A stack reclaimer with a pile of iron ore at the Rio Tinto Parker Point ship loading terminal in western Australia. Picture: REUTERS
A stack reclaimer with a pile of iron ore at the Rio Tinto Parker Point ship loading terminal in western Australia. Picture: REUTERS

Melbourne — Australia’s corporate watchdog has launched court action against global miner Rio Tinto and two former executives for misleading investors about the coal reserves it reported in a $4bn acquisition in Mozambique.

The Australian Securities and Investments Commission said on Friday that the company, former CEO Tom Albanese and former chief financial officer Guy Elliott had made deceptive statements in their 2011 annual report, published in 2012.

The commission "alleges that RTL (Rio Tinto Ltd) engaged in misleading or deceptive conduct by publishing statements in the 2011 annual report, signed by Mr Albanese and Mr Elliott, misrepresenting the reserves and resources of RTCM (Rio Tinto Coal Mozambique)", the commission said.

Rio Tinto had no immediate comment on the commission’s action, but has previously denied any wrongdoing in a similar case brought by the US Securities and Exchange Commission (SEC).

Rio Tinto now faces court cases in the US and Australia over the disastrous acquisition of Riversdale in Mozambique, with the SEC having charged the company, Albanese and Elliott with fraud.

"The outcomes of these matters, and associated class actions that have been commenced on behalf of securities holders, remain uncertain, but they could ultimately expose the group to material financial cost," the company said in its 2017 annual report, released on Friday.

The Australian watchdog says it is asking the court to declare that Rio Tinto broke the Corporations Act, is seeking monetary penalties against Albanese and Elliott, and is asking the court to bar them from managing corporations "for such periods as the court thinks fit".

The commission is continuing investigations into the circumstances surrounding the impairment of the Mozambique coal assets, it said, declining to comment further.

Rio Tinto bought Riversdale for $4bn in 2011, wrote off about $3.5bn of its value and sacked Albanese and other executives involved in the deal in 2013. The Mozambique deal came on top of hefty write-downs on a previous acquisition.

The SEC alleges that the company and executives inflated the value of coal assets in Mozambique and concealed critical information while tapping the market for billions of dollars.

The company, Albanese and Elliott have all said they will vigorously defend themselves against the allegations.

Rio Tinto already reached a settlement with the UK’s Financial Conduct Authority, agreeing to pay a fine of £27m for breaching accounting rules in connection with the Mozambican assets.

"The investment in 2011 of $4bn in Mozambique in what ultimately turned out to be inferior quality coal assets was undoubtedly a low point during my tenure," departing chairman Jan du Plessis said on Friday in his final annual report with the company.