Rio Tinto Names Stausholm New CEO, as It Seeks to Rebuild Reputation
17 December 2020 - 10:07PM
Dow Jones News
By Rhiannon Hoyle
SYDNEY--The destruction of two ancient rock shelters in
Australia this year cost three Rio Tinto PLC executives their jobs.
Now, the global miner has promoted another insider, Jakob
Stausholm, to CEO as it battles to repair its reputation with
investors, lawmakers and indigenous groups.
Among the decisions facing Mr. Stausholm when he steps up from
the chief financial officer role on Jan. 1, is how to rebuild trust
with the traditional owners of the Juukan Gorge caves that were
destroyed by Rio Tinto on May 24 as part of an expansion of a big
iron-ore mine in Western Australia.
Rio Tinto, the world's second-largest listed mining company by
market value, must decide whether it wants to join with Chinese
companies in a big African iron-ore development that could make its
existing mines in Australia less profitable should the project
weaken global iron-ore prices. Mr. Stausholm, a Danish citizen,
will also need to steer the challenging expansion of a copper mine
in Mongolia.
Chief Executive Jean-Sébastien Jacques was ousted amid the
fallout from the destruction of ancient rock shelters, which
contained a trove of artifacts that indicated they had been
occupied by humans more than 46,000 years ago. He will leave Rio
Tinto at the end of March.
"I am...acutely aware of the need to restore trust with
traditional owners and our other stakeholders, which I view as a
key priority for the company," Mr. Stausholm said in a
statement.
A government inquiry report this month recommended Rio Tinto
negotiate a restitution package with the traditional owners of the
Juukan Gorge, the Puutu Kunti Kurrama and Pinikura people, or
PKKP.
It also made recommendations for the mining sector of Western
Australia state more broadly, reflecting how the fallout from that
calamity is reverberating throughout the industry. Australian
lawmakers handling the probe have called on miners to review
agreements with traditional owners, stop using contracts that limit
those groups' ability to disagree publicly with decisions and to
hold off on requesting new heritage consents until local laws are
strengthened.
"As an investor, we are closely watching how Rio's board and its
senior leadership take action to improve governance and oversight
and respond to the very substantial recommendations of the
parliamentary inquiry," Debby Blakey, chief executive of Hesta, an
Australian pension fund, said following Mr. Stausholm's
appointment. "Investors have an expectation of significant and
lasting change."
Rio Tinto, whose headquarters is in London, had faced pressure
from Australian lawmakers to appoint an Australian successor to Mr.
Jacques, given the company generates the bulk of its profits in the
country. Some analysts and investors had speculated that Rio Tinto
would try to attract an executive from rival miners, while others
had suggested the miner should look outside of the resources
industry for its next leader.
Mr. Stausholm, who joined Rio Tinto in 2018, has shown he can
build effective relationships and has a strong, personal commitment
to sustainable development, Rio Tinto Chairman Simon Thompson
said.
"His blend of strategic and commercial expertise, strong values
and a collaborative leadership style are the ideal qualities for
our next chief executive," said Mr. Thompson.
RBC Capital Markets called the appointment a clear positive,
saying that Mr. Stausholm's firsthand knowledge of the company
would help management navigate a difficult phase.
"We think his understanding of what's come before and especially
of what needs to happen following the last six months will help Rio
to re-emerge, " it said.
Rio Tinto also highlighted Mr. Stausholm's central role in
strengthening the miner's balance sheet and boosting returns to
shareholders. Mr. Stausholm--a former finance chief at A.P.
Moeller-Maersk A/S who also worked at Royal Dutch Shell PLC for two
decades--will take the reins at Rio Tinto at a time when prices for
iron ore are booming on roaring Chinese demand. Rio Tinto is one of
the world's biggest sellers of that commodity, alongside Brazil's
Vale SA.
Prices at a roughly eight-year high are expected to boost
profits for the company, whose Australian iron-ore operations
typically record margins of more than 60%.
"Rio Tinto's purpose is to produce the materials essential to
human progress and I remain deeply committed to this after the
difficult times we have faced during 2020," said Mr. Stausholm.
Write to Rhiannon Hoyle at rhiannon.hoyle@wsj.com
(END) Dow Jones Newswires
December 17, 2020 05:52 ET (10:52 GMT)
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