At Rio Tinto, we produce materials essential to human progress.
Achieving this purpose requires us to work, as often as not, in remote locations and sensitive, beautiful environments, often on land owned by Indigenous people. Our values, experience and history tell us that we must work in a way that delivers real, lasting benefits for the owners of our company as well as the wider communities in which we operate. We must care for our employees, respect and care for the environment when we explore, build and operate, and re-purpose or rehabilitate the land when we cease. We must contribute our fair share to local and national economies, including through taxes, and do so transparently. And we must do so in a way that preserves the profitability of our own business, not only so we can meet our commitments to our shareholders, but so that we can continue to invest in areas important to our other stakeholders, including safety, climate change mitigation and workforce training. These beliefs are the foundation of our views on sustainability.
The first pillar is foundational: running a safe, responsible and profitable business.
As such, this pillar includes issues that lay at the heart of our business.
Safety is our top priority because, simply put, we care for the people we work with. We therefore have standards, processes and tools embedded across our business to protect the health and safety of our people, our environment and our communities.
Maintaining and enhancing our profitability is also critical because only a profitable business can create sustained, long-term value not only to shareholders but also to communities, governments and employees.
Activities that fulfil our obligations to other parts of our business also reside here: our commitment to the rights and wellbeing of our employees, the ethics and integrity of our business and supply chain and respect for the environment, for example. As does transparency: because we believe access to information about our business is critical to building trust with our stakeholders, we regularly disclose relevant information on how we conduct our business and other aspects of our sustainability performance.
The second pillar builds on the first, and focuses on the success of our communities, including our contribution to the resources available to their governments: collaborating to enable long-term benefits where we operate.
We work hard to leave a lasting, positive legacy everywhere we work. We do this in many ways; one is via a focus on regional economic development (RED). In 2019, we began a process to revise our approach to development, to ensure we are leveraging resources beyond our own, so as to magnify the positive impact our business has on the communities in which we operate. For example, we are looking at how we can better partner with the development agencies of national, state and provincial governments as well as multi-lateral institutions, including the World Bank group.
Actively supporting global initiatives like the Extractive Industries Transparency Initiative is also part of this effort: ensuring that the money we pay, via taxes and royalties, to governments is disclosed transparently is critical to ensuring that it is used for development and other community needs. We are looking at how we can better leverage financial tools, including those of social impact investors – again, for the benefit of our communities – and also looking at how we can increase the positive impact of our own community investments.
And we are investing in skills training for work of the future. In Western Australia, for example, where automation may have a disruptive impact on our communities, we launched a partnership with the government of Western Australia and South Metropolitan TAFE (Technical and Further Education) to develop the first nationally recognised courses in automation. This partnership aims to train and certify people in new skills, making them easily transferable – so people can follow opportunity wherever they find it.
We also recognise that our business is often the major source of jobs and livelihoods in the communities where we operate, which are often far from metropolitan centres. We take this responsibility seriously.
Employment and job creation is central to our economic contribution in each of the 35 countries where we have a footprint. In Mongolia, approximately 93% of our employees are Mongolian. In our iron ore product group, in Western Australia, we employ 10,500 people: 13.5% of our residential workforce are from Indigenous groups in the Pilbara. We are a major employer in the Saguenay, in northern Quebec. At our mineral sands business in Madagascar, we have over 90% Malagasy employees. In 2018, we paid $4.7 billion in wages and other employment costs.
The employment opportunities we create do not stop with our own business. We continue to study our procurement practices, not only to deepen our local spend but also to develop a responsible supply chain in line with the coming low-carbon economy. In 2018, we spent $12.3 billion with more than 37,000 suppliers in more than 120 locations. In Australia alone, our operations created the equivalent of almost 111,500 full-time jobs and added A$10.5 billion to the real incomes of Australian residents in 2017. We believe this is how economic development and prosperity is created, and sustained.
The third pillar is about our shared future: pioneering human progress through sustainability, including the materials we produce and the innovations we bring to market, aligned with the priorities of the coming low-carbon economy.
We have long acknowledged the reality of climate change and its potential to have a negative impact on the world, our communities and our business. In 2015, we supported the outcomes of the Paris Agreement and the long-term goal to limit global average temperature rise to well below 2°C, recognising that doing so will require governments and companies alike to approach climate change with more ambition and action.
We believe we are doing our part – from helping to develop technology that can make the aluminium smelting process entirely free of direct GHG emissions to providing the world with the materials it needs, such as copper and titanium, to build a new low-carbon economy and products like electric vehicles and smartphones. In 2018, we also exited fossil fuel production, becoming the only major mining company to do so.
Closure is also a part of our shared future because how we manage it is critical to the future of our communities after our operations cease. With respect to the land, we plan our operations from the exploration stage with closure in mind. In places, such as Richards Bay Minerals in South Africa, we progressively rehabilitate the land as we mine. Closure planning also comprises the economic health of the communities once our operations cease; we want to ensure the health and resilience of our communities extends beyond our presence there. This is also part of our approach to RED.
This year and in years to come, we plan to continue to explore ways to develop our participation in a circular economy. We are also looking at ways to reduce and re-process mineral waste, including tailings. Across our business, we are looking to increase the share of electricity sourced from low-carbon, renewable energy. We are also looking at new ways to work with stakeholders and partners to manage and rehabilitate land and strengthen conservation, including the sustainable management of forests.