Smoke billows from chimneys at the Rio Tinto alumina refinery. Picture: REUTERS
Smoke billows from chimneys at the Rio Tinto alumina refinery. Picture: REUTERS

Melbourne — Four years after mining giant Rio Tinto swept out its veteran managers to make way for a new generation of business heads, its leadership team has come unstuck.

The world’s biggest iron ore miner is looking for a new chief and iron ore boss after they allowed the blasting of ancient Aboriginal rock shelters to expand a mine in Western Australia against the wishes of the traditional owners.

Investors and analysts saw no clear internal candidates and said after the damage done to the company’s reputation, it was likely Rio would tap an outsider to replace Frenchman Jean-Sébastien Jacques.

“Clearly from the comments of the chairman they want to reset the culture, which would imply an external candidate would be more likely than an internal one,” said Macquarie analyst Hayden Bairstow.

Chair Simon Thompson said on Friday the company was determined to “re-establish our reputation as a leader in communities and heritage management”.

Aside from repairing the company’s community relations, the board will need to look for someone who refocuses on operations and building the copper business, areas neglected as Jacques stripped out layers of management and focused on capital allocation, two fund managers said.

“Rio was the benchmark for operations, but in the last 18 months they've lost that title,” said an investment manager who declined to be named.

Potential external candidates that analysts and investors pointed to included Anglo American CEO Mark Cutifani, Orica CEO Alberto Calderon, former Fortescue Metals Group boss Nev Power, and former Shell Australia chair Zoe Yujnovich, who previously ran Rio’s Canadian iron ore business.

“Zoe has the relevant mining background, international management experience, government relationships, acute sensitivity to indigenous and remote community engagement, and strong Australian roots,” said one analyst, who declined to be named as he does not cover Rio.

If the company wants to overhaul its culture, it might be tough to turn to former Rio executives, though several were seen as potential candidates: Newcrest Mining CEO Sandeep Biswas, Aurizon CEO Andrew Harding, Oz Minerals CEO Andrew Cole and Fortescue COO Greg Lilleyman.

One fund manager pointed to Rio’s aluminium chief Alf Barrios as a potential candidate.

However, analysts said the company may want to look beyond mining expertise to set a new vision for the company.

“You don’t need to be able to do a mine plan for an iron ore pit to run Rio Tinto. Look at [former travel industry executive] Elizabeth Gaines’ success at Fortescue,” Bairstow said.

Reuters

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