Rio Tinto sacks chief executive
Rio Tinto sacked chief executive Tom Albanese yesterday and revealed a $14 billion writedown almost entirely on the value of his two most significant acquisitions, the Alcan aluminium group and Mozambican coal miner Riversdale.
An engineer who became the miner’s first American boss, Albanese will be replaced by Australian Sam Walsh who heads Rio’s operations in iron ore, where it is the world’s second largest producer.
Doug Ritchie, a heavyweight former energy boss who led the acquisition of Mozambique-focused miner Riversdale, was also shown the door after almost three decades with the company.
New Jersey-born, Alaska-trained Albanese had until now survived the consequences of his disastrous $38 billion acquisition of Alcan in 2007, a bruising top-of-the-market deal when Rio was under pressure from rivals to bulk up or be bought.
The deal, just two months after Albanese took the reins, turned bad as markets crumbled and aluminium prices slumped, battering Rio’s balance sheet and nearly forcing it into the arms of Chinese state-owned Chinalco and triggering a $15 billion rights issue.
Rio has since suffered years of losses in aluminium, with Alcan adding to problems at its original business, and has taken some $29 billion in impairments.
Walsh was already in charge of the division that accounts for nearly 80 per cent of profits, and his appointment hints at a back-to-basics strategy. Walsh was welcomed by investors as a safe pair of hands, but many questioned whether a 63-year-old veteran would be a long-term solution, raising concerns over management.
Rio had planned to shrink the aluminium arm, reducing one of the world’s largest producers of the metal by hiving off most of its Australian and New Zealand assets.
However, industry sources say it has not been overrun with buyers. – (Reuters)