Rio Names New CEO as Scrutiny Over Australian Blasts Lingers
Rio Tinto Names Stausholm CEO as Jacques Steps Down After Blast
(Bloomberg) -- Rio Tinto Group named finance head Jakob Stausholm as chief executive officer, tapping a relative newcomer to manage the fallout over its destruction of ancient Aboriginal sites in Australia.
Danish-born Stausholm, 52, takes the helm at a time of crisis for the world’s second-largest miner. The blasts that destroyed a 46,000 year-old heritage site have damaged relations in Australia -- where Rio operates hugely profitable iron-ore mines --sparked criticism from investors and shined a spotlight on how the group’s internal culture may have contributed to the failures. They also cost outgoing chief Jean-Sebastien Jacques his job.
While some shareholders who called for fresh blood at the top may be disappointed, Stausholm, who takes over as CEO on Jan. 1, is still new to both Rio and the mining industry. He joined the company as chief financial officer in 2018 from shipping giant A.P. Moller-Maersk A/S and earlier in his career spent 19 years with Royal Dutch Shell Plc.
The new leader will need to convince investors, regulators and legislators that the mining giant can address its governance failings. He also inherits a multibillion-dollar copper mine expansion in Mongolia that’s been beset by delays, a budget blowout and a public spat with its partners on the project. Still, Rio’s core businesses are booming, with both iron ore and copper trading at multiyear highs, and its shares have outperformed rivals in recent years.
“He’s got some bridges to mend that’s for certain. The problem is he’s part of the company where that happened,” said David Lennox, a resources analyst at Fat Prophets. “It’s a trade-off -- he’s knows the company well, he knows its operations.”
Since joining Rio two years ago, the new CEO has kept a relatively low profile among the investment community. He’s seen as a more personable and collaborate executive than his predecessor, and is well liked within the company. Yet many of his public appearances were overshadowed by the more charismatic Jacques. At more than 6 foot 7 inches tall, he is a keen sportsman who competes in triathlons.
In the aftermath of the Aboriginal-site blasts in May, Stausholm was among executives and directors who led meetings with investors, Indigenous leaders and legislators. That means he’s not only familiar with the company’s businesses, but also its response to the fallout in Australia. He already sits on Rio’s board.
In a statement, Stausholm said he was “acutely aware” of the need to restore trust with traditional landowners, adding that he viewed it as a key priority for the company.
While Rio has responded to investor pressure by replacing senior executives, Chairman Simon Thompson is also under pressure to shake up the board to ensure the views of the Indigenous community are better incorporated into the company’s decision making. Rio, which is headquartered in London, has been criticized for a lack of understanding about community issues in Western Australia. The company’s iron-ore unit accounted for more than 90% of first-half earnings.
“As an investor, we are closely watching how Rio’s board and its senior leadership take action to improve governance and oversight,” said Debby Blakey, CEO at Hesta, one of Australia’s biggest pension funds. “Investors have an expectation of significant and lasting change. A vital first step is opening up all agreements with traditional owners to an independent review.”
Stausholm’s appointment also extends a broader changing of the guard across the world’s biggest mining companies. Larger rival BHP Group installed Mike Henry as its CEO in January, 2020, while Glencore Plc’s long-term boss Ivan Glasenberg in December announced he’ll retire and be replaced by insider Gary Nagle.
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