Rio Tinto sacked chief executive Tom Albanese on Thursday and revealed a $14 billion writedown in connection with his two most significant acquisitions, Mozambican coal and the Alcan aluminum group.
A mining heavyweight who joined Rio two decades ago, Albanese will be replaced by iron ore boss Sam Walsh. Doug Ritchie, who led the acquisition and integration of the Mozambican coal
assets, was also shown the door.
Alaska-trained Albanese had until now survived the consequences of his disastrous $38 billion acquisition of Alcan in 2007, a bruising top-of-the-market deal when Rio was under pressure from rivals to bulk up or be acquired.
The deal turned bad as markets crumbled and aluminum prices slumped. Rio has since seen years of losses in aluminum and taken billions in impairments — it had already taken an $8.9 billion charge on those struggling assets a year ago.
Walsh was welcomed by investors and analysts as a safe pair of hands, but many questioned whether the veteran would be a long-term solution for the group, and raised concerns over management of a group that also announced the departure of its CFO last July.
“It’s another black mark in terms of (Albanese’s) M&A record and I suppose, given the magnitude of this writedown ... I’m not surprised that he’s stepping down with this, nor am I surprised that Doug Ritchie is,” analyst Jeff Largey at Macquarie said.
Rio had planned to shrink the aluminum division by hiving off most of its Australian and New Zealand assets, but industry sources say it has not been mobbed by buyers.
Albanese then spearheaded a deal to buy Mozambique-focused coal miner Riversdale in 2011, fighting off rival bids from steelmakers. There, however, Rio has come up against infrastructure problems more challenging than anticipated.
News of Albanese’s departure and the writedown, more than twice its 2011 profit, took the market by surprise, knocking Rio shares down 2.5% to 3,372 pence in early London trading.