Rinehart ventures off Rio agenda
LONDON: Mining magnate Gina Rinehart's wish for Rio Tinto to approve swiftly more joint ventures with her company appears unlikely to be granted any time soon, judging by comments from the chief executive of Rio Tinto, Sam Walsh.
Mr Walsh indicated that an expansion of Rio Tinto's highly successful iron ore joint venture with Ms Rinehart's Hancock Prospecting was not on his immediate agenda, despite Ms Rinehart suggesting upon his appointment that three new mines around Hope Downs were "convenient for early development" and should be committed to in a "timely manner".
The two companies had developed three mines at Hope Downs in the Pilbara, but Mr Walsh said more work to prove deposits would be needed before any new mines could be commissioned.
"We have works underway in terms of development, the drilling work and other work before you can make any decisions," he said.
Rio Tinto was going through a cost-cutting phase and wanted to trim capital spending, and Mr Walsh said Ms Rinehart also had plenty to occupy her at the moment.
"Gina is also working on her own project, the Roy Hill project, and clearly there needs to be a balance for her in terms of what we physically bring forward because she will need to finance everything that goes on ... so for us it's a balance, and with her it's a balance."
Speaking from a suite in a building on the banks of the Thames, Mr Walsh showed no sign of acting upon Ms Rinehart's other suggestion: that he move Rio Tinto's headquarters from London to Perth.
His comments followed the reporting this week of Rio Tinto's first loss after being savaged by $US14.4 billion ($13.9 billion) in writedowns.
On Thursday night, Rio Tinto delivered a $US2.99 billion loss for last year, though underlying earnings were above consensus forecasts at $US9.3 billion. Rio Tinto's Australian-listed shares on Friday ended down 2.7 per cent at $70.15.
For now Mr Walsh appeared intent on steadying the ship and "turning around" the under-performing divisions within its ranks.
"The strategy is unchanged ... but under my leadership there will be changes in the way we implement the strategy and that relates to the focus of the organisation, the discipline, how people take accountability and the fact I want people to act like business owners," he said.
The coal, aluminium and uranium divisions would bear the brunt of the $5 billion worth of costs and divestments that would be stripped out over the next two years, he said, but he warned that no part of the business was immune.
The cost-cutting drive would be helped by the fact the mining sector was already a cheaper place to do business than it was at the peak of the boom several years ago, he said.
And there appeared to be little prospect of Mr Walsh adding a new commodity to Rio Tinto's books. "There are no acquisitions that I'm working on. One can never say never, I've learned that in business, but there's nothing on my radar screen. My focus will be on delivery of value to shareholders," he said.
But Mr Walsh went out of his way to highlight the tensions between his company and the Mongolian government over the development of Rio Tinto's key growth project: the Oyu Tolgoi copper and gold mine.
The government wanted a bigger stake in the project, and was also reportedly concerned about the rising cost of development at the mine.