- Destruction of the Juukan rock shelters in May 2020 takes toll on Rio’s Senior Management.
- CEO J-S Jacques steps down, successor to be identified, and Chris Salisbury – CEO (Iron Ore) stepping down with immediate effect and leave the Company on 31 December 2020.
- Rio shakeout now strongly demonstrates the growing ESG considerations among the investing community
- Rio inked a Memorandum of Understanding (or MoU) with Turquoise Hill Resources
Rio Tinto Limited (ASX:RIO) finally comes under the investors and community pressure with the iron ore behemoth now taking stringent actions for the destruction of the Juukan rock shelters in May 2020.
After conducting an internal review and deciding to trim bonuses of higher executives, Rio has now announced a change in to brass with many senior executives stepping down from their executive roles.
To Know More, Do Read: Rio Tinto Identifies Shortfall in Internal Heritage Management
Rio’s Executive Changes
The Company stated that post engaging extensively with shareholders, Traditional Owners of the cave, Indigenous leaders of the aboriginal community, and other stakeholders leading to the identification of concerns related to executive accountability for the failings have been identified.
CEO J-S Jacques has decided to step down from his role by mutual agreement, and Rio mentioned that a process to identify his successor is underway.
However, J-S Jacques would remain in position till the appointment of his successor or till 31 March 2021, whichever is earlier, ensuring business continuity and maintenance of the group’s global operations in the COVID-19 landscape.
Apart from this many other changes have been brought forward by the Company on a senior executive level with Chris Salisbury – CEO (Iron Ore) stepping down with immediate effect and leave the Company on 31 December 2020.
- Mr Salisbury has come under the radar for the expansion of the iron ore business in the Pilbara region which eventually led to the destruction of Juukan rock shelters.
- Furthermore, Ivan Vella, MD – Rail, Port & Core Services within the iron ore business would replace Mr Salisbury on an interim basis, following a handover period.
On the level of corporate relations, CEO Simon Niven would also step down while leaving the group on 31 December 2020 post completing an orderly transition of her responsibilities.
As informed by the Company recently, Rio is undertaking the establishment of a new Social Performance assurance function, which would directly report to the group executive – Mark Davies (HSE Technical and Projects).
Moreover, to enhance the engagement of the Board in Australia, the Company has appointed Simon McKeon (non-executive director) as a Senior Independent Director with immediate effect.
As per the Company, this newly created Board would complement the existing Senior Independent Director role performed by Sam Laidlaw for Rio Tinto plc.
Words from the Chairman
The Chairman – Simon Thompson mentioned to stakeholders and admitted that what happened at Juukan was wrong while ensuring that the destruction of the heritage site of such exceptional archaeological and cultural significance would never occur.
Furthermore, Mr Thompson also suggested that the Company is determined to improve its relation and trust with the Puutu Kunti Kurrama and Pinikura people and other traditional owners.
Growing ESG Considerations Among The Investing Community
Rio shakeout now strongly demonstrates the growing ESG considerations among the investing community with major shareholders demanding strong actions by the group over the blasting of indigenous caves.
The importance of Economic, Social, and Governance (or ESG) is taking strong roots across the globe with many investors avoiding companies engaged in works which could trigger social unrest or staying away from companies having issues in internal management.
To Know More, Do Read: How ESG Consideration Rings Bell In Assessing The Quality of A Mining Stock?
For example, sectors such as coal, cobalt, which have attracted government interference and caused massive unrest across the globe have been witnessing a considerable loss in investment from many large institutional investors.
To Know More, Do Read: BHP’s High ESG Considerations Kept Coal And Cobalt Out Of The Company’s Portfolio
Funding Plans for Oyo Tolgoi
In a separate announcement, Rio suggested that the Company inked a Memorandum of Understanding (or MoU) with Turquoise Hill Resources, enabling a runway in order to progress the funding to wrap up the Oyo Tolgoi Underground Project.
Some of the significant terms of the agreement, acceptable to both parties, includes.
- Re-profiling of principle debt repayments with lenders under existing project financing arrangements, for better alignment with the revised mine plan, project timing, and cash flows; and,
- Raising of $500 million in additional lending under the existing project finance arrangements.
The stock of the Company last traded at $103.73 (as on 14 September 2020), up by 3.8 per cent against its previous close on ASX.