Citing Fink's January 2018 Letter to CEOs, NRDC urges pressure on First Quantum Minerals to Abandon Pebble Mine
Laurence D. Fink
Chairman and CEO
55 East 52nd Street
New York, NY, USA 10055
Re: Open Letter on the Pebble Mine
Dear Mr. Fink:
On behalf of the Natural Resources Defense Council and its 3 million members and activists, I write, first, to applaud your ground-breaking January 2018 letter to CEOs endorsing the increased importance of social and environmental responsibility in decision-making by corporate leaders:
Society is demanding that companies . . . serve a social purpose. To prosper over time, . . . [c]ompanies must benefit all of their stakeholders, including shareholders, employees, customers, and the communities in which they operate.
You urged company executives and board members to ask questions like “[w]hat role do we play in the community? How are we managing our impact on the environment,” and you invited their “leadership and clarity” not only on “their own investment returns, but also the prosperity and security of their fellow citizens.”
Coming from BlackRock, with its $6.5 trillion in assets under management, this message has reverberated through the financial world like a blast of fresh air. It promises a new era in investing, focused not just on short-term corporate profits but on long-term sustainability.
With that in mind, I write more specifically today to convey our disappointment in BlackRock’s reluctance thus far to publicly connect your sound advice to its own corporate conduct—that is, to act on your compelling words with respect to the company’s relationship to one of the most damaging, widely opposed development projects anywhere in the world today. Called the Pebble Mine, it is a massive open pit gold and copper mine proposed to be sited in the headwaters of the greatest wild salmon ecosystem on Earth.
As you may know, and as we’ve been dismayed to learn, BlackRock is the third largest investor in a Canadian mining company called First Quantum Minerals that has recently become the principal funder of the Pebble Mine (and is negotiating an option to become the 50% owner of the entire project). Through its relationship to First Quantum, we are deeply concerned that BlackRock is now on a course to become one of the largest investors in this uniquely reckless and irrevocably unacceptable project.
Here’s why we’re concerned and why we believe BlackRock should be too:
The Pebble Mine is one of the most widely condemned mining projects anywhere today—an environmental, social, and economic pariah on a global scale, and a bad long-term investment:
- opposed by 80 percent of the residents in Alaska’s Bristol Bay region where it would be built;
- described by the U.S. Environmental Protection Agency, after years of peer-reviewed scientific study, as potentially “catastrophic” in its environmental impacts;
- abandoned by three of the largest mining companies in the world—Mitsubishi Corporation, Anglo American, and Rio Tinto;
- denounced in 2016 by the IUCN World Conservation Congress, which voted virtually unanimously to oppose the Pebble Mine and urge the United States government to deny permits;
- rejected in early 2017 as a “value-destroying boondoggle” by New York-based investment firm Kerrisdale Capital, which, based on a thorough financial analysis, concluded that the “Pebble project is doomed: politically impaired and commercially futile”; and
- dismissed just last December “as the wrong mine in the wrong place” by a consensus of former EPA Administrators for every Republican President (except Ford) since EPA was created—Nixon, Reagan, George H. W. Bush, and George W. Bush.
There is no dispute that Pebble’s open pit would be gouged from the pristine tundra at the top of the watershed that feeds the most productive wild salmon fishery on the planet. Last summer alone, that fishery produced almost 60 million wild salmon, and every year it generates revenue of $1.5 billion and jobs for 14,000 people. It is the “Fort Knox” of salmon on Earth—the source of 50 percent of all sockeye salmon—and the sustainable economic engine of southwest Alaska, fueled by both commercial fishing and recreation. And it sustains the people and wildlife of Bristol Bay who have subsisted on its natural bounty for centuries.
Tiffany & Co. has actively opposed the Pebble Mine, “believing it poses a dire threat to the remarkable Bristol Bay ecosystem, and the world’s most productive salmon fishery it sustains.” Supported by 60 jewelry companies around the world in a “No Pebble Pledge”—a pledge never to take minerals from the mine—Tiffany’s has concluded that “there are certain places where mining should simply never occur[, and] Alaska’s Bristol Bay is one such place.”
All but dead in 2016 in the wake of a devastating four-year comprehensive scientific risk assessment by EPA, the project has been given new life by the Trump Administration. Last May, after a one-hour, closed-door meeting with the mining company, EPA Administrator Scott Pruitt agreed to abandon restrictions that his agency, based on its scientific risk assessment, was poised to impose under the federal Clean Water Act. It further agreed to remove EPA altogether from its oversight role, but when 1.1 million commenters objected last fall, Pruitt backed down, although his legal agreement not to restrict the project remains in force.
With this political turn of events, the owner of the mine—a small Canadian exploration company called Northern Dynasty Minerals—attracted First Quantum, which in December invested $37.5 million toward an eventual $150 million and is now negotiating an option agreement entitling it to buy 50% of the project for $1.5 billion. This investment enabled Pebble to file a federal permit application with the US Army Corps of Engineers that, when approved, will allow, among other devastation, thousands of acres of pristine wetlands to be destroyed for Pebble’s massive open pit, to say nothing of the mine’s associated infrastructure.
Mr. Fink, we believe the unique circumstances and history of the Pebble Mine should matter to BlackRock, because, with over 43 million shares of First Quantum Minerals stock, your company can’t credibly argue that it is playing no part in the resurrection of this socially and environmentally toxic project.
Although BlackRock had no role in First Quantum’s decision to invest in the Pebble Mine, it can now, if it chooses, have a profound impact on First Quantum (and potentially its relationship with Pebble) going forward. As a minimum, BlackRock can express directly to First Quantum it’s unhappiness with the company’s investment in this irresponsible project, as the California Treasurer and New York State and New York City Comptrollers, trustees for the country’s largest pension funds, did in January.
For index fund investments in which First Quantum is included, BlackRock’s “responsibility to engage and vote is more important than ever,” as you explained in your letter. For its active investments in First Quantum, BlackRock can threaten and, if necessary follow through with, divestment. What BlackRock can’t do, consistent with its call for corporate leadership in social and environmental responsibility, is say nothing at all.
And if your response is “not now, not yet,” consider what exactly it is you hope to learn as this inalterably unacceptable project proceeds through permitting. The Alaska Native tribes and communities of Bristol Bay have overwhelmingly opposed it for years, and a 65 percent majority of Alaskans approved a statewide initiative in 2014 to protect the region’s salmon from project’s like Pebble. Stakeholders in the multi-billion-dollar Bristol Bay commercial fishing industry are virtually unanimous in their opposition, as are the thousands of sport-fishers from all over the world who frequent the region.
EPA has already completed a scientific risk assessment, subjected to extensive public comment, documenting the certainty of irreparable harm to the region if the mine is built and, if its containment fails, the risk of catastrophe. With the pre-ordained permit process that it has initiated and is determined to complete in record time, the U.S. Army Corps of Engineers—which grants over 60,000 dredge and fill permits each year—can reasonably be expected to add nothing of substance to this twice-peer reviewed scientific record.
Mr. Fink, to be clear, we’re not asking Blackrock to make a moral judgment. Objectively, the Pebble Mine is a bad social, environmental, and financial investment. Given this, we ask what it is that you and your colleagues at BlackRock hope to hear from First Quantum, Northern Dynasty Minerals, the Army Corps, or anyone else that, in the face of this unreasonable risk and broad-based condemnation, could justify proceeding with such a project in such a place?
The fate of the Pebble Mine at the headwaters of the 40,000-square mile Bristol Bay watershed may be the most consequential land use decision in North America today, pitting an essentially eternal supply of food against an essentially eternal supply of poison. It is absolutely “the wrong mine in the wrong place,” and the time for BlackRock to act is now. Because if a project as environmentally destructive as this one, as intensely opposed by the people who live there, as widely condemned at state, national, and international levels—if such a project can comfortably co-exist with BlackRock’s vision of corporate social responsibility, then that vision is just business as usual.
Your letter to CEOs is compelling, full of promise for a better world. But BlackRock’s significant relationship through First Quantum to the Pebble Mine is fraught with financial and reputational risk for your investors, inconsistent with the long-term financial, environmental, or social sustainability that is the focus of your message. If that relationship continues, then your inaction will speak louder than words, and the story it tells will have nothing inspirational to say about BlackRock’s commitment to social and environmental responsibility.
As CEO of BlackRock, you have the power to change that—and we hope you will.
Thank you once again for your leadership.
cc: Barbara Novick