Archived press release

Rio Tinto Dumps on Environment, Ducks Taxes

13 May 1998

The Rio Tinto plc AGM starts at 11am in the QEII Centre, Broad Sanctuary (off Parliament Square) SW1 - FOE will hold a photocall outside the AGM at 10:30am - come and see Rio Tinto “whitewash the forests”!

Rio Tinto, the world's biggest mining corporation, has struck a deal to dodge taxes on a major mining project in Madagascar, one of the poorest countries in the world [1]. The company's justification for the project, which will cause huge environmental damage, has been that it will benefit the country's economy.

The initial Convention of Establishment, necessary for the vast mining project (the largest ever in Madagascar) to proceed, was signed at the end of January between Rio Tinto and the Malagasy government. It states that the mining tax for the project has been calculated under “somewhat different conditions” and therefore the company will pay 2% tax on the value of the mining operation. The standard tax foreign companies pay on mining operations in Madagascar is 5% [2].

The proposed ilmenite mine along the south-eastern coast of Madagascar would destroy unique forests, and severely disrupt local aquatic systems and the coastline [3]. Ilmenite is a whitener used in products such as industrial paint. Following a visit to the area last month, Friends of the Earth can reveal that the local communities are distressed at the lack of information given about the mine and are worried about the future of their local fishing industry.

Sarah Tyack, Forest Campaigner at Friends of the Earth said:

“Rio Tinto boasts to shareholders about the benefits the company will bring to Madagascar and local people. Meanwhile they wheel and deal to avoid taxes, and keep the local communities in the dark about their future. Rio Tinto plans to screw the maximum profit

Concerns over this company's activities are not confined to the environment. More than 50 British MPs have signed an Early Day Motion which was put down by the International Federation of Chemical, Energy, Mine and General Workers Unions. The EDM expresses concern over Rio Tinto, described as "probably the most uncaring and ruthless company in the world" [4].

NOTES TO EDITORS:

[1] RTZ's wholly owned Canadian subsidiary, QIT Fer et Titane, is developing plans to mine deposits along the south eastern coast of Madagascar, containing ilmenite -a major source of titanium dioxide (TiO2). Titanium dioxide is used as a whitening agent in numerous products such as industrial paint.

[2] The source of this information is the Convention of Establishment document (in French) which was drawn up between the Malagasy Government and QIT FER, the Rio Tinto subsidiary and ratified in January 1998.

[3] The littoral forests under threat from the proposed mine are unique, representing a transition between rainforest and spiny forest environments. Madagascar is famous for its astounding diversity of unique species of plants and animals including 34 endemic species of chameleon and 30 endemic species of lemur. Approximately 45% of all known native species of Madagascar's vertebrates occur within this region. 29 species of plant are endemic to the mine area and 16 face possible extinction if the project proceeds.
The area to be mined which stretches along about 40 kilometres of coastline, also supports thousands of villagers who rely on the forest for fuel and construction and on the marine environment for fishing - their main economic activity.

[4] Copy of the Early Day Motion 1194 attached.

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Published by Friends of the Earth Trust