Belatedly fixing one leadership problem, Rio Tinto has exposed another

Rio Tinto chairman Simon Thompson. Picture: Getty Images

JS Jacques and his Rio colleagues were pushed out of their jobs by Australian shareholders, leaving the UK-based board with no option but to effectively reverse its previous support for them.

Jacques, it should be noted, will be staying until May next year, or until a successor can be found. He will retain a large chunk of the 500,000 plus long term share rights outstanding, which together with some bonus shares are worth around $35m.

The man who presided over blowing up 46,000 years of cultural heritage in the Juukan Gorge, he was paid $10.3m by Rio last year and owns $9.7m worth of shares.

Rio Tinto had lost the support of its Australian shareholders and effectively was heading towards losing its social licence to operate in this country when its evidence to a parliamentary hearing was questioned.

Today’s action was led very much from Australia, with Australian Super, HESTA and the Future Fund leading the charge for some form of accountability for the executives to suffer some consequence other than losing some pay.

This column has called for Jacques to go from the moment the tragedy unfolded and finally the London based board has come to its senses thanks to Australian shareholder protests.

In a gesture towards Australia, Simon McKeon was appointed as the lead independent director for the company, which, on paper at least, could be the start of a revolution.’

Rio earns more than 80 per cent of its money from Australian iron ore but only 15 per cent of its shareholders are based in Australia, so maybe an Australian revolution is actually a bit of a stretch in reality.

Chairman Simon Thompson said the board realised it could not restore its relations with the traditional owners and other stakeholders with the management team in place.

Thompson didn’t say it, but another problem is a total lack of succession planning by Jacques and the board means there are no obvious successors in place to fill the ranks.

Just as with QBE, here is another blue chip company in the middle of a global pandemic effectively without leadership alternatives because they have failed to fulfil their duties.

That said, today’s belated actions are at least a start to the changes needed by the company to restore relationships with the traditional landowners and other Australian stakeholders.

Rio’s failure to follow basic management controls allowed the sacred site to be blown up in the hunt for extra dollars from quality iron ore shipped to China.

Having made the fundamental error, it then failed to make management accountable, instead following a circuitous path in a ludicrous 10 year history trying to hide the obvious.

Today is step one of what will be a long fight to restore its social licence to operate.

This will be helped by some transparency and a commitment to its obligations.