BackRio Tinto replaces Sam Walsh with former Tata Steel strategist as CEO
44-year old Jean-Sbastien Jacques will be the first copper man in decades to run a group that depends on iron ore for almost 90% of its earnings
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Sydney: Rio Tinto has named its copper and coal division head, Jean-Sébastien Jacques, as its chief executive, replacing veteran Sam Walsh and marking a shift for the Anglo-Australian mining major that has long focused on iron ore.
Walsh, 66, was placed at the helm three years ago after the abrupt ousting of Rio’s then boss Tom Albanese. A former auto industry executive, Walsh was elevated from the iron ore division he ran. He was considered a safe pair of hands to steer the company at a time when it was battling the fallout of a string of costly investments gone sour.
While Walsh did drive down production costs of Rio’s main commodity iron ore, the company ran into troubled waters with the toughest mining downturn in decades and slumped to a net loss for 2015. Most recently, bowing to pressure from investors and rating agencies, he scrapped Rio’s long-standing dividend policy, which it had promised never to cut.
He had been expected to move on this year from the world’s second-largest miner, though investors and analysts had been divided on a likely replacement.
The 44-year old Jacques, praised by analysts for running tough assignments such as Rio’s Oyu Tolgoi project in Mongolia, will be the first copper man in decades to run a group that depends on iron ore for almost 90% of its earnings.
Rio has in recent months faced calls from investors to rebalance as iron ore prices and the steel industry languish, by pushing more into later cycle commodities like copper.
“The board has decided that J-S is the right person to lead Rio Tinto in an increasingly complex world filled with both challenges and opportunities for our industry," Rio Tinto chairman Jan du Plessis said on Thursday.
New blood
Jacques’s strategic and negotiating skills, analysts and investors said, would place the company well in considering any deals. With many mid-sized and even large rivals struggling, billions of dollars worth of mines have come up for sale.
“Clearly the board wanted some new blood. Sam was very risk averse and very critical of the direction that Rio had taken in the past in terms of the investments it made," analyst Hunter Hillcoat at Investec in London said.
“Perhaps the change reflects the board’s intention to reach middle ground."
Jacques, who worked on the strategy team at Tata Steel before joining Rio in 2011, led negotiations over a $4.4 billion financing agreement necessary for an expansion of the giant Oyu Tolgoi copper mine in Mongolia.
“It’ll be interesting to see how he approaches things," said Brenton Saunders, a portfolio manager at BT Investment Management, which owns Rio Tinto shares.
“Every time you have a discussion with him, you certainly get the impression that he thinks out of the box and that he’s not your conventional kind of CEO."
Analysts speculated on Thursday that the arrival of a copper boss could signal a harder intention to look at copper and other deals. Copper and coal currently account for just 6% of profit.
Walsh has made no secret Rio Tinto would consider copper acquisitions at the right price, but had moved with caution.
“Rio Tinto must now be about more than just cost-cutting," analysts at Sanford Bernstein said in a note.
“We think that this move to appoint Jacques speaks to greater strategic focus and an M&A agenda, and as such contextualises the recent dividend cut."
Jacques will join the board and become deputy chief executive with immediate effect, the company said in a statement. He takes the helm in July. Reuters
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