The mining industry has been shaken by what’s been described as a “surprise resignation.” But it doesn’t look like a surprise -- or a resignation. Tom Albanese has lost his job as CEO of mining giant Rio Tinto Zinc after the company wrote off $14 billion.
Albanese has been under a cloud for some time since he became the boss of the world’s second biggest mining company in 2007. In that year he engineered the takeover of U.S. aluminum company ALCAN. It proved a financial disaster -- Albanese paid top dollar at the height of a raging bull market and aluminum prices have since plunged. Rio Tinto has written off almost a third of the purchase price.
But Albanese is being blamed for another more recent ill-fated acquisition, a coal mining company focused on Mozambique. That’s cost another $3 billion in write-downs.
"I think Albanese had come to the end of the road," says Rupert Nathan of financial services group Fat Prophets. "This latest impairment they’ve announced was the final straw. That was it. He had to go."
Ironically, Albanese is leaving just as things are beginning to look up for the mining industry. Iron ore prices have picked up as China’s prospects have improved.