“Sexual harassment has no place in our workplaces or anywhere. We are committed to providing a safe and respectful workplace for everyone,” BHP, the world's largest mining company, said.
Rio, the world's biggest iron ore miner, said it treats “all such claims with utmost seriousness”.
The companies' share prices showed little reaction, with Rio dropping 1.2% in Sydney on Wednesday to end at A$123.81 (R1,399.08), while BHP gained 0.4% to close at A$42.00 (R474.66).
The sanguine market reaction likely reflects the scale of the lawsuit and potential damages that may be paid are uncertain. While the market may be in a wait and see mode regarding the lawsuit, there is little doubt that BHP and Rio have underperformed in the broader Australian S&P/ASX 200 Index.
BHP hit a record high of A$37.73 (R426.44) a share on April 13 2011 amid the commodity boom led by China in the recovery from the global financial crisis of 2008. It then entered a downtrend until the beginning of 2016 and recovered to the same level it was at its 2011 peak by December 2020 and the price has since rallied about 11.3% to Wednesday's close.
Rio paints a similar story, having peaked just as the 2008 crisis was starting at A$111.79 (R1,263.04) a share on May 22, 2008 and while it rallied in 2011, it took until the end of December 2020 to exceed its previous record.
Since then Rio has gained about 13.4%, while the S&P/ASX 200 Index is up about 20.6% over the same period.
If BHP and Rio are to outperform the market, they will have to convince investors their plans to be leaders in the energy transition are viable and profitable.
In theory there's no reason the companies shouldn't be able to do this. Both are well positioned in key transition metals such as copper and aluminium and are also building portfolios in other key metals such as lithium.
While the process of turning iron ore into steel is carbon-intensive, both companies can argue steel is also essential to the energy transition and both are looking at ways to decarbonise the steelmaking process. Achieving the goal of being seen as vital to the energy transition also means having the necessary skilled workforce and it's here that the lawsuit and the likely associated damaging revelations are a threat.
The more stories about appalling sexual behaviour on the part of some male workers at Australian mines and the allegations that mid-level managers were more interested in covering this up than stamping it out, the harder it becomes to attract workers.
Already miners are challenged by falling enrolments in key university courses, with research published last year by consultants McKinsey showing mining engineering graduates dropped by 63% in Australia between 2010 and 2018 and by 39% in the US.
If the declining graduate numbers aren't bad enough, imagine trying to recruit young employees to work on remote mine sites, especially if what they recall from the media is stories of inappropriate behaviour, uncaring management and a poor culture.
The risk for BHP, Rio and other miners is they battle to find enough skilled staff, meaning they have to pay considerably higher salaries or try to convince increasingly wary governments of boosting immigration.
_Disclosure: At the time of publication Clyde Russell owned shares in BHP Group and Rio Tinto as an investor in a fund._
_The views expressed here are those of the author, a columnist for Reuters._
**Reuters**