Rio Tinto announces $14bn writedown, appoints new CEO

16 January 2013 (Last Updated January 16th, 2013 18:30)

Rio Tinto chief executive Tom Albanese has stepped down after the company reported $14bn in writedowns related to its aluminium assets and coal division in Mozambique.

Tom Albanese, Rio Tinto

Rio Tinto chief executive Tom Albanese has stepped down after the company reported $14bn in writedowns related to its aluminium assets and coal division in Mozambique.

The firm incurred an impairment charge of $11bn following the unsuccessful acquisition of Alcan and another $3bn after the government in Mozambique rejected a plan to send coal down the Zambezi river.

Rio Tinto also expects to report a number of smaller asset write-downs in the order of $500 million, the company said in a statement.

CEO Tom Albanese has now been replaced by Iron Ore chief executive Sam Welsh.

Speaking on his departure Tom Albanese remarked, "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."

Energy chief executive Doug Ritchie, who had implemented the acquisition and integration of the Mozambique coal assets also resigned from his post, the company said in a statement.

Rio Tinto chairman Jan du Plessis said that the board fully acknowledges that such a large scale write-down from the recent Mozambique acquisitions was 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," Plessis added.

Rio purchased Canada-based Alcan in June 2007 and Mozambique coal miner Riversdale in 2011.

The company paid $44bn for the Alcan operations, including debt, but wrote down its value by nearly $9bn in February 2012.

Looking ahead, Rio Tinto new chief executive Sam Walsh said, "I will be working flat out to build an even stronger, more valuable Rio Tinto business for shareholders and for our many other stakeholders."


Image: Tom Albanese, former chief executive of Rio Tinto. Photo: World Economic Forum.