Jan.17 - Global miner Rio Tinto has already appointed a new chief following colossal writedowns but it could be too soon, and it's one of many departures in the mining sector. Joanne Nicholson reports
It seems Rio Tinto has been losing money hand over fist - on coal investments in Mozambique. And on the purchase of Canadian aluminium company, Alcan. The mining giant's CEO has resigned but many think that could be premature. Alpesh Patel is a global investor at Praefinium Partners SOUNDBITE English ALPESH PATEL, PRAEFINIUM PARTNERS, SAYING: "Off the back of iron ore prices, which make up about 70 percent of the company's business worldwide, and the iron ore prices bumping up, global GDP outlook more positive, I suspect it's going to have a new 52 week high this year." The global mining giant's write down of assets totalled $14bn dollars. $3bn of that is from the acquisition of Coal Mozambique which it bought in 2011 for $4bn. The rest was linked largely to falling aluminium prices. But Rio has already appointed a successor to Tom Albanese - Rio's head of iron ore, Sam Walsh. Kevin Allison is from Reuters Breaking Views SOUNDBITE English KEVIN ALLISON, REUTERS BREAKING VIEWS, SAYING: "I think that rushing a new CEO appointment and making Sam Walsh the permanent new chief executive, perhaps missed an opportunity for a more in depth examination of what went wrong with these two acquisitions and not just with the top management but other aspects of Rio's internal culture." Albanese is just the latest in a spate of executive exits in the mining world Cynthia Carroll is standing down at Anglo American following a sharp drop in profits. Xstrata's Mick Davis is seeking new employment after the merger between his firm and Glencore. And Marius Kloppers, BHP Billiton chief executive is set to leave after the group wrote down $2.84bn of gas assets. SOUNDBITE English KEVIN ALLISON, REUTERS BREAKING VIEWS, SAYING: "You've gone through probably the most intensive phase of Chinese demand for raw materials, pushing up prices and profits for the last decade. Now it's moving on into arguably a more boring phase of retrenchment, cost control, volume discipline, where those are the things that are going to push mining company returns rather than just growing for growth." Despite the massive write-down, Rio's shares didn't drop much after the announcement. Investors clearly see value in the company long term.