Rio Tinto (RIO), which has operations in Mozambique, had fired its chief executive, Tom Albanese, after writing down the value of the company’s aluminium and coal operations by $14 billion, the global miner said.
The mineral resources mining and processing giant promoted the head of its main iron ore business, Sam Walsh, to CEO, replacing Albanese immediately.
It said most of the charge – $10-11 billion – related to the falling value of Rio Tinto’s aluminium assets, primarily Rio Tinto Alcan and Pacific Aluminium.
But the company also took a $3 billion charge after overestimating the production potential of coking coal deposits in Mozambique, acquired in 2011, and underestimating the logistical challenges of developing those assets.
“A writedown of this scale in relation to the relatively recent Mozambique acquisition is unacceptable,” Rio chairman Jan du Plessis said in a statement. “We are also deeply disappointed to have to take a further substantial writedown in our aluminium business.”
As CEO, Albanese oversaw the acquisition of Alcan for $38 billion in 2007. Rio Tinto’s aluminium operations have lost money for years and the charge is the second in 12 months.
Albanese will remain on the company payroll until July, but won’t receive a performance bonus for 2012 or 2013. He also forfeits his 2013 long-term share award.