Rio Tinto Extends CEO Sam Walsh's Term
Mining giant Rio Tinto (LSE:RIO) (ASX:RIO) (NYSE:RIO) has announced it will retain the services of CEO Sam Walsh next year and beyond after his fixed-term retirement date was replaced with a long-term, open-ended contract.
The uncertainty around the CEO’s position at the company fueled speculation that an impending boardroom implosion would make Rio Tinto vulnerable for a takeover.
Walsh, 64, was due to end his contract in December 2015 but Rio Tinto said the “decision to extend his tenure has been an easy one for the board.”
“For quite some time, Sam has made no secret of the fact that he loves his job and would like to continue well beyond next year,” said Rio Tinto chairman Jan du Plessis. “Given his performance and his enthusiasm to continue in the role, the decision to extend his tenure has been an easy one for the board.”
According to Plessis, Chris Lynch, chief financial officer, would also have his fixed term retirement date replaced by a long-term, open-ended commitment to the company.
“Since their appointments early last year, Sam and Chris have led a transformation of the business and established a track record of delivering on their promises.”
He added, “Rio Tinto has increased cash flows from operations, achieved significant operating cash cost improvements, reduced net debt and refocused capital expenditure on projects with the most compelling returns.”
Walsh joined Rio Tinto in 1991, replacing Tom Albanese as chief executive in 2013.
Global iron ore production to recover by 5.1% in 2021
Global iron ore production fell by 3% to 2.2bnt in 2020. Global production is expected to grow at a compound annual growth rate (CAGR) of 3.7% to 2,663.4Mt between 2021 to 2025. The key contributors to this grow will be Brazil (6.2%), South Africa (4.1%), Australia (3.2%) and India (2.9%). Key upcoming projects expected to commence operations include South Flank in Australia (2021), Zulti in South Africa (H2 2021), Serrote Da Laje in Brazil (H2 2021) and Gudai-Darri (2022), according to GlobalData, a leading data and analytics company.
Vinneth Bajaj, Associate Project Manager at GlobalData, comments: “Declines from Brazil and India were major contributors to the reduced output in 2020. Combined production from these two countries fell from a collective 638.2Mt in 2019 to an estimated 591.1Mt in 2020. The reduced output from the iron ore giant, Vale, was the key factor behind Brazil’s reduced output, while delays in the auctioning of mines in Odisha affected India’s output in 2020.
“Miners in Australia were relatively unaffected by COVID-19 due to effective measures adopted by the Australian Government, while a speedy recovery in China led to a significant 10.4% increase in the country’s iron ore output.”
Looking ahead, the global iron ore production is expected to increase by 111.3Mt to 2,302.5Mt in 2021. Rio Tinto is expected to produce up to 340Mt of iron ore, while BHP has released production guidance of 245–255Mt, supported by the start of the Samarco project in December, which is expected to produce between 1–2Mt.The company has retained its guidance for Australian mines at 276–286Mt on a 100% basis, due to scheduled maintenance work at its ore handling plant and tie-in activity at the Area C mine and South-Flank mine.
Bajaj added: “The remaining companies are expected to produce more than 600Mt of iron ore, including FMG, whose production is expected to range between 175–180Mt supported by its Eliwana mine that commenced operations in late December 2020, and Anglo American, which is expecting to produce between 64–67Mt. Vale is expected to resume 40Mt of its production capacity, taking its overall production capacity to 350Mt in 2021, with production guidance of 315-335Mt.”