Rio Tinto CEO Tom Albanese fired over $14bn debacle
Biggest shock for investors was $3bn being struck from value of mines bought recently for $3.7bn
A MASSIVE write-off by mining giant Rio Tinto yesterday lead to the sudden exit of long-serving chief executive Tom Albanese. Rio told investors that key assets were worth $14 billion less than the value the company was carrying on its books.
The biggest shock for the market was the news that $3 billion had been struck from the value of coal mines acquired for $3.7 billion less than two years ago. A further $10 billion was taken off the value of the Alcan aluminium business.
Albanese, who has served at Rio for 30 years, and his head of strategy, Doug Ritchie, both stepped down without a payoff, The Times reports under the headline: 'Rio chief is shown the door after one mistake too many'.
The two men were also forced to forfeit their 2012 and 2013 bonuses and millions in share options earned in past years. However, it is understood Albanese will retain £10.7 million in share options awarded between 2003 and 2007, says the Daily Telegraph.
Explaining the failed investments, Rio Tinto said coal assets in Mozambique were hit by unexpectedly high costs for developing infrastructure around the mines. Rio was also refused permission to ship coal on barges down the Zambezi river.
The decline in the value of Alcan was down to poor timing by Albanese - Rio bought at the very peak of the aluminium market.
According to The Times, Sam Walsh, head of Rio¹s profitable iron ore business, was "immediately parachuted in" to replace Albanese.