Walsh’s steely resolve for change of culture helps Rio Tinto turn around – by Andrew Burrell and Paul Garvey (The Australian – January 4, 2014)


SOON after arriving in London a year ago to begin his reign as chief executive of Rio Tinto, Sam Walsh took a stroll from his Kensington home to check out an antiques fair at nearby Sloane Square.

The avid collector of milk jugs — he has more than 350 of the cherished antiques stashed away in his other house in Perth — was in his element as he prepared to browse the collectables. “I walked up to the very first stand and picked up a Royal Worcester milk jug,” recalls Walsh. “And the lady looked at me and said, ‘Australian accent, interested in milk jugs, we know who you are — we’ve been expecting you!’ ”

Walsh roars with laughter when telling the story, partly because he cheerfully revels in the fact his passion for delicate milk jugs breaks all the stereotypes of the knockabout mining industry. But he knows too that it’s much harder to be anonymous — even at an antiques fair — when you’re running one of the biggest companies in one of the world’s financial capitals.

It’s even harder, it may be suggested, when you’re trying to lead the turnaround of a company that had spectacularly lost its way under predecessor Tom Albanese, culminating in more than $US14 billion in writedowns as a result of the failed 2007 acquisition of Canadian aluminium producer Alcan and the disastrous takeover of African coal play Riversdale Mining in 2011.

Walsh was elevated to the top job in January last year after having run Rio’s dominant iron ore division in Perth since 2004, a period in which he oversaw enormous growth driven by China’s record-smashing appetite for the steelmaking commodity.

His legacy of expansion and innovation in the Pilbara operations is undeniable. In the six months to June 30 last year, the iron ore business accounted for almost 90 per cent of Rio’s earnings as the price held up strongly against most forecasts. In other words, it’s the only division delivering meaningful returns to shareholders.

As soon as Walsh slipped his feet under his desk at the chief executive’s office above London’s Paddington station, he knew he had to act fast to introduce a new spending discipline and a stronger focus on shareholder value throughout the entire company.

His first objective was to attempt a shift in culture under which all of his 66,000 employees view themselves as owners of the business and treat the company’s money as if it is their own. To illustrate his point, he takes a mild swipe at one of his rivals in the global mining industry, Glencore Xstrata chief executive Ivan Glasenberg.

“Ivan Glasenberg got it a bit wrong — he put up a chart at a conference in Barcelona (last year) about how many shares his management team own in the company,” Walsh tells The Weekend Australian.

“Well, that’s not what it’s about. It’s about every single employee acting as if they’re owners, not just the top 10. The top 10 will always act as owners.

For the rest of this article, click here: http://www.theaustralian.com.au/business/mining-energy/walshs-steely-resolve-for-change-of-culture-helps-rio-tinto-turn-around/story-e6frg9df-1226794605907#