Flawed planning exposed as board hunts for successor

It is a damning indictment of the Rio board that no clear successor to Jean-Sebastien Jacques is present within Rio’s ranks.

Shell Australia CEO Zoe Yujnovich. Picture: Jane Dempster/The Australian.

It is a damning indictment of the Rio board that no clear successor to Jean-Sebastien Jacques is present within Rio’s ranks.

When Rio abruptly replaced Tom Albanese in 2013 — after a second $US14.6bn ($20bn) writedown of the disastrous $US38bn Alcan acquisition Albanese led in 2007 — his replacement, Sam Walsh, was the obvious choice but not the only option for the Rio board.

Then chairman Jan du Plessis was appointed to the Rio board knowing the ongoing fallout from the Alcan acquisition could return to haunt Albanese, and brought Walsh onto the Rio board almost immediately as a ready-made successor if Albanese’s position became untenable.

But, four years into Jacques’ tenure as CEO, there are no internal candidates that stand out as clearly as Walsh did in 2013 — or the obvious potential successors, including Jacques, when Walsh reluctantly left three years later.

The Juukan Gorge disaster may have been unforeseen, but the Rio board has clearly failed in its primary duty: to ensure the company has a succession plan when the chief executive departs, for whatever reason.

Jacques is now a lame-duck CEO, and the board’s failure, along with the cultural failings identified by the destruction of Juukan Gorge, means it will almost certainly have to take an external candidate for the first time in modern memory.

The departure of a generation of Rio’s younger executive talent since Jacques took the helm also suggests a long road ahead for the mining giant. But that exodus also means that Rio’s headhunters will have plenty of options to sift through if the preference is for a former Rio hand to return.

Former Rio iron ore boss Andrew Harding, now running rail hauler Aurizon, is arguably now tainted by Jacques efforts to paint Juukan Gorge as a failure of the Sam Walsh era. But he is one of a suite of former Rio executives who have proved their capability elsewhere.

Shell’s Zoe Yujnovich, now heading up the company’s global oil and gas operations from The Hague, is one standout option. She left Rio in 2014 to run Shell’s iron ore sands business in Canada.

But also in the wings are Newcrest Mining boss Sandeep Biswas, OZ Mineral’s chief executive Andrew Cole, or Ampol’s Matt Halliday.

If Rio were to look outside its historic ranks, it could look to Energy Australia boss Catherine Tanna, or South32’s Graham Kerr, or Anglo American chief financial officer Stephen Pearce, who held the same role at Rio’s Pilbara rival Fortescue Metals. No doubt Anglo boss Mark Cutifani, who has an enviable record elsewhere in turning round some of the cultural problems now facing Rio, could also be a consideration.

And although Rio’s board may baulk at inviting in recent departures from chief rival BHP — currently in the late stages of a far more orderly leadership transition — it could consider outgoing CFO Peter Beaven, or former Minerals America chief Danny Malchuk, or even try to tap current executives such as Minerals Australia boss Edgar Basto.