$14 Billion Write-Down Costs Rio Tinto CEO His Job
Mining giant Rio Tinto PLC (NYSE: RIO) said this morning that the company expects to take a noncash impairment charge totaling $14 billion in its full-year 2012 results. Rio Tinto's CEO, Tom Albanese, and the head of its Energy division, Doug Ritchie, have both "stepped down by mutual agreement." Rio Tinto's board appointed insider Sam Walsh as CEO, effective today.
Like many of the CEOs at the mega-mining companies, Albanese, who has been at Rio Tinto for more than 30 years, was a serial acquirer who paid around $38 billion for Canada's Alcan aluminum in a giant miscalculation on where the aluminum market was heading. The 2011 purchase of a coal property in Mozambique that cost Rio Tinto $3 billion of the write-down was the last straw.
Rio's board chairman said:
The Rio Tinto Board fully acknowledges that a write-down of this scale in relation to the relatively recent Mozambique [coal] acquisition is unacceptable. We are also deeply disappointed to have to take a further substantial write-down in our aluminium businesses, albeit in an industry that continues to experience significant adverse changes globally.
Albanese also beat back a $140 billion takeover offer from BHP Billiton Ltd. (NYSE: BHP) in 2007.
Albanese joins former Anglo American CEO Cynthia Carroll and former Xstrata CEO Mick Davis in the unemployment line. BHP's Marius Kloppers is also on a short rope, as the company's board has begun a search for his successor.
Filed under: 24/7 Wall St. Wire, Commodities & Metals, Corporate Governance, Management Change, Shareholder Issues Tagged: BHP, RIO