Rio Tinto Elevates Director to Chairman -- WSJ
December 04 2017 - 3:02AM
Dow Jones News
By Robb M. Stewart
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (December 4, 2017).
MELBOURNE, Australia -- Rio Tinto PLC has turned to Simon
Thompson, a boardroom veteran with mining-industry experience under
his belt, to succeed Jan du Plessis as chairman from next year.
Mr. Thompson, a director at Rio Tinto since 2014, will take over
when Mr. du Plessis steps down in March after about nine years as
chairman, the mining company said Monday.
A former executive at Anglo American PLC who has served as a
director with miners including AngloGold Ashanti Ltd. and Newmont
Mining Corp., Mr. Thompson will assume the helm of a revitalized
Rio Tinto but also a company with a dented corporate
reputation.
The U.K.-Australian company swung back to profit last year as
prices for iron ore rebounded, allowing it to resume dividend
payouts as the company focused on slashing costs and improving
productivity at its portfolio of mines. Backed by the exit from
unwanted assets, it has slashed debt and has been buying back
shares to return cash to shareholders.
However, it was hit with a U.S. lawsuit in October alleging the
company and former executives misled investors about the value of
assets in Mozambique, a further cloud for a company already
grappling with a number of investigations in the U.S., U.K. and
Australia into a $10.5 million payment made to a consultant who
helped secure rights to a large iron ore deposit in Guinea. The
company said it would defend itself against the Securities and
Exchange Commission's suit, arguing claims of fraud were
unwarranted. The miner said it was cooperating with authorities in
the Guinea investigation and has handed over emails and information
to investigators.
"Rio Tinto is in great shape, with a strong management team,
world-class assets and a successful strategy," Mr. Thompson
said.
Mr. du Plessis said in March he was stepping down to join
British telecommunications firm BT Group PLC, where he became
chairman last month. At the time, the company said the search for
his successor had begun in mid-2016, when Mr. du Plessis agreed to
remain in the role a further two years following the appointment of
Jean-Sebastien Jacques as chief executive.
"I am really pleased to be succeeded by Simon, especially given
how closely we have worked together since he joined the board some
three years ago," Mr. du Plessis said.
Between 1995 and 2007, Mr. Thompson worked in a number of roles
for Anglo America, including as head of its base metals division
and chairman of the exploration division. Early in his career he
held investment-banking positions at S.G. Warburg and N M
Rothschild, and he has been chairman of international investment
manager 3i Group PLC since 2015. From 2012 until earlier this year
he was chairman of Tullow Oil PLC.
Mr. du Plessis said he was handing over the baton at a time when
Rio Tinto was in great shape.
At a presentation to investors in Sydney on Monday, executives
said the company remained focused on delivering "superior" cash
returns to shareholders by working assets harder.
Mr. Jacques said a $5 billion productivity program was expected
to drive value over the next five years, targeting $1.5 billion in
additional free cash flow a year from 2021.
The company has a number of expansion opportunities being
considered to expand the company, including an iron-ore project in
Australia's remote Pilbara, aluminum operations in Canada, copper
in the U.S. and its Jadar lithium project in Serbia, he said.
Still, while the company said it remains optimistic about the
medium to longer-term outlook for China, the world's biggest
consumer of commodities stretching from copper to iron ore, it
cautioned there could be a slowdown over the next six months due to
weakening construction, infrastructure and automotive demand.
Rio Tinto has sold almost $8 billion worth of assets since 2013,
including this year's exit from its Coal & Allied coal business
in Australia, and has slashed debt to $7.6 billion from $14.5
billion in mid-2013. Net profit in the first half of this year
jumped to $3.31 billion from $1.71 billion the year before.
In Monday's presentation, it said it now expected capital
expenditure this year of less than $4.5 billion, where it
previously anticipated it would be about $5 billion, before it
rises to $5.5 billion in 2018 and $6 billion in each of the
following two years.
Write to Robb M. Stewart at robb.stewart@wsj.com
(END) Dow Jones Newswires
December 04, 2017 02:47 ET (07:47 GMT)
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