Perth-based Sam Walsh has taken the top job at Rio Tinto after the global mining giant shocked financial markets last night by axing chief executive Tom Albanese as a series of troubled takeover deals cost it billions.
Rio Tinto announced the departure of Mr Albanese yesterday afternoon, just before European financial markets opened. The company said Mr Albanese, along with recently appointed head of strategy Doug Ritchie, had stepped down with the "mutual agreement" of Rio Tinto's board. The miner said it would write down $US14 billion from the value of its troubled aluminium business and from African coal assets acquired two years ago through the $US4 billion takeover of ASX-listed Riversdale Mining.
Rio chairman Jan du Plessis said Mr Walsh, 63, was "ideally placed to cast a fresh eye over how we address the challenges and opportunities in the business, and derive greater value from it".
After joining Rio in 1991, the former General Motors and Nissan executive took charge of Rio's iron ore operations in 2004, when the company was producing about 100 million tonnes of iron ore a year in the Pilbara. Last year, its WA mines produced 239 million tonnes of iron ore and, despite the occasional hiccup, the multibillion-dollar expansion program - which will eventually take exports past 360 million tonnes per annum - is regarded as one of Rio's major successes.
Mr Walsh, who is also a director of Seven West Media, publisher of _The West Australian _, said he was honoured to take charge of Rio. He will leave Perth for London for the top job, and his pay package - including potential bonuses - will rise 15 per cent to $7.8 million.
Mr Albanese's fall surprised financial markets, with Rio shares down as much as 4 per cent in early London trading. Although writedowns were expected, their scale is almost certainly the key cause of his downfall. Blamed personally for Rio's disastrous 2007 acquisition of Canadian alumina firm Alcan, he survived a push for his sacking by investor groups during the global financial crisis.
Rio paid $US38.1 billion for Alcan at the top of the market in 2007, and the debt taken on to fund its purchase nearly sank the company. Rio said yesterday it would book a $US10 billion to $US11 billion impairment when its financial reports were released next month, taking the total writedowns on the acquisition to about $US29 billion. Adding to its woes, Rio would write off $3 billion from value of Riversdale's Mozambique coal assets.
Mr du Plessis said writedowns of that scale were "unacceptable".
Widely respected in WA's business community, Mr Walsh will also be missed by Perth's arts community, where he has been active.
Fortescue Metals Group chief executive Nev Power said it was a "fantastic move" for Mr Walsh while Mineral Resources managing director Chris Ellison said the departing Rio iron ore boss would leave behind an operation that was in good shape. "And one of the great things about Sam is he builds high-calibre teams around him," Mr Ellison said.
Chamber of Minerals and Energy chief executive Reg Howard-Smith said Mr Walsh was a "very impressive leader" in the mining industry and in the arts world.
"He acts with the utmost professionalism, but is also a person with humility," Mr Howard-Smith said.
Janet Holmes a Court said Mr Walsh would be missed for his contribution to the arts and initiatives like Rio's Future Fund.
"It's a marvellous opportunity for Sam, but it is a tragedy for Perth," she said. "We'll have to have a wake."