(Bloomberg) -- The ethics adviser to Norway’s $1.5 trillion sovereign wealth fund has raised concerns with Rio Tinto Group 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 has been speaking with Rio — the world’s second-largest miner — about its minority stake in Mineracao Rio do Norte, a bauxite producer in Brazil, according to people familiar with the matter.

The adviser has questioned the mine’s impact on deforestation though no decisions have been made, they said, asking not to be identified as the talks are private. 

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% stake, according to data compiled by Bloomberg.

The Council of Ethics confirmed in an email on Thursday that it had been in contact with Rio. The adviser said it is in contact with a number of companies every year, and that most of those won’t be excluded from the fund. Of the 102 new cases opened and assessed in 2023, just eight resulted in recommendations to exclude or place a company under observation, or to terminate a company’s exclusion or observation period, according to its annual report.

A spokesperson for Norges Bank Investment Management, or NBIM, declined to comment.

Rio owns 22% of MRN. Glencore Plc is the biggest owner with a 45% stake while South32 Ltd. 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.”

The Wall Street Journal earlier reported the discussions with Rio Tinto.

(An earlier version of this story corrected the headline to show it is the Council of Ethics rather than NBIM that raised concerns.)

--With assistance from Kari Lundgren.

(Updates with comment from Council of Ethics in sixth paragraph.)

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