“I’m happy to stay on, as long, or short, as the board wants,” says Rio Tinto boss Sam Walsh. “It is one of those things I’m sure we’ll look at during next year.” Photo: Dan Kitwood
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Rio Tinto chief executive Sam Walsh is fast developing a reputation for under-promising and over-delivering.
But after delivering the mining giant’s latest impressive earnings results and the promise of bigger shareholder returns, investors are turning their minds to the question of how long Mr Walsh might stick around for.
Tongues have been wagging that change among the top brass could be afoot since the surprise news on Wednesday that Rio chairman Jan du Plessis will take on the role of chair at brewing giant SAB Miller.
He will take on this second high-powered role next July, and some are speculating that he will step down from the helm at Rio the following year. Chairing a company in as great a state of flux as SAB Miller will no doubt be very hands-on.
Mr du Plessis’ final - and monumental - task at Rio could be to orchestrate a changing of the guard if Mr Walsh were to step down at next year’s annual general meeting.
Speaking after the release of Rio’s impressive interim results on Thursday evening, Mr Walsh said his leadership was likely to be looked at next year.
“I’ve indicated to board, I’m happy to stay on, as long, or short, as the board wants,” he says.
“I think we are delivering results, I think they (the board) are happy with how things are progressing.
“It is one of those things I’m sure we’ll look at during next year.”
His chairman was committed to Rio and had indicated he wanted to serve on the board for “several more years”, Mr Walsh said.
And of the new role at SAB Miller, Mr Walsh said: “I don’t think we should read anything into that except for the fact that Jan is a very capable guy.”
Result beat expectations
Rio posted first-half underlying earnings of $US5.1 billion ($5.5 billion) on Thursday afternoon, streaks ahead of analyst expectations.
Falling iron ore prices were in part offset by Rio’s huge increase in iron ore production, as it races towards nameplate production of 360 million tonnes a year.
Speaking to analysts after posting Rio’s interim result, Mr Walsh dismissed suggestions that the miner should pare back its aggressive volumes drive in the face of spiralling iron ore prices. Iron ore has lost about 25 per cent this year to hover at about $US96 a tonne.
Mr Walsh said prices had stabilised at between $US95 and $US100, and pointed to Rio’s industry-leading cash costs of about $US20 a tonne.
“We are expecting 125 million tonnes of capacity to come off in China, and we are seeing a number of juniors around the world starting to get the wobbles,” he says.
“We are in a very good place…now is not a time for the best iron ore producer in the world to take a step back.
“Now is the time for others to really feel the consequences of price against their operating costs and for them to make decisions.”
The Rio chief also pointed to an easing of credit tightening in China, and said stockpiles of both steel and ore were being whittled down.