Rinehart gets on board Melbourne’s campaign to lure Rio home – by Stephen Mayne (Crikey.com.au – April 8, 2013)


It’s not often that Stephen Mayne and Gina Rinehart agree. But they’ve found common ground in urging mining giant Rio Tinto, which has recently slashed its Melbourne workforce, to relocate its headquarters from London to Australia.

Should capital cities get into the business of trying to persuade multi-nationals to shift their headquarters to Australia?

That’s what City of Melbourne is doing tomorrow night as we debate a 10-page motion outlining the case for Rio Tinto to shift its 700-strong London head office to one of the major Australian capital cities.

The Australian Financial Review ran with the story on Saturday but we’re still yet to hear a peep out of the Herald Sun or The Age, even though the motion reveals Rio Tinto has almost completed slashed staff numbers at its Collins Street office in Melbourne from 300 to as little as 25.

The AFR was right to point out Rio Tinto retains 200 staff at an R&D facility at Latrobe University, but they were wrong in quoting an unnamed resources analyst saying the headquarters move was “highly unlikely given 80% of Rio Tinto”s investor base were also located in the UK”.

Rio Tinto is one of only a handful of so-called dual-listed companies which has separate share registers and listings in two jurisdictions, but common boards, dividends and financial results.

At the moment Rio Tinto Ltd, which trades on the ASX, has 435 million shares on issue or 23.4% of the 1.86 billion in total shares. The other 1.425 billion shares are indeed traded in the UK on the London Stock Exchange as Rio Tinto PLC. But, like with many global companies listed in the UK, there is not a single UK-based shareholder that is big enough to be classified as “substantial” and disclosed in the annual report.

This is how the largest shareholders of Rio Tinto’s UK stock line up from page 130 of the latest annual report:

Shining Prospect (Chinese government through Chalco): 12.7%
Capital Group (LA-based fund manager): 8.9% in total across two holdings
Blackrock Inc (New York-based fund manager): 8.38%
Axa SA (French insurance giant): 4.86%
These offshore shareholders don’t give a fig where Rio is based, as long as the returns are good. And if you then look at the number of retail shareholders in the annual report, there are only about 45,000 in the UK versus 220,000 in Australia.

The reason I’m confident this campaign will succeed is that the likes of Gina Rinehart, Peter Costello and some former Rio Tinto directors are all on board. Now is the time to strike after the recent appointment of former Transurban CEO Chris Lynch as Rio’s London-based CFO.

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