News Column

Rio Tinto Replaces CEO Amid Write-down

Jan. 17, 2013

Rio Tinto PLC chief executive Tom Albanese stepped aside in favour of former iron ore division head Sam Walsh, the mining company said Thursday as it announced an expected write-down on its assets of 14 billion US dollars in its 2012 full-year results.

The charges for the dual London-Sydney-listed company include about 3 billion US dollars on Rio Tinto Coal Mozambique and 10.5 billion US dollars on a reduction of the value of its aluminium assets, including those of Alcan Pacific Aluminium.

"The Rio Tinto board fully acknowledges write-downs of this scale in relation to the relatively recent Mozambique acquisition is unacceptable," chairman Jan du Plessis said in a statement to the stock exchange.

"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," he said.

Doug Ritchie, who led the acquisition of the Mozambique coal assets, also resigned. Like Albanese, he had worked for Rio Tinto for more than 25 years.

The Melbourne- and London-headquartered company announced last year that jobs would go around the world as it sought productivity savings of 5 billion US dollars by 2014.

One billion US dollars would be sliced off the cost of finding and assessing new projects this year.

At the time, Albanese told investors that cost increases were "unsustainable," particularly in coal mines in Australia and in its aluminium business.

"The increases that we've seen in capital costs in Australia in the coal industry over the past five years really do need to be rolled back to attract capital," he said.

Chief financial officer Guy Elliott said then that operations that "don't deliver cash flow" might be shut down and predicted "some difficult discussions with labour."

"The escalation of costs that we've seen, well above the rate of inflation ... in particular in Australia, is going to have to stop," he said.

Thursday's announcement was made after the stock market closed.

Source: Copyright 2013 dpa Deutsche Presse-Agentur GmbH

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