Walsh: My ‘amazing’ Rio turnaround ‘will be a Harvard case study’

Rio Tinto CEO Sam Walsh gave a wide-ranging interview to the Australian Financial Review on Thursday, talking about everything from milk jugs to Christian ethics in mining to opera and of course the $160 billion Glencore bid for the world’s number two miner.

Walsh has been in the news often of late and appears to be on a charm offensive in anticipation of another round fighting off Ivan Glasenberg’s unwelcome advances.

Most believe the Glencore CEO’s second takeover attempt (sorry, merger of equals) could come as soon as April – the earliest date allowed under British securities law after Rio’s rebuff in September.

While the London papers have run several glowing profiles of Glasenberg, the Australian press is, unsurprisingly, rallying behind Rio Tinto.

AFR calls Glasenberg’s style in the “phoney war” with Rio “combative” but headlines the profile: Sam Walsh: Iron Fist in a Velvet Glove.

Also, while Walsh, a 64-year old grandfather, possesses an “avuncular demeanour” and “gentlemanly” manner, he’s “extremely tough”. Not to mention “dressed immaculately”.

What Walsh isn’t though is modest.

But even here he gets a helping hand from AFR which calls this obvious bluster about his first two years at Rio’s helm rather euphemistically “Walsh’s underlying sense of self-confidence”:

“One day it will be a Harvard case study because it really is an amazing turnaround,” he says. “I can vividly remember when I took over, I went round and met with every shareholder I could. There was the group that said, ‘what makes you think you can do this?’ I said, ‘have a look at my track record’. And if you don’t believe me then watch this space closely. And of course we have delivered.”

Walsh points to the $US4.4 billion ($5.2 billion) that has been pulled out of the cost base since he arrived and a reduction in net debt of $US6 billion to $US16.1 billion for the year to June 30. Even the aluminium division has recovered to the point where Walsh describes it as the “hidden gem in our business”.

Walsh is careful to reassure shareholder that dividends will keep flowing and belts be tightened further.

But he dismisses criticism of his aggressive iron ore expansion and volume over price strategy which has put a number of smaller iron ore companies out of business:

“I am intrigued that people feel I should have some sort of moral obligation to the juniors,” he says. “OK, we’ve got to ride out this situation of excess supply, but at the end of the day it’s a cyclical commodity. Prices go up, people bring on capacity. Prices go down, people take off capacity. This is free-market economics.”