Rio Tinto says its growth lies in resource-rich Africa — despite its past failures
London — Rio Tinto Group said resource-rich Africa is still central to the company’s growth strategy despite a succession of failed investments and scandals in the last 10 years.
The continent will expand its production and consumption of metals over the next decades as the economy grows and becomes more industrial, Bold Baatar, Rio’s CEO of energy and minerals, said in a speech at Bloomberg Intelligence’s London Metals Exchange Week Forum.
"Africa is the largest untapped source for growth for our industry, and a lot of the minerals of the future will come from the continent," Baatar said. "Our future with the East lies in Africa, and together we can participate in its transformation journey."
The track record of success for the world’s biggest mining companies in Africa over the last decade has been poor. Firms, including Rio, spent billions expanding into new African assets as metal prices soared during the commodities super-cycle of the late 2000s, only to see much of the value lost as prices collapsed in later years.
Rio spent $3.7bn in 2011 on a coal project in Mozambique and years developing the $20bn Simandou iron ore project in Guinea. It later abandoned both projects. Rio’s former CEO and former chief financial officer were charged with fraud by US authorities, who alleged they inflated the value of the Mozambique coal assets.
For future projects to succeed, partnerships with African states, financiers and customers must "change beyond the traditional models and include different types of joint ventures and different project-financing models", Bataar said.
Rio exited Zimbabwe in 2015, but still has more than 10,000 workers in Africa, along with assets in Namibia, Guinea, Mozambique, SA and Madagascar.