Rio Tinto chief quits after heavy writedowns
Updated 1 hour 26 minutes ago
Photo: Stepping aside: Tom Albanese (Christinne Muschi, file photo: Reuters ( FAMILIAR SURNAME)!!!!
Related Story: Rio hits record iron ore production
Mining company Rio Tinto has announced the sudden resignation of its chief executive Tom Albanese.
Mr Albanese’s decision to stand down follows more than $13 billion worth of writedowns on the company’s aluminium assets and its coal division in Mozambique.
The projects were two of Mr Abanese’s most significant acquisitions, and Rio Tinto chairman Jan du Plessis has described the results as “unacceptable”.
“I would like to pay tribute to Tom for his considerable contribution to Rio Tinto over more than 30 years of service and for his integrity and dedication to the company,” he said in a statement.
Mr Albanese, who became chief executive in 2007, says his resignation is effective immediately.
“While I leave the business in good shape in many respects, I fully recognise that accountability for all aspects of the business rests with the CEO,” he said in a statement.
Mr du Plessis says the head of Rio’s iron ore division, Sam Walsh, will step into the role.
“He is ideally placed to cast a fresh eye over how we address the challenges and opportunities in the business and derive greater value from it,” he said.
Until now, Mr Albanese had largely survived the consequences of his damaging $US38 billion acquisition of aluminium group Alcan in 2007, a top-of-the-market deal when Rio was under pressure from rivals to bulk up or be acquired.
The group has since seen years of losses in aluminium and took a $8.9 billion charge a year ago.
It had planned to shrink the division by hiving off most of its Australian and New Zealand assets for sale, but buyers have not flocked.
The finance world has expressed surprise at the announcement, but business commentator Tim Treadgold says Mr Albanese’s departure was inevitable.
“These guys always look good when they’re buying things and spending shareholders money, but they don’t look good when it comes time to earn profits off those investments and they simply haven’t been able to do that,” he said.
The announcement comes a day after the mining giant unveiled record production in 2012 and beefed up expansion plans for its flagship Australian iron ore operations.
Rio bought Mozambique-focused coal miner Riversdale in 2011.
Doug Ritchie, who led the acquisition and integration of the Mozambique coal assets, has also stepped aside.
Neither will get a lump sum payout or outstanding bonuses.
Rio says the non-cash impairments in its 2012 results include a charge of around $3 billion relating to the Mozambique business, as well as reductions in the carrying values of Rio’s aluminium assets in the range of $10 billion to $11 billion.
The group also expects to report a number of smaller asset writedowns in the order of $500 million.
The final figures will be included in Rio Tinto’s full-year results on February 14.
“The Rio Tinto Board fully acknowledges that a writedown of this scale in relation to the relatively recent Mozambique acquisition is unacceptable,” Mr du Plessis said.
“We are also deeply disappointed to have to take a further substantial writedown in our aluminium businesses, albeit in an industry that continues to experience significant adverse changes globally.”
Topics:mining-industry, industry, business-economics-and-finance, company-news, australia, united-states, wa
First posted 3 hours 21 minutes ago