The beautiful thing about cleaning out the executive ranks is that it gives a company an opportunity to press the reset button on strategies and positions. Rio Tinto should seize the moment and come up with a forecast for Chinese steel output that is more realistic.
Jean-Sebastien Jacques, who takes over from Sam Walsh as chief executive at the start of July, has already moved to put his stamp on the world’s second-largest mining company. Rio announced on Tuesday that the head of its iron ore division, Andrew Harding, would leave the company on July 1 as part of a restructuring.
Harding’s job of running Rio’s main profit contributor will be taken by Chris Salisbury, the current acting chief of copper and coal. Iron ore accounts for some 90 percent of Rio’s profit, making it by far the miner’s most important division.
Harding would have been a candidate to replace Walsh as chief executive, so his departure can be viewed as giving Jacques a clear path at running Rio without a potential rival sitting in a key position.
It would appear that Jacques wishes to start his tenure with a clean slate, and all eyes will now be on how he uses the opportunity, given he will only get it once.
While the market has focused largely on how Jacques may expand Rio’s copper portfolio, given his background in running that division, what he does with iron ore will be more crucial for the company’s fortunes, especially given the close correlation between the share price and Asian spot iron ore.
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