Rio Tinto has announced the firing of CEO Tom Albanese stemming from $14 billion in write downs in connection to takeovers of the Alcan aluminum group and Mozambique coal producer Riversdale Mining Ltd.
He will be replaced by Sam Walsh, a longtime leader of Rio’s iron ore unit, its largest. With headquarters in London and Australia, Rio Tinto is the world’s second-biggest diversified mining multinational.
Albanese’s departure stems from the $38 billion takeover of aluminum producer Alcan Inc. in which Rio’s debt soared to 19-fold. The 2007 deal went bad as markets soured, aluminum prices fell and China became the world’s largest aluminum producer. Conditions forced Rio to seek a $19.5 billion deal with Aluminum Corp. of China, which it later stopped.
Rio had since planned to reduce aluminum output by selling off most of its Australian and New
Zealand assets, though analysts have reported lukewarm interest.
Rio is also writing down 70% of Albanese’s two-year-old, $4.1 billion purchase of Mozambique coal company Riversdale Mining Ltd. Problems with transportation and logistics, common to the region, also dogged profits. Doug Ritchie, who led that acquisition, will also leave “by mutual consent” along with Albanese.
This contrasts the tenor of recent statements by Albanese that Rio enjoyed “strong operational performance” in a fourth quarter with “record annual iron ore production and shipments.” Global iron ore production for 2012, he added, was 253 million metric tons with Rio Tinto’s share at 199 million mt, a 4% increase over 2011.
Albanese is the latest in a series of executive departures from mining majors. Earlier this month Anglo American named a new CEO, and BHP Billiton is seeking a replacement for Chief Executive Marius Kloppers.