Rio Tinto pair forego bonus after losses
THE TOP two executives at global miner Rio Tinto yesterday said they would not take bonuses after the company lurched into a loss triggered by its aluminium business.
A surplus of aluminium and rising input costs have hammered margins in the industry, sending the value of Rio’s aluminium unit Alcan plummeting.
Rio paid $38bn (£23.9bn) for the business at the height of the commodities boom in 2007. And yesterday it announced an $8.9bn charge for Alcan.
Total one-off charges including a writedown on its diamonds business totalled $9.3bn, causing net results for July-December to swing to a loss of $1.76bn compared with a profit of $8.4bn the previous year.
The aluminium division, which the company plans to shrink by hiving off most of its Australia and New Zealand assets, just broke even with earnings of $63m in the half year.
The disappointing performance prompted chief executive Tom Albanese and chief financial officer Guy Elliott to forego any bonus.
Albanese received salaries, bonus and benefits of $2.97m (£1.87m) in 2010. He said yesterday: “As the acquisition of Alcan happened on my watch, I felt it only right not to be considered for an annual bonus this year.”
Albanese painted a dismal picture for aluminium in the short and medium term, with China adding new capacity in the West despite the oversupplied market.
“These pressures, together with the strengthening of some currencies and escalating raw materials, may continue to squeeze our margins in the medium term,” he said in a presentation. “The environment in the aluminium industry is tough.”
Chairman Jan du Plessis said he backed Albanese’s decision to waive any bonus.