Rio Tinto shareholders overwhelmingly approved the excessive $US44 billion purchase of Canadian company Alcan on Friday with 97.3% of shares cast at the London and Melbourne meetings voting in favour.
The 13 member board once again showed its disdain for Australia as only five of them turned up on Friday, but at least it included American CEO Tom Albanese and plummy English chairman Paul Skinner, a 40 year veteran of Shell.
AFL President Mike Fitzpatrick and Ashton Calvert, the DFAT secretary who completely missed AWB’s $300 million backhander to Saddam, both attended but Melbourne-based Sir Rod Eddington was also a no-show.
Skinner admitted that the Alcan auction process was “very competitive” and that this had driven the price up such that Rio’s debt was now so high that the complete mining portfolio was being reviewed to identify potential asset sales to help pay back the banks.
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I put the case to the board that a de-merger of the Australian iron-ore business would be the best way to go for the following reasons:
- If Fortescue Metals is worth $13 billion without shipping a tonne of ore, surely the Rio iron-ore portfolio in WA is worth about $50 billion in the current bubble environment.
- De-merging by simply issuing new shares to existing shareholders wouldn’t involve actually selling anything, but the iron-ore vehicle could easily be loaded up with $20 billion-plus of debt.
- Rio Tinto is only 15% Australian-owned yet the $1 trillion in superannuation assets is desperate for new investment opportunities so they would pounce on a 100% Australian-listed iron ore spin-off.
- With wall to wall Labor governments coming, London-based Rio Tinto needs to demonstrate a far greater commitment to Australia and the WA government would look at the company more favourably if it was suddenly the biggest Perth-headquartered listed company.
Skinner simply said he “noted” these point, but it would be very interesting to see how the company reacted to signals from a Rudd Labor Government that they were concerned a London-based company had amassed about $100 billion of Australian assets whilst only having three Australian-based directors.
Using his best Cambridge accent, Skinner also stressed how Rio had invested many billions in Australia over the past few years. Indeed, Sir, that’s the point – your company has enjoyed a spectacular windfall exploiting our resources dowry and it’s time to give a bit back.