Rio Tinto paying top dollar for coal miners
WHEN coal prices boomed, so too did Rio Tinto.
However, they were also forced to pay top dollar for workers as a crippling skills shortage pitted mine companies against one another.
But with prices low and the crisis easing, Rio has told its annual general meeting in London that it is paying twice as much for coal miners in return for just 10% more production.
New chief executive Sam Walsh, the man who replaced Tom Albanese earlier this year, said cost-cutting would continue as Rio tried to save $5 billion by next year.
"We are aggressively reducing operating and support costs across all areas of the business," he said.
Mr Walsh and chairman Jan Du Plessis did not mention speculation about whether Central Queensland energy coal mines Clermont and the now-mothballed Blair Athol would be sold off.
The story of its coal business was left in the background at the London presentation, however, as shareholders blasted Rio for writing off billions in poorly timed investments.
They were angry about the $14 billion in writedowns, including $11 billion loss on its purchases of aluminium firm Alcan in 2007.
The figures in January showed a $3 billion annual loss and prompted the resignation of Mr Albanese.
Rio Tinto bought Alcan before the global financial crisis in 2007, at the height of the international resources boom.
It subsequently lost much of its appeal as market conditions fell apart.
"In hindsight, this transaction was not only badly timed at the top of the market, but major structural changes over the last year or two have put the global aluminium industry under tremendous pressure," Mr Plessis said.
As the chairman tried to show some optimism about Rio Tinto's results, one shareholder reportedly told him: "To suggest that you are doing well when your sales are down and you've made a resounding loss is, I suggest, outrageous".
Mr Plessis said the company was doing well in spite of the losses but said it was appropriate for investors to "hold executives to account".