Former Xstrata CEO Mick Davis may become Rio Tinto new chairman
Former Xstrata chief executive Mick Davis, the current leader of Britain’s ruling Conservative Party, is said to be the frontrunner to become Rio Tinto’s new chairman.
Davis could face competition from internal candidates, including former head of UK gas company Centrica, Sam Laidlaw, now part of Rio’s board.
Davis is a well-known name in the mining industry as he led Xstrata from a $500 million-business in the early part of the last decade to an operation so big that — at one point — it made a takeover offer for Anglo American (LON:AAL).
In 2012, he sold Xstrata to Glencore (LON:GLEN) and ventured into setting up X2 Resources, a mining fund that was unable to score any deals in the three years since launch.
Some believe Davis could face competition from internal candidates, such as Sam Laidlaw, the former head of UK gas company Centrica, who now sits on the Rio board. The other name that has been touted as a potential chairman is Simon Thompson’s, a former banker and mining executive also part of Rio’s board.
Others, such as Reuters’ columnist Clara Ferreira Marques, argue that dismissing Mick would be a mistake, and she gives three sound reasons:
First, the industry needs to reinvent itself and Davis has shown vision. He ran Xstrata much as a private-equity investor would. That was before many others in the industry had switched their focus from digging up as much metal as possible to generating solid returns on equity.
Second, he would have valuable industry expertise. That experience at the literal coalface is unusual for big miners. And third, he is a strong personality who could hold the chief executive and his team to account. That sounds like a valuable mixture.
Rio Tinto (ASX, LON:RIO), the world’s second largest mining company, has been looking for a new chairman since March this year, but the search has proven to be more difficult than originally thought.
Rio is also looking for a new finance director to replace Chris Lynch.
To make things worse, John Varley, the non-executive director tasked with finding a replacement for Jan du Plessis, had to step down in June, as he was charged in the UK with fraud over his time as chief executive of Barclays.
Three months later, chief financial officer Chris Lynch announced he was also retiring this year. Under his direction, Rio cut debt significantly and, in February, it was able to post its first gain in annual profit since 2013.
Chief executive officer Jean-Sébastien Jacques, who took the helm in July last year, has since then replaced nearly all of the top executive team as he dealt with the aftermath of a series of probes. Those investigations included an inquire into a questionable payment made to an external consultant over the Simandou iron ore project in Guinea, and a $3bn write-down on a mine in Mozambique.
Ann Godbehere, the Rio board member who is now leading the search for a new chairman, has said the new leader’s name would be announced before the end of the year.
Rio Tinto’s stock fell in Australia on Monday, closing almost 1% lower to A$73.04. In London, shares were 1.82% down to 3,627p at 2:46PM local time.