Rio Tinto walks away from massive Pebble copper-gold project
Global miner Rio Tinto (LON, ASX:RIO) said on Monday it is pulling out of the polemic Pebble Mine copper and gold project in the Bristol Bay region of Alaska, by giving away its 19.1% stake in Northern Dynasty Minerals (TSX:NDM), the owner of the huge deposit.
The company said the project does not fit its strategy, so it will donate its shares to two Alaskan charities. This way Rio becomes the second large diversified miner to back out of the project in less than seven months.
Anglo American (LON:AAL) left the project last September, handing its 50% stake in the project back to Northern Dynasty and taking a $300 million write down in the process. Rio itself took a $130 million write down on the asset in its 2013 results.
Environmentalists across the world praised Rio’s decision. Washington, DC-based watchdog Earthworks also applauded the giant miner for respecting locals’ wishes.
“Rio Tinto’s divestment from Pebble may not be the final nail in the coffin, but it’s surely one of the last,” the group said in a statement. "With Rio Tinto’s departure…there is now no mining company behind Pebble that has actually mined anything," it added.
The project has faced increased scrutiny from environmental campaign groups and the U.S. Environmental Protection Agency (EPA) regarding its potential risk to salmon fisheries. Northern Dynasty and Anglo previously said that the project could be built without harming Alaska's salmon fishing industry.
In February, EPA initiated a rarely used process under the Clean Water Act that would block development of the copper-gold deposit, one of the largest in the world, citing the potential of "irreversible harm" to the state's salmon fishery.
Half of Rio's shares will go to the Alaska Community Foundation and the other half will go to the Bristol Bay Native Corporation Education Foundation, the company said.
"We look forward to meeting with the leadership of the Alaska Community Foundation and Bristol Bay Native Corporation Education Foundation in the days ahead to better understand their long-term goals and aspirations, and how their ownership interest in Northern Dynasty and the Pebble Project can make the greatest possible contribution to the people and communities they serve," said Northern Dynasty after Rio’s announcement.
Pebble mine would have become the largest open pit copper and gold mine in the world, but its opponents claimed it would have generated tons of potentially dangerous waste material.
The Pebble deposit holds an estimated 55 billion pounds of copper and 67 million ounces of gold.
Shares in Northern Dynasty crashed on the news. The stock was 3.85% in Toronto this morning at 11:20 am ET.