment.
"As fiduciaries of pension funds that are substantial, long-term Rio Tinto shareholders, we believe the company's interest in divesting its shareholding in Northern Dynasty takes on added urgency" after the release of EPA's Watershed Assessment, the CA Controller and NYC Comptroller wrote.
EPA's Bristol Bay Watershed Assessment found that Pebble Mine would have "devastating" effects on the Bristol Bay ecosystem. Based on those findings, the CA Controller and NYC Comptroller - representing large public pension funds valued at almost $500 billion - emphasized that the "reputational risks that Rio Tinto faces as a result of its association with the Pebble Project may well exceed the equity value of its investment in that project."
The letter also noted Northern Dynasty Minerals CEO Ron Thiessen's "confrontational posture" in response to the release of EPA's Watershed Assessment and warned that Northern Dynasty's "attacking and attempting to discredit the EPA" could expose Rio Tinto to reputational and regulatory risks given that its long-term interests in the U.S. depend, in part, on a "constructive working relationship" with EPA.
Taking the high road, the Controllers didn't highlight Northern Dynasty's confrontational posture toward the offices themselves. Responding to the CA Controller and NYC Comptroller's letters to Rio Tinto last year urging it to divest from Pebble Mine, Northern Dynasty CEO Ron Thiessen wrote that the offices lacked "balance and perspective" and belittled the offices for determining that Pebble Mine would pose a risk to Bristol Bay.
Instead of responding to the personal attack, the CA Controller and NYC Comptroller simply highlighted the potential risks to Rio Tinto's interests of such an aggressive posture to a regulatory agency with lawful jursidiction: "In our view, Northern Dynasty's confrontational posture toward the EPA is further evidence of the widening chasm between Northern Dynasty's interests and those of Rio Tinto and its shareholders."
The message could not be clearer: Pebble Mine poses too great of a risk.
Rio Tinto has already pledged to undertake a "strategic review" of its investment in Pebble, including possible divestment. The company has a unique opportunity to demonstrate its environmental and financial leadership if it acts now and dumps the Pebble Mine.