Rio Tinto (RIO) and BHP Billiton (BHP) will both be changing chair’s in the next year after Rio chairman was named as chair of British telco, BT.
His decision to quit (he will still nominate for the board at April and May’s annual meetings of the London and Australian listed companies) follows the decision by BHP chair, Jac Nasser to step down at this year’s AGM after revealing plans to retire last October.
Rio said Thursday night that independent director John Varley is leading the process to appoint a new chairman. A successor is expected to be announced before the end of 2017, with Mr du Plessis retiring as chairman by no later than the 2018 annual general meeting in Australia.
Jan du Plessis has spent eight years chairing Rio, helping drag it from the self-inflicted damage caused by the over priced takeover of Alcan in 2007 – on the eve of the GFC.
There were two booms and two collapses in commodity prices and the $4 billion Mozambique coking coal mine disaster which saw the then CEO Tom Albanese and another senior executive walk the plank over the deal which saw most of the $4 billion written off.
Rio was only saved after the GFC by asset sales, cost cutting and a link up with Chinalco, the Chinese aluminium group. The company the had to ride out the price and demand collapse of iron ore, coal, aluminium and related commodities and copper from 2013 to midway through last year which saw more cost cutting and job losses.
During his eight-year stint as chairman, Mr du Plessis launched a $1US5 billion rights issue to repair Rio’s balance sheet (and abandoned the company’s generous ‘progressive dividend policy) and saw off a takeover approach from Glencore.
But last year he triggered a major multi-national investigation into a suspect $US10.5 million payment to a consultant over the Simondou iron ore project in Guinea.
That saw two senior executives depart and a cloud placed over the head of the former CEO, Sam Walsh (who oversaw the survival of the company’s cash cow, the Pilbara iron ore mines) that remains unresolved, as does the investigation. The Australian federal Police officially joined the investigation into the payment this week.
To leave Rio with considerable uncertainty about the circumstances of that payment, the true involvement of the executives and especially Mr Walsh uncertain, is very odd.
The Financial Times broke the story of Jan du Plessis’ move to chair BT yesterday morning.
BT holds its AGM in London in July and the current chair, Sir Mike Rake will be leaving with a cloud over his head, the board and the company’s senior managers.
BT shares are down more than 30% over the past year thanks to an incredible accounting scandal at its Italian division involving 530 million pounds (instead of around 145 million) of alleged fraud, a profit warning about its government contracts and a failure to resolve a long-running argument with UK media and telecoms regulator Ofcom over the future of BT’s Openreach division.
And Mr Nasser leaves with a major stain on his time at the head of the world’s biggest miner – the Samarco disaster in Brazil which killed 19 people and injured dozens more. The full cost has yet to be determined. He wanted to quit a year earlier but stayed on to see BHP through the worst of the fallout from Samarco, a big difference to his Rio counterpart.
He has been through a similar situation at BHP as Rio’s chairman as the company dealt with the aftermath of the GFC, the investment and final China boom, the slid in prices and demand, intensive cost cutting, over $US20 billion wasted on dud investments in the US shale gas sector, job cuts, asset sales and the abandonment of its progressive dividend policy (which meant dividends would rise each year).
BHP has emerged from the black hole in solid shape and more and more analysts are talking a credit ratings upgrade for the miner. It has started investing again in oil in the Gulf of Mexico and wants a major copper purchase under its belt as well.
BHP shares fell sharply yesterday as investors reacted to a slide in iron ore and coal prices, a change in Chinese government coal mining policy and the slump in global oil prices on Wednesday night. The shares lost nearly 5% to end at $23.97. Rio Tinto shares fell 2.5% to $59.85 after iron ore prices fell more than 3%.
