Overvaluing of assets leads to rumbles at board level.
Rio Tinto’s chief executive Tom Albanese has stepped down from his role, following the announcement that the global mining company expects a non-cash impairment charge of $14 billion (£8.7bn) in its 2012 full year results.
The impairments include an amount of approximately $3 billion (£1.8bn) relating to Rio Tinto Coal Mozambique, as well as reductions in the carrying values of Rio Tinto’s aluminium assets in a range up to $11 billion (£6.8bn). The final figures will be included in Rio Tinto’s full year results on 14 February 2013.
Albanese has left his role in a mutual agreement with the Rio Tinto board. Current iron ore chief executive Sam Walsh has been appointed as his successor with effect from today.
Tom Albanese said of his departure: "While I leave the business in good shape in many respects, I fully recognise that accountability for all aspects of the business rests with the CEO. I am pleased that someone of Sam’s calibre and values has been chosen to succeed me as chief executive. This is a great company and Sam will do an outstanding job."
Doug Ritchie, who led the acquisition and integration of the Mozambique coal assets in his previous role as energy chief executive, has also stepped down by mutual agreement.
Rio Tinto chairman Jan du Plessis said: "The Rio Tinto board fully acknowledges that a write-down of this scale in relation to the relatively recent Mozambique acquisition is unacceptable.
“We are also deeply disappointed to have to take a further substantial write-down in our aluminium businesses, albeit in an industry that continues to experience significant adverse changes globally.
"I would like to pay tribute to Tom for his considerable contribution to Rio Tinto over more than 30 years of service and for his integrity and dedication to the company. I would also like to thank Doug for his 27 years of service to the Group and particularly for his invaluable work in developing our relationships in China. I wish them both well for the future.”
Du Plessis expressed that Rio Tinto’s underlying business and balance sheet remain “in good health”, and that the company is taking decisive action to improve its competitive position further with an aggressive cost reduction plan.