Norway fund divestment of Rio Tinto on line over environmental damage at Mineracao Rio do Norte mine in Brazil

The ethics adviser to Norway’s $2.3 trillion sovereign wealth fund has raised concerns with Rio Tinto about the environmental impact of a mine in Brazil, reviving questions about the fund’s future role as an investor in the company.

The ethics adviser to Norges Bank Investment Management is understood to have been speaking with Rio — the world’s second-largest miner — about its minority stake in Mineracao Rio do Norte, a bauxite producer in Brazil.

The adviser has questioned the mine’s impact on deforestation though no decisions have been made, sources suggest.

The adviser’s concerns are the latest example of scrutiny of one of Rio’s projects. Norway refused to buy stock in Rio for more than a decade because of the environmental damage caused by its Grasberg mine in Indonesia, and only resumed investing in the company in 2019.

In an extreme case, Norges could divest again — which would be a blow for London-based Rio. The fund is the company’s fifth-biggest holder and has a 2.6 per cent stake, according to data compiled by Bloomberg.

A spokesperson for Norges didn’t immediately respond to requests for comment.

Rio owns 22 per cent of MRN. Glencore is the biggest owner with a 45 per cent stake while Perth-headquartered South32 also owns a share.

“While the MRN operation is not managed by Rio Tinto, it has been working to progressively improve its environmental and social performance to meet industry best practice and our expectations as a shareholder,” Rio said in a statement.

“We will continue to support and drive this improvement through our board and committee roles, and by providing technical assistance.”

Bloomberg