Governance

Part 3

Environmental regulation

Rio Tinto measures its performance against environmental regulation by rating incidents on a low, moderate, high, or critical scale of likelihood and consequence of impacting the environment. High and critical ratings are reported to the Executive committee and the Committee on social and environmental accountability, including progress with remedial actions. Prosecutions and other breaches are also used to gauge Rio Tinto's performance.

In 2008, there were 17 high or critical environment incidents at Rio Tinto managed operations compared with nine in 2007. Of the 17 incidents, 11 occurred at former Alcan Inc. operations acquired in October 2007.

These incidents were of a nature to impact the environment or may have concerned local communities. Of these, one affected air quality, nine resulted from water discharge and seven were spills. Examples of these include:

• Discharges of bauxite residue and also acid into the local river at Vaudreuil, Canada
• Loss of transformer oil into groundwater following a fire at Anglesey, Wales
• Discharge of mine water off site following the failure of a pipeline flange at Bengalla, Australia
• Slow leakage of water from a drain point following failure of a valve that resulted in unlicensed discharge from a dam at Mount Thorley Warkworth, Australia
• Oil leakage from a sump into surrounding soil at Richards Bay, South Africa
• Acid spray from a storage tank onto surrounding soil as a result of mechanical failure of an inlet supply pipe at Rössing, Namibia
• Oil overflow from a truck onto soil during maintenance activities at an electrical substation at Chute des Passes, Canada
• Processing liquor releases to a sea water channel from holding ponds at Gove, Australia
• Oily stormwater release from a light fuel tank farm which exceeded waste discharge license limits at Gove, Australia
• Overflow of residue mud into a natural channel from holding ponds during a high rainfall event at Gove, Australia
• Air emission concentrations of fluoride and particulates that exceeded monthly permit limits at Kitimat, Canada
• Hydrocarbon leakage from an underground pipe at NZAS, New Zealand.

During 2008, five operations incurred fines amounting to US$15,500 (US$8,326 in 2007).

The Australian National Greenhouse and Energy Reporting Act 2007 came into effect in July 2008. Rio Tinto Limited and Alcan Gove Pty Limited exceed the emission and energy use thresholds under that legislation and from 2009 are required to register and report to the Australian Government. Rio Tinto's Australian operations are implementing measurement and reporting systems in readiness for these requirements. Rio Tinto Limited and Alcan Gove Pty Limited are registered under the Australian Energy Efficiency Opportunities Act 2006. In 2008 they submitted the first reports of energy use and energy efficiency opportunities covering the sites required to undertake energy assessments.

Further information in respect of the Group's environmental performance is included throughout this Annual report, in the Sustainable development section.

Legal proceedings

Neither Rio Tinto plc nor Rio Tinto Limited nor any of their subsidiaries is a defendant in any proceedings which the directors believe will have amaterial effect on either Company's financial position or profitability.

Contingencies are disclosed in note 35 to the 2008 Full financial statements.

Exploration, research and development

The Group carries out exploration, research and development in support of its activities as described more fully under Exploration, and Technology & Innovation. Notwithstanding significant increases in cash expenditure, the amounts charged for the year for exploration and evaluation were US$645 million (2007: US$321 million) and for research and development were US$307 million (2007: US$69 million).

Auditors and disclosure of information to auditors

PricewaterhouseCoopers LLP and PricewaterhouseCoopers are the auditors of Rio Tinto plc and Rio Tinto Limited respectively.

PricewaterhouseCoopers LLP have indicated their willingness to continue in office as auditors of Rio Tinto plc and a resolution to reappoint them as auditors of Rio Tinto plc will be proposed at the 2009 annual general meetings of Rio Tinto plc and Rio Tinto Limited. PricewaterhouseCoopers will continue in office as auditors of Rio Tinto Limited. A resolution to reappoint them as auditors, and to authorise the Audit committee to fix their remuneration will be put to shareholders at the 2009 annual general meetings.

PricewaterhouseCoopers as the auditors of Rio Tinto Limited are required to provide an Auditor's Independence declaration to the directors under Section 307C of the Australian Corporations Act 2001. A copy is set out in the 2008 Full financial statements.

No person who was an officer of Rio Tinto during the year was a former partner or director of either Company's auditors.

As required by section 418 of the Companies Act 2006 each of the directors at the time this report was approved has confirmed that:

• so far as he or she is aware, there is no relevant audit information (ie information needed by the Companies' auditors in connection with preparing their report) of which the auditors are unaware; and
• he or she has taken all steps that they ought to have taken as a director in order to make himself or herself aware of any relevant audit information and to establish that the auditors are aware of that information.

Principal auditor - audit and non audit fees and services

The amounts payable to the Group's principal auditors, PricewaterhouseCoopers, were:

Further information on audit and non audit fees is set out in note 43 to the 2008 Full financial statements.

A description of Rio Tinto's policies to uphold the independence of the Group's principal auditors is set out in the Corporate Governance section on the Auditors and internal assurance page. Based on advice provided by the Audit Committee as set out in the Report of the Audit committee page, the directors are satisfied that the provision of non-audit services by PricewaterhouseCoopers is compatible with the general standard of independence for auditors and the standards imposed by the Australian Corporations Act 2001.

Financial instruments

Details of the Group's financial risk management objectives and policies and exposure to risk are described in the Financial review.

Value of land

Most of the Group's interests in mining properties and leases, and in other land and buildings have been included in the financial statements at cost in accordance with its accounting policies. It is not possible to estimate the market value of such interests in land as this will depend on product prices over the long term which will vary with market conditions.

Creditor payments

It is the Group's policy to agree terms of payments with suppliers when entering into contracts and to meet its obligations accordingly. The Group does not follow any specific published code or standard on payment practice.

At 31 December 2008, there were 26 days' (2007: 28 days) purchases outstanding in respect of the Group based on the total invoiced by suppliers during the year.

Going concern

statements have been prepared on a going concern basis as they have satisfied themselves that the Companies and the Group are a going concern with adequate financial resources to continue in operational existence for the foreseeable future.

Further discussion is included on the Capital resources and contractual obligations page. The Directors' report is made in accordance with a resolution of the board.

Paul Skinner
Chairman
6 March 2009

Back to top