Ukraine crisis: Rio Tinto, Worley look to sever ties with Russia

Headshot of Stuart McKinnon
Stuart McKinnonThe West Australian
The Boyne Smelter in Queensland is part of Rio's QAL joint venture.
Camera IconThe Boyne Smelter in Queensland is part of Rio's QAL joint venture. Credit: Rio Tinto

Australian corporate heavyweights Rio Tinto and Worley have moved to sever business ties with Russia amid mounting shareholder pressure for companies to distance themselves from the rogue state.

Rio said in a statement on Thursday morning it was “in the process of terminating all commercial relationships it has with any Russian business”.

The strongly worded statement follows comments from the mining giant’s copper boss Bold Baatar that Rio was pursuing a steady relationship with Russia to ensure adequate supplies of fuel and other goods for its massive Oyu Tolgoi mine in Mongolia.

“The reality is, Mongolia has two very big powerful neighbours, so it’s quite important for us to maintain healthy, peaceful, balanced relationships,” he told an energy conference in Houston.

The about-face from Rio on Thursday follows a report in The West Australian last week noting that activist shareholder group, the Australasian Centre for Corporate Responsibility, had called on the company to immediately review its joint venture arrangement with Russia’s Rusal over its Queensland Alumina operation in light of the recent invasion of Ukraine.

The West Australian understands Rio is seeking legal advice as to how it can extricate itself from the tie-up with Rusal, which is linked to Vladimir Putin-aligned oligarchs Oleg Deripaska and Viktor Vekelsberg.

The mining giant is 80 per cent owner and operator of QAL, which is a toll treatment operation, with the bauxite sourced and product sold separately by the two joint venture parties.

Meanwhile, engineering contractor Worley said on Thursday it had begun the safe withdrawal of its services provided in and into Russia and would not enter into new contracts in the country.

“Worley’s exposure from this withdrawal is not material to the Worley global business,” the company said in a statement to the Australian Securities Exchange.

“Consistent with our purpose and values we prioritise the safety, health and well-being of our people, including those in Russia.”

ACCR climate and environment director Dan Gocher welcomed the announcements from Rio and Worley.

“We look forward to seeing more detail about the implications for Rio Tinto’s Queensland Alumina joint venture,” he said.

“Following Russia’s invasion of Ukraine, all Australian companies should sever relationships with companies owned or part-owned by oligarchs aligned with Russian President Vladimir Putin.

“In the last fortnight, the global push to isolate Putin has escalated at enormous speed.

“Rio Tinto and Worley should be commended for taking appropriate action.”

However, Mr Gocher said questions remained about Mr Vekselberg’s interest in Origin Energy’s joint venture partner Falcon Oil & Gas.

“Vekselberg’s Renova Group has been sanctioned by the US government,” he said.

“While Vekselberg’s board representative has stood down from Falcon, Vekselberg still stands to benefit from any successful exploration in the Beetaloo Basin.

“The Federal Government must ensure that the Origin-Falcon joint venture has not or will not receive any government grants relating to the ‘gas-fired recovery’.”

An Origin spokeswoman told The West Australian last week the company would follow any rules dictated by the Australian Government and other governments as appropriate, with respect to sanctions.

She noted Origin was majority owner and operator of the Beetaloo exploration joint venture and carried 100 per cent of the costs for exploration, with no funding provided by Falcon.

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