RIO’s Sam Walsh has announced his retirement, from WSJ:
Rio Tinto PLC said Chief Executive Sam Walsh will retire in July, a surprise that comes as the mining giant and its peers look for a way out of a prolonged commodity slump.
Investors cheered the change, sending shares up 3.7%. Rio said Mr. Walsh will be replaced as of July 2 by the miner’s copper boss, Jean-Sébastien Jacques, named deputy CEO in the interim.
Although Rio slumped to an $866 million loss last year, the 66-year old Mr. Walsh has been widely credited with turning around its fortunes in his three years on the job, mainly by cutting costs and investment after several years of heavy spending on failed acquisitions.
While many of its peers continue to slim down, Rio has shown early signs of switching gears even as metals prices hover near multiyear lows. The Anglo-Australian miner has approved a bauxite project in Australia and lined up financing to expand a Mongolian copper mine—a process spearheaded by the 44-year old Mr. Jacques.
Walsh took control of RIO’s iron ore division in 2004 so he could be blamed for the entire bust having been a key mover of the market into massive oversupply. He was slow to ramp up supply then misjudged the durability of Chinese demand and overdid it so can be held to account for that.
But overall his strategies were all spot on. Increasing supply was going to come from somewhere so it should always have been RIO doing it given it’s go the best and cheapest ore. It delivered on time and on budget too.
That’s the thing that everyone seems to have forgotten in the commodity price mania. It’s a lousy business to be in: capital intensive, low margin, price-taking and volatile. Given those tenets, our Sam acted rationally throughout.
Iron ore was always going to fall back to the marginal cost of production, and the marginal cost itself was always going to fall as well. Sam has exaggerated both but he didn’t create the pulses. He did OK.
