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Rio Tinto advised to beef up its board

Rio Tinto has been urged to get more mining experience on its board to ensure decisions on how and where to mine are properly scrutinised.
By · 6 Apr 2013
By ·
6 Apr 2013
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Rio Tinto has been urged to get more mining experience on its board to ensure decisions on how and where to mine are properly scrutinised.

After more than $US20 billion worth of impairments over the past 14 months at Rio, the British arm of proxy adviser CGI Glass Lewis has called for the company to review the composition of the board, led by South African Jan du Plessis.

"We remain concerned with the apparent lack of core industry experience and strategic geographical diversity among the independent element of the board," said Glass Lewis, in its report before Rio's annual general meeting for British shareholders on April 18.

The adviser acknowledged Rio's board had good measures of legal, accounting, business and finance skills, but said there was a risk that too few directors could speak with authority on mining issues.

"We believe that additional independent directors with core industry expertise would provide an informed 'check and balance' with management on issues specific to this group's industry," the report said.

"In the absence of non-executive directors well-versed in the resources sector, there is also a risk that management could have a heavy - and unchecked - hand in setting strategy. Given the magnitude of the impairments and asset write-downs by the group in recent years, the need for the board to review its composition ... is of particular importance in ensuring effective oversight over strategic management decisions."

Rio boasts several Australians, notably Mike Fitzpatrick and Chris Lynch, on its board.

Despite the comments, the advisers said they would support all but one of the motions at the upcoming AGM, including new executive remuneration terms.

Rio is in the middle of a major divestment campaign. The Wall Street Journal reported this week Macquarie and Deutsche Bank had been hired to find buyers for several Australian assets, reportedly including thermal coal assets in Queensland and NSW, and the Northparkes copper and gold mine in NSW.
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