Rio Tinto PLC (LSE:RIO) will pay a A$750,000 (£421,000) penalty to settle allegations made by the Australian Securities and Investment Commission (ASIC) that the miner had overstated the reserves and resources for Rio Tinto Coal Mozambique (RTCM) in 2012.
Rio Tinto completed the acquisition of RTCM (then called Riversdale Mining Ltd) in August 2011 for more than US$4bn. The ASIC had alleged that the miner had engaged in misleading or deceptive conduct by publishing statements in its annual report for 2011, which was signed on 5 March 2012 and published on 16 March 2012, misrepresenting the reserves and resources of RTCM.
Rio Tinto announced in January 2013 that it expected to take a US$3bn impairment charge in its 2012 full-year results relating to RTCM.
“As part of the court approved settlement, Rio Tinto will pay a A$750,000 penalty for a single contravention of its continuous disclosure obligations in the period 21 December 2012 to 17 January 2013, immediately preceding the impairment announcement,” the company announced.
“As part of this court approved settlement between ASIC and Rio Tinto, there were no findings of fraud or any systemic or widespread failure by Rio Tinto,” it said.
The ASIC announced in March 2018 that it would take action against Rio Tinto, former chief executive Tom Albanese and former chief financial officer Guy Elliott for misleading and deceptive conduct.
The case against Albanese and Elliott has been wholly dismissed, the miner said today.
As the annual report for 2011 was signed by Albanese and Elliott, the ASIC had accused both men of failing to exercise their powers and discharge their duties with the care and diligence required by law as directors and officers of Rio Tinto.
While the settlement relates to events that occurred a decade ago, it is a further reminder of the wider ESG issues affecting one of the world’s largest mining companies.
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UK, SEC
In October 2017, the UK Financial Conduct Authority fined Rio Tinto almost £27.4mln relating to the same RTCM impairment, accusing it of breaching transparency and disclosure rules.
A US court also dismissed a related US securities class action.
Rio Tinto said it welcomed closure of the ASIC case “on appropriate and reasonable terms”.
“The resolution of this matter, however, does not impact the Securities and Exchange Commission's proceedings. Rio Tinto will continue to defend itself vigorously against the SEC's allegations,” it added.
The SEC has alleged in a civil complaint filed in the US District Court for the Southern District of New York that Rio Tinto committed fraud by not accurately disclosing the value of RTCM and not impairing it when Rio Tinto published its 2011 year-end accounts in February 2012 or its interim results in August 2012.
RTCM was sold in 2014 for just $50 million.