Friday, 18 January 2013 12:30
Rio Tinto shares have jumped two per cent following the shock resignation of chief executive Tom Albanese after the miner was forced to make $US14 billion worth of writedowns.
Rio stunned investors after the market closed on Thursday with news that Mr Albanese had stepped down as the global miner announced hefty writedowns of its aluminium and coal assets.
The company has promoted its Perth-based iron ore chief Sam Walsh to the top job.
Shares in Rio Tinto leapt by $1.28 to $65.88 in early trade on Friday.
The dual-listed stock had initially dived four per cent during trading on the London Stock Exchange overnight amid shock at Mr Albanese's sudden departure.
However, it later recovered to close half a per cent lower at STG34.39.
Rio said it would write down the value of its aluminium assets, including Alcan Pacific Aluminium, by between $US10 billion and $US11 billion ($A9.53 billion and $A10.48 billion).
It will also take a $US3 billion ($A2.86 billion) hit relating to Rio Tinto Coal Mozambique, which it acquired during its takeover of Riversdale Mining.
Along with Mr Albanese, senior executive Doug Ritchie, who led the acquisition and integration of the Mozambique coal assets, has also resigned.
Evan Lucas, IG Markets market strategist, said the market had taken Mr Albanese's departure as a positive for Rio Tinto.
"The new CEO Sam Walsh is more of a trusted hand, he's a bit steadier," Mr Lucas said.
"He's been with the company for a very long time. He started at the company in 1991 and he has been in control of their iron ore department for a very long time and has done very well under tricky and trying conditions.
"We see the change as a good thing for Rio. We see quite a lot of upgrades in research houses consensus of Rio."
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.
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