IGO to record impairment against nickel assets in strategy shift
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In an unexpected announcement, mining giant Rio Tinto (ASX, LON, NYSE:RIO), the world’s second largest miner, said Thursday its chief executive, Sam Walsh, would retire on July 1 and that Jean-Sébastien Jacques, the copper and coal division boss, would take the reins of the company.
Walsh, who has led the Anglo-Australian group since 2013 and overseen a cost-cutting drive as the mining sector faces plunging commodity prices, will leave Rio’s board at the same time, the company added.
In 2014, Walsh famously said that his “amazing” Rio turnaround would be “a Harvard case study” one day.
The change of leadership comes after Rio – which is heavily reliant on iron ore – posted last month an annual net loss of $866m for 2015 because of tumbling commodity prices that have squeezed both small and big players in the sector.
Investors welcomed the news, sending shares up 4.7% in London at around 1:00 pm GMT and 3.7% in New York pre-market trading.
“Today’s announcement is the culmination of a comprehensive and deliberate executive succession process,” Rio’s chairman, Jan du Plessis, said after the market closed in Sydney. “The board has decided that J-S is the right person to lead Rio Tinto in an increasingly complex world filled with both challenges and opportunities for our industry.”
Walsh, who has been with the company for 25 years, famously told the Australian Financial Review in 2014 that his “amazing” Rio turnaround would be “a Harvard case study” one day.
Jacques led negotiations over a $4.4bn financing agreement needed for the expansion of Oyu Tolgoi copper mine in Mongolia.
So far, he doesn’t seem to be so far off, as the 66-year-old executive has been widely credited with turning around Rio’s fortunes during his three years at the helm, mainly by cutting costs and investment after several years of heavy spending on failed acquisitions.
The upcoming boss, Jean-Sébastien Jacques, has spent more than three years on Rio Tinto’s executive committee. He was tasked with bringing greater focus to the copper and coal businesses and has been credited with improving safety while significantly reducing costs as the global mining sector faltered.
Most recently, the French-born executive took the lead role in negotiations over a $4.4 billion financing agreement necessary for an expansion of the giant Oyu Tolgoi copper mine in Mongolia.
To ensure a smooth transition, Rio Tinto said, Jacques is joining the board and becoming deputy chief executive effective immediately. Walsh will receive a payment of $1.4 million to cover the remainder of his contractual notice period of just under nine months.
Comments
Goldfinger
Come on Sam. Your not sticking around to see the results of your “I am too sexy for my recovery” recovery. You might make a Harvard case study for a CEO timing his exit perfectly before his company craters. Still in the mining industry they have a few case studies to choose from.