Rio Tinto board renewal urged
RIO Tinto has been urged to get more mining experience onto its board, in a bid to ensure that decisions over 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 in advance of Rio's annual 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 Rio Tinto 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, including the appropriate skill, mix and breadth and depth of relevant experience, 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 about board renewal, the advisers said they would support all but one of the motions at the coming AGM, including new executive remuneration terms.
Rio is in the middle of a major divestment campaign, and The Wall Street Journal reported this week that both Macquarie and Deutsche Bank had been hired to find buyers for several Australian assets.
The sell-off reportedly includes numerous thermal coal assets across Queensland and NSW, along with the Northparkes copper and gold mine in outback NSW.