LONDON – (Reuters) – Mining companies were too slow to respond to changing investor demands from mid-2011 as sentiment deteriorated, failing to spot the wave of change which eventually swept out a generation of executives, the former boss of miner Rio Tinto said on Tuesday.
“We didn’t react fast enough,” said Tom Albanese, chief executive of Rio Tinto (RIO.L) (RIO.AX) until he was ousted in January – one of a string of executives toppled by writedowns at the world’s largest mining firms, as boom-year deals soured.
Recalling Rio’s half-year earnings, released in August 2011, Albanese told an industry gathering that the company had felt at the time that it was announcing positive numbers. Indeed, it reported record cash flow and record profits.
Investors, though, were watching screens “filled with red”, he said, and the mining group’s shares fell. Instead of demanding more growth, investors had begun to feel nervous.
“It felt like panic was setting in… We said this is not us, this is not our problem. We should have said this is us, this is our problem,” the U.S.-born mining veteran said, in one of his first public appearances since his departure from Rio.
“At that point the sentiment changed very quickly – a matter of three weeks – and it never turned. It probably took us 18 months to get that.”
Albanese left Rio in January 2013, ending his six-year tenure at the top after the world’s third-largest mining company announced a $14 billion writedown almost entirely on the value of his two most significant acquisitions, the Alcan aluminum group and Mozambican coal.
The deal to buy Mozambique-focused coal miner Riversdale – pursued as Rio came under pressure to move into what was seen as the next coking coal frontier – completed in June 2011, just months before the turning point Albanese identified.
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