Why Rio Tinto chief Tom Albanese is mining's latest casualty
As Tom Albanese is forced out over $14bn of write-downs, FTSE 100 heavyweight Rio Tinto becomes the latest mining giant to look for new leadership.
Poetically, it would be his inability to master a river that finally meant Tom Albanese could no longer keep the top job at Rio Tinto - 'red river’ in Spanish.
The world’s second biggest mining company paid $4bn (£2.5bn) for Riversdale’s coal assets back in 2011, but on Thursday had to admit the seriousness of its difficulties setting up infrastructure to make the Mozambique project a goer.
The country’s government has refused to let it transport coal down the Zambezi river, meaning the company has instead had to transport its product by more expensive rail.
That was not all. Rio had been too optimistic about the amount of coking coal – used in the production of steel – that it could realistically get out of the ground. That is seen at the company as a “judgement call” that went wrong, rather than a failure of its processes.
Nonetheless, the headaches meant Rio had to knock $3bn off its valuation of the project, costing Mr Albanese the job of chief executive after seven years in the role, as well as prompting the exit of strategy chief Doug Ritchie.