Rio Tinto’s legal battle with Quebec Innu intensifies

VANCOUVER — Mega miner Rio Tinto (NYSE: RIO; LON: RIO) is staring down the barrel of a potentially costly legal battle with a pair of First Nation groups whose traditional Nitassinan territory covers a large part of northeastern Quebec and Labrador.

On Jan. 7 the Quebec Court of Appeal — the province’s highest court — shot down an appeal of a September 2014 Quebec Superior Court judgment that rejected Rio’s motion to dismiss a $900-million legacy lawsuit.

The Innu First Nations of Uashat Mak Mani-Utenam (Uashaunnuat) and Matimekush-Lac John (MLJ) are seeking compensation from Rio Tinto subsidiary Iron Ore Company of Canada (IOC) for violating rights and aboriginal titles over the past 60 years by extracting minerals and building a railway on the Nitassinan territory.

IOC operates a mine, concentrator and a pelletizing plant in Labrador City, Newfoundland and Labrador, as well as port facilities located in Sept-Îles, Quebec. The company also runs a 418-km railroad that links the mine to the port. IOC has approximately 2,500 employees.

Back in May 2010 IOC announced the resumption of an expansion program, with an ultimate capital cost of US$732 million, to increase its annual concentrate production capacity by 4 million tonnes. The investment was the first stage of a three-stage expansion that could increase concentrate annual capacity to 25 million to 30 million tonnes.

The long-standing mining operation started up in the 1940s and includes 20 abandoned mines in the Schefferville area of Quebec, nine mines at the mining centre in Labrador City, three hydroelectric plants, as well as the port and railway.

Rio Tinto had reportedly been trying to sell its 58.7% stake in the operation. Mitsubishi holds a 26.2% stake and Labrador Iron Ore Royalty (TSX: LIF) holds the remaining 15.1% stake and receives a 7% gross royalty on all iron ore sales.

The First Nation groups claim the “megaproject permanently devastated the [Nitassinan] and forced the eviction of Innu families from their homeland while illegally dispossessing them of what was the essence of their traditional way of life.”

“While we have made every effort possible to come to an agreement with the company, [Rio Tinto] was more negative than ever this fall. And yet we have had no trouble in coming to terms with all other mining operators on our territory,” commented the Chief of Matimekush-Lac John, Réal McKenzie. “In this matter, Rio Tinto continues to act as a rogue company: it seems to believe that norms concerning the respect of the rights of First Nations do not apply to it.”

The Innu communities have reached agreements with miners ArcelorMittal (NYSE: MT), Cliffs Natural Resources (NYSE: CLF), India’s Tata Steel, New Millennium Iron and Labrador Iron Mines (TSX: LIM; US-OTC: LBRMF) that outline financial compensation for mining activities.

The lawsuit and a motion seeking an injunction to stop all mining activity were originally filed in March 2013 in Quebec Superior Court. Rio Tinto was hoping to have the suit dismissed by arguing that the provincial government is the one that should be targeted and not the company.

“The highest Court in Quebec has made clear that Rio Tinto’s subsidiary will have to answer in court for its violations of our constitutionally protected rights, which violations date back to the 1950s”, declared the Chief of Uashat Mak Mani-Utenam, Mike McKenzie.

Rio Tinto’s decision to pursue the matter through the court system could be viewed as questionable due to the heightened state of First Nation empowerment in Canada.

On June 26, 2014, the Supreme Court of Canada recognized for the first time a First Nation’s aboriginal title over an area outside a reserve in Tsilhqot’in Nation vs. British Columbia. And Quebec has seemed more than willing to adopt the concept that natural resource and infrastructure development requires local acceptance and social license.

Rio Tinto was not immediately available for comment, and all allegations have not been proven in court.