Rio Tinto’s CEO search marks changing of the guard | Australian Markets

At the opening final week of the Western Range iron ore mine in the distant Pilbara area of Australia, Jakob Stausholm gave one of his ultimate speeches as head of the world’s second-largest mining company.

“When I was interviewing for the job as CEO, I said succession planning starts on day one,” the Rio Tinto chief instructed reporters. Standing behind him in the crimson grime was Simon Trott, head of the company’s iron ore division and a frontrunner for the position.

Yet such planning had not been obvious simply a few weeks earlier when Rio introduced Stausholm’s departure after nearly 5 years at the helm. The news took each buyers and senior figures at the Anglo-Australian company unexpectedly, with the indisputable fact that the board didn’t have a successor lined up raising eyebrows throughout the industry.

Rio will not be the solely main mining company in search of a new chief government. Its search is a component of changing of the guard happening throughout the senior ranks of the industry, with all 4 of the world’s largest iron ore producers both present process, or poised for, a shake-up at the high.

This subsequent technology will lead an industry at a crossroads, as demand for iron ore — historically their most profitable product — flatlines and miners look to different metals and minerals linked to high-tech industries and the power transition.

The tempo of management change “is unprecedented, in terms of that turnover, in such a short period of time”, stated Bob Brackett, mining analyst at Bernstein.

As properly as Stausholm at Rio, BHP, the world’s largest miner, is anticipated to hunt a new chief government subsequent yr when Mike Henry steps down, whereas Brazil’s Vale welcomed its new head, Gustavo Pimenta, late final yr. Australia’s Fortescue has additionally shuffled its high management after Dino Otranto, head of the company’s metals division, had his position expanded.

The management adjustments coincide with the imminent first manufacturing from Rio’s large Simandou mine in Guinea, which is anticipated to keep iron ore costs in test.

Meanwhile, the shift to newer metals and minerals has led to Rio inserting more than $10bn in bets on lithium during Stausholm’s tenure by way of acquisitions, joint ventures and capital expenditures.

BHP is investing closely in potash, with its Jansen mine in Canada set to start out manufacturing of the fertiliser subsequent yr, in addition to inserting a large wager on copper demand with giant investments in South Australia and Latin America.

The race to secure entry to copper — the crimson steel important for wiring and electrical energy grids — has been the driving drive behind a number of mega-deal makes an attempt, although the largest efforts have to date been unsuccessful. BHP made a £39bn bid for Anglo American however was rejected, whereas Glencore and Rio additionally final yr held secret merger talks that didn’t progress.

Rio’s board and Stausholm did not see eye-to-eye on the Glencore merger, in accordance with people acquainted with their discussions. Speaking at Western Range, Stausholm stated there had been “no misalignment” between himself and the board, when requested about stories of pressure with Rio chair Dominic Barton, however added that it was “the right time to look for a successor”. 

George Cheveley, portfolio supervisor at investment group Ninety One, stated M&A would stay high on the agenda throughout the huge miners, noting “frustration in boards” about the need to maneuver sooner.

“The companies need to get bigger — both from an investors’ demand point of view, and because of the need for bigger projects — and the only way to do that is through consolidation,” Cheveley stated. “There’s a feeling that they need someone who can be more assertive with M&A.”

At Rio, the choice course of for the subsequent chief government is properly beneath approach, with inside frontrunners together with Trott, Jérôme Pécresse, head of aluminium, and chief industrial officer Bold Baatar, in accordance with people close to the company.

Trott is a long-serving Australian who has run Rio’s iron ore operations since 2021 and held the position of chief industrial officer previous to that. He declined to remark at the Western Range opening whether or not he had utilized for the job or whether or not his distinguished position in the ceremony was a gown rehearsal for the place. 

Pécresse, a French citizen who joined Rio solely two years in the past, is taken into account to have a robust if short report enhancing operations at the company’s aluminium business. He was beforehand chief government of GE Renewable Energy.

Baatar, a former banker, joined Rio in 2013 and ran its copper business, earlier than changing into chief industrial officer. He is credited with finding out the possession of the Oyu Tolgoi copper mine in Mongolia, and getting Simandou on monitor. 

Who takes the helm at Rio is of large consequence for Australia, the place the company employs 23,000 people, nearly half the company’s headcount.

Madeleine King, Australia’s mining minister, additionally highlighted the position that the present management had performed to restore relations with the indigenous group after the destruction of historical rock shelters at Juukan Gorge, an occasion that was the catalyst for the final change at the high at Rio. 

“The global leader of Rio Tinto is an extremely important role and the person that does that . . . is of enormous importance to Western Australia, and therefore Australians,” King instructed the Financial Times.

Stausholm stated he hoped to “pass the baton” on to the new chief when the appointment was made later this yr, placing the transition in the context of the ethos of the area’s indigenous group.

“What you learn [from them] is we’re all just a small part of the puzzle,” he stated. “Learning from the past and bringing it to the future.”