Tom Albanese, the CEO of Rio Tinto, has resigned after the company was forced to book a US$ 14 billion write down on its aluminium and Mozambique coal businesses. Doug Ritchie,
who led the acquisition and integration of the Mozambique coal assets in his previous role as energy chief executive, has also stepped down.
The company’s iron ore chief executive, Sam Walsh, has been appointed as his successor with immediate effect. The company’s iron ore business is its biggest and more profitable division.
Write downs “unacceptable”
Rio Tinto chairman Jan du Plessis said: "The Rio Tinto Board fully acknowledges that a write-down of this scale in relation to the relatively recent Mozambique acquisition is unacceptable. We are also deeply disappointed to have to take a further substantial write-down in our aluminium businesses, albeit in an industry that continues to experience significant adverse changes globally.”
Rio Tinto Coal Mozambique
The write downs include approximately US$ 3 billion relating to Rio Tinto Coal Mozambique (RTCM), which the company acquired in 2011 with the US$ 4 billion purchase of Riversdale Mining Ltd.
Infrastructure challenges have been the major issue in developing the company’s coal assets in Mozambique. It has originally sought to transport coal by barge along the Zambezi River, but this option did not receive formal approvals. These infrastructure constraints, combined with a downward revision to estimates of recoverable coking coal volumes on the RTCM tenements, have led to a reassessment of the overall scale and ramp up schedule and consequently to the impairment announced today.
All change at the top
Two of the mining majors have now announced changes at the top. Anglo American recently announced the appointment of Mark Cutifani, the CEO of AngloGold Ashanti Ltd., to replace Cynthia Carroll in April. Meanwhile, BHP Billiton, the world’s largest mining company, has also announced that it has started to search for a successor to its CEO, Mario Kloppers, although no time frame for his departure has been disclosed.
Written by Jonathan Rowland.