Walsh takes over Rio Tinto
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MELBOURNE, Jan 18 AAP
January 18 2013, 5:50PM
Sam Walsh's new job as chief executive of Rio Tinto started well, with the company's share price jumping three per cent to $66.35 on Friday.
But that can't hide the negative circumstances of his elevation: his predecessor Tom Albanese was forced out on Thursday after announcing a $US14 billion writedown, one of the biggest in Australian corporate history.
The consensus seems to be that after the embarrassing writedown, Mr Walsh is a trusted hand who has been running Rio's cash cow iron ore division since 2004 and been with the company for more than 20 years.
But at 63, the Melbourne-born grandfather is considerably older than the 55-year-old Mr Albanese and not a long term choice if the board wants change.
There is a spate of leadership changes taking place at the world's largest miners, including Xstrata, Anglo American and possibly BHP Billiton, suggesting a desire for re-invigoration.
Pengana Capital fund manager Tim Schroeders said he did not think appointing Mr Walsh would significantly change the ill will he believed would hold back Rio's share price in the near term.
"We haven't seen dramatic changes at board level or a press release saying we have re-scoped the way we assess projects and implemented a more rigorous assessment of risk and due diligence process to make sure this never happens again," he told AAP.
"The guy has been with Rio for 20 years and did he keep all these secrets in his back pocket in terms of re-invigorating the company? I've got my doubts."
Mr Walsh has an impressive track record running the iron ore division and its massive growth to be the second-biggest producer in the world.
It shipped 253 million tonnes in 2012.
He is credited with introducing Rio's famed automated mining systems, including driverless trucks and other equipment controlled in Perth, thousands of kilometres away from the Pilbara.
Whether that was luck through being in the right place or skill would have to be discerned, Mr Schroeders said.
Resources analyst Gavin Wendt, of Mine Life, backed the choice, saying Rio needed to now concentrate on its existing projects and clean up the mess of this week's writedowns.
"Having someone like Sam makes sense because he is well respected by the market and doesn't have any of the negative perceptions and hasn't been involved with any of the extravagant deals," he told AAP.
"He is in charge of the business unit that generates 80 per cent of Rio's income."
Mr Walsh will be relocated to London in his new role and receive a base salary of $A1.9 million.
His total remuneration, including bonuses, will increase 15 per cent to $7.8 million.
He joined Rio after 20 years in the automotive industry with General Motors and Nissan Australia.
In a recent interview, he spoke with pride about his collection of antique milk jugs, one of which is 2000 years old.
By Greg Roberts