Tag Archives: planning

Mozambique, Michigan, and the SEC Complaint Against Rio Tinto

Chinde_Rusting_boats

Rusting boats at the port of Chinde, where Rio Tinto proposed to barge Riversdale coal via the Zambezi River.

Yesterday, the Securities and Exchange Commission brought a complaint in New York City against Rio Tinto, charging Tom Albanese, the former CEO of Rio Tinto, and Guy Elliott, his Chief Financial Officer, with fraud. According to the complaint, Albanese and Elliott actively misled the Rio Tinto board, audit committee, auditors, and the investing public about their acquisition of the Riversdale coal business in Mozambique in 2011.

The fraud that Albanese and Elliott are accused of perpetrating looks awfully familiar to those who have followed the development of Eagle Mine and the controversy over County Road 595. Having noticed the parallel between Mozambique and Michigan back in 2013, when Tom Albanese was forced to step down, I now have to wonder whether prosecutors will take the company’s representations around the Eagle Mine into account when building their case.

In Mozambique, they told investors, coal would be transported by barge to the Indian Ocean port of Chinde. Although their technical advisors “highlighted the ‘showstopping’ risks” associated with the barging proposals before the acquisition, Albanese and Elliott blundered recklessly ahead. Then eight months later, the Mozambique government denied Rio Tinto a permit to transport the coal by barge down the Zambezi River. Suddenly, the coal business they had acquired for $3.7 billion appeared to be worth a negative $680 million. According to the SEC’s complaint, Albanese and Elliott “concealed and glossed over” the fact that they had no viable haul route for the 30 million tons per year they projected in their business plans, and misled investors as they raised $5.5 billion in US debt offerings.

In that very same period, Rio Tinto was also promoting Eagle Mine to investors and promising economic renewal in the Upper Peninsula, though they had not yet secured a transportation route — a haul route — for Eagle’s sulfide ore. In Michigan, it appears, the company took the same cavalier attitude toward planning and risk that the SEC complaint says got them into trouble in Mozambique.

Way back in 2005, John Cherry, who was then a Kennecott Minerals project manager and is now President and CEO of the Polymet project in Minnesota, characterized Eagle as a “direct ship” operation, “meaning that the rock would not be processed on site, thereby avoiding the storage of highly toxic debris left over, called tailings.” Presumably this is what Michigan DEQ’s Robert McCann had in mind in 2007, when he told The Blade that Kennecott’s permit “would require them to keep the ores underground, put them in covered rail cars, and ship them to Ontario for processing”; the Marquette Monthly told roughly the same story that year, only now there were trucks in the picture: “ore would be transported by truck and rail to a processing site in Ontario.” This seems to have been nothing more than a cover story.

Everything changed in 2008, when Rio Tinto bought the Humboldt Mill. Those permit requirements the DEQ’s McCann touted back in 2005? They were quickly abandoned. Covered rail cars come into the picture only after the ore is crushed, ground into a slurry, floated and rendered into concentrate at Humboldt Mill. A glossy 2010 company publication promoting Eagle Mine includes not a single word about how Rio Tinto and Kennecott plan to travel the 30 kilometers from mine to mill: “Happily, processing of the nickel and copper can take place in Humboldt, around 30 kilometres [sic] away, at a previously abandoned iron ore plant.” By 2011, the company had “considered more than a half dozen transportation routes” from mine to mill, according to a Marquette Mining Journal article by John Pepin published in February of that year, but they still had no viable haul route.

A good prosecutor with a rigorous and thorough discovery process would probably be able to determine whether the evasions and misrepresentations perpetuated on the public over the Eagle Mine haul route also amounted to fraud, or were part of a larger pattern of deliberately misleading statements. It’s clear Rio Tinto never came clean — and perhaps never really had a firm plan — on mine to mill transport at Eagle before it sold the works to Lundin Mining in June of 2013 and decamped. As long as regulators in Michigan continued to be more accommodating than those in Mozambique, the company seems to have been content to let the people of Marquette County fight out the haul route issue among themselves.

Neither Here Nor There

I set out for Lake Superior on Saturday, with the intention of spending the better part of this week meeting and interviewing people for a documentary project I’m developing. The day got off to a rocky start: at 4:30AM, United Airlines called and emailed to tell me that my 8AM flight to Chicago would be delayed. I would miss my connection to Hancock unless I hustled and got myself to Chicago on an earlier flight – the 7AM — which I did. I arrived with plenty of time to spare, and was at Gate F1A and ready to board the Hancock flight when my phone buzzed. Flights to Hancock were cancelled, due to a blizzard in the Keweenaw — lake effect snow.

The woman at the customer service counter had clearly had a rough morning. Her allergies were making her miserable: all the dust from the heater, she said; she had just turned it on for the first time this winter. She did her best, but when all was said and done my options were limited to waiting out the storm in Chicago (which probably meant the dreary and overpriced airport hotel) or making a dash to Detroit, switching from United to Delta (I never found out exactly how this was to be accomplished, or what it would cost), and trying to catch the evening flight to Marquette. Both sounded expensive, exhausting and damaging to the soul. I told myself that I could probably accomplish everything I’d set out to do on this trip the next time around. So I decided to call it a day, turn around and head back to New York.

The woman behind the counter seemed relieved, and marked my ticket “Carrie Over Carrie Back” [sic]. I moved to a new gate to wait for the next New York flight, and ate an airport sandwich that registered on the receipt as “CEB Tur Goud.” That’s about how it tasted. carrieovercarrie

Now I am here when I expected to be there, here in New York with a strange sense of being absent from the UP. This confusion of presence and absence, here and not there, is not quite the same as missing a place; it’s not like nostalgia and doesn’t involve longing to be elsewhere. It’s more like misplacing myself – a sense of dislocation. I can’t shake the feeling that I shouldn’t be here: none of my planning included that possibility. Plans commit us to a time and place. They tell us where we belong, and when. They are ways of making ourselves belong. I simply don’t belong here, at least not until Thursday, when I’d planned to come back. Until then, I am neither here nor there.

I hit on that familiar expression yesterday. It’s a colloquial way of talking about irrelevance, things that are of no account, and though I have plenty to keep me busy until Thursday, I am also seriously exploring this feeling that I am of no account, and will be for a couple days to come.

The expression neither here nor there is, I now understand, a good place to start reflecting on our plans and purposes and how they give us a sense of belonging in the world. It goes way back, and was popular and well-worn even before Shakespeare used it in Othello. That much is clear from the earliest instance cited by the OED: Arthur Golding’s 1583 translation of The Sermons of J. Calvin on Deuteronomie.

This is Golding’s translation of Calvin’s 92nd sermon, on “the law of the tithe” as it’s presented in Deuteronomy 14.24-29 — a passage which is itself already about being displaced and absent, about being “far” from the place where “God shall choose to set his name” (as the King James version has it). Tithes of money are offerings “if the way be too long for thee…or if the place be too far from thee.” Seeing that God has dealt so generously with us, Calvin writes,

what an unthankfulnesse is it for me to despise him that sheweth himself so liberall towardes me? True it is that our so dooing is neither here nor there (as they say,) in respect of God: the seruice that we do him doth neither amend him nor appaire him: but he giueth vs the poor among vs, to bee succored at our handes, to the ende that none of vs should so glutte himself by cramming his owne bellie, as to despise others that are in necessitie, but that we shoulde bee well advised to make an offering vnto God of the thinges that he hath put into our handes, and that the same might become holy by that meanes. Not that wee should paye it as a ransoume to God; but that the acknowledgement which we make vnto him in having compassion upon our poore needy brethren, is as though our Lord should allow of our eating and drinking, saying thus: Now is all lawful for you, I lyke well of it, I giue it vnto you; and that is because ye honor me in dooing almesdeedes to such as are in pouertie.

It’s a wonderful and complicated passage about making things “holy” and honoring the bounty and plenty of the world by sharing it and making an offering of it – the sort of thing we’d expect to find Lewis Hyde writing about in The Gift. Louis CK, a very different kind of Louis, makes roughly the same point Calvin makes here in a profanity-laced routine called “If God Came Back.” It all starts with the question why Christians don’t seem to believe they have to look after the creation:


This morning, sitting here in New York, and feeling as if I belong elsewhere, it seems downright uncanny that I was thinking about precisely this routine just minutes before my flight to Hancock was cancelled on Saturday. An exhibit called “Ice: Portraits of Vanishing Glaciers” – currently running at Chicago O’Hare in Terminal 2 – brought it to mind. Huge photographs of glaciers by James Balog had been hung on the wall and a sign instructed travelers to “teach your children about landscapes their children will never know.” That sentence alone left me aghast — I had plenty of time to contemplate it, sitting there at the gate — and it made me wonder what purpose could justify the things we do every day, all the running back and forth, the going here and there. We hardly ever give it a second thought.