Walsh says Rio made poor judgements
- 15 February, 2013 10:11
Rio Tinto chief executive Sam Walsh has taken a veiled swipe at his predecessor for the decisions that led to the major miner's first-ever financial loss.
Rio posted a $US2.99 billion ($A2.91 billion) full year net loss on Thursday, due to $US14.4 billion ($A14 billion) of recent writedowns on its aluminium assets and a coal project in Mozambique. The company is leading the world in writedowns, with last month's labelled the largest in Australian corporate history, and impairments on the same aluminium assets a year ago, bringing the recent total to $US23 billion ($A22.36 billion).
The $US38 billion acquisition of aluminium company Alcan in 2007, $US4 billion ($A3.89 billion) spent on Mozambique-focused coal company, and recent problems with Mongolia's government about sharing the profits from the Oyu Tolgoi copper project are a bad look.
When it was pointed out to Mr Walsh in a media teleconference that the board should share the blame, he would only back the board's decision that former CEO Tom Albanese and the head of the Mozambique acquisition Doug Ritchie should depart.
"There were instances of poor judgement, some people have said it is an underlying issue, but I don't believe it actually is," Mr Walsh, formerly head of its most successful division, Iron Ore, told reporters.
"There has been poor judgement, both I and the board say it is simply unacceptable ... there has been a lot of soul searching.
"The board have made a decision that the executive who led responsibility for the Rio Tinto Coal Mozambique acquisition and the CEO, Tom Albanese, have ultimately responsibility and they've left." The company increased its dividend by 15 per cent, he pointed out.
A post-acquisition review was underway to understand what had happened with Mozambique, he said, where the quality of coal was far below expected. The company would learn from it and move on.
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