UPDATE: Rio Tinto Chairman Says CEO Retains Board's Full Support
June 05 2009 - 10:14AM
Dow Jones News
Rio Tinto PLC (RTP) Chairman Jan du Plessis said Friday the
Anglo-Australian miner's chief executive retained the board of
directors' full support after the company reversed course on a
strategic tie-up with Aluminum Corp. of China, or Chinalco.
"Tom is a great chief executive," du Plessis said of Tom
Albanese.
Some analysts and investors have questioned Albanese's future at
the company after a series of apparent missteps, including the
purchase of Canadian aluminum producer Alcan at peak-market prices
in 2007 and support for the Chinalco deal, which was deeply
unpopular with some investors.
Robert Talbut, chief investment officer at Rio shareholder Royal
London Asset Management, said investors and company directors will
need time to reflect on Albanese's future.
"It is possible the chairman may decide some change is
required," Talbut said.
"You employ chief executives to make big calls and generally on
big calls chief executive reputations are made," he added.
Liberum Capital analyst Michael Rawlinson said Albanese's job
appeared safe.
"We see Tom as a capable operator who can run a steady state Rio
well. It remains to be seen if the Rio shareholder base will be as
forgiving," Rawlinson said.
Albanese, 51, joined Rio Tinto in 1993 and became company chief
executive in May 2007.
Soon afterwards, the miner tookon $40 billion in debt to fund
the Alcan purchase. Albanese also led the company's defense against
a hostile takeover bid from rival BHP Billiton Ltd. (BHP) through
2008, calling its offer too low.
But by the end of 2008, BHP withdrew its offer, the
Alcan-related debt weighed on the company's balance sheet and Rio
shares had tumbled more than 80% from a May peak.
Rio turned to Chinalco for a $19.5 billion funding package in
February so it could meet debt obligations. Albanese called the
deal a "pioneering strategic partnership."
But after months defending the deal, the miner this week dumped
Chinalco in favor of a rights issue and a joint venture with
BHP.
Du Plessis said he preferred not to use hindsight judgements,
but to move the miner forward. Albanese is the person to do that,
he added.
"I absolutely don't need a new chief executive," du Plessis
said.
Some observers say Rio Tinto's chief executive for iron ore, Sam
Walsh, is a potential heir-apparent. Walsh, 59, was appointed to
the company's board of directors Friday.
"He is well respected internally having grown iron ore to be
Rio's most important division," Rawlinson said. "The conspiracy
theorists will have it that he is now the CEO elect, with Tom
Albanese heading for the exit at some stage."
Company Web site: www.riotinto.com
-By Jeffrey Sparshott, Dow Jones Newswires; +44 (0)207 842 9347;
jeffrey.sparshott@dowjones.com