Cave calamity caps CEO’s mixed legacy
It is no small irony that his reign at Rio ended with a last-ditch trip to the Pilbara to rescue his leadership of the company.
Crisis trips to the Rio Tinto iron ore operations act as bookends for the tenure of Rio Tinto chief executive Jean Sebastien Jacques.
In June 2016 a young worker was tragically killed at Rio’s Channar mine.
Jacques, only weeks away from replacing Sam Walsh in Rio’s top job, immediately flew from his London base to Paraburdoo to get a first-hand account of the tragedy.
At the time Rio was keen to brief out the visit as a sign of the changes coming at Rio — not just a renewed focus on safety, but sign that the incoming Rio boss understood that every part of Rio’s machine contributed to the health of the whole.
It is no small irony that his reign at Rio ended with a last-ditch trip to the Pilbara to rescue his leadership of the company, hoping to convince traditional owners he was the right man to lead Rio’s reputational recovery from the decision to blast the 46,000-year-old heritage sites.
But the events that led to his resignation on Friday, and particularly Rio’s early reaction to crisis, show the company had completely lost its way in responding to the catastrophe caused by the blast.
Rio’s cack-handed early failures include its initial unwillingness to apologise for the destruction of the sites, followed by disastrous radio and television interviews with iron ore boss Chris Salisbury in which he characterised their destruction as a “misunderstanding” between Rio and traditional owners, the Puutu Kunti Kurrama and Pinikura people (PKKP).
All of this was compounded by Jacques’ complete public disappearance on the issue until he was finally forced to respond to the growing reputational crisis Rio on June 12.
His legacy at Rio will be tarnished by Juukan Gorge. And, despite some successes, that legacy was always likely to be mixed.
There is no doubt Rio’s safety record has been excellent under Jacques, and shareholders have gratefully accepted the cash pouring from its operations under his leadership — flowing partly from Vale’s tailings dam disasters that pushed up the iron ore price, but also from his well-timed sales of coal assets, and the $US3.5bn sale of Rio’s stake in the Grasberg mine in Indonesia.
But his tenure has also seen Rio lose its prized crown as the lowest-cost iron ore miner in the world, the legacy of the undercapitalisation of the division over the last four years, an issue that may have contributed to Rio’s haste to blow up Juukan Gorge to access high-grade ore in the vicinity.
His tenure has seen a vast exodus among Rio’s middle management and rank and file, as well as almost every senior manager seen as tied to the miner’s former leadership, creating a gap in the company’s corporate knowledge that may also have contributed to its current problems.
A decade ago Rio’s rivals struggled to poach its staff at any price. But one senior BHP manager told The Australian early this year that had reversed in the last few years, with a rise in the number of Rio supervisors and managers reaching out to look for new jobs outside the company, citing “cultural issues” inside Rio.
The signs of trouble ahead were emerging even before Jacques formally assumed the role as Rio’s boss, appointed — as then chairman Jan du Plessis said — with the next decade in mind.
It is no secret that Sam Walsh left the top job reluctantly, and there is no love lost between the two men. The succession was announced in March 2016, with Jacques to take control in July.
But, where incoming BHP boss Mike Henry took nine months from the announcement of his appointment to change over his leadership team, as Rio’s deputy chief executive Jacques wasted no time in wielding his new power among Rio’s ranks.
By the time Jacques stepped up to Rio’s top job almost his entire hand-picked team was in place and a sweeping cull of its old management was well under way.
Jacques got his own speaking spot at Rio’s 2016 annual shareholder meeting in May, presenting after Walsh.
In late May Rio announced the first round of executive changes, with technology and innovation boss Greg Lilleyman to depart the company.
A month later, only days before Jaques flew to the Pilbara after the death of a worker, Rio announced sweeping changes to its executive structure. Walsh appointee Andrew Harding left, to be replaced by Chris Salisbury, with Arnaud Soirat appointed as Rio’s copper boss.
Within a few months long-term human resources boss Hugo Bague was gone, with Simone Niven joining the executive team. And a year later in September 2017 — when well regarded chief financial officer Chris Lynch announced plans to retire within 12 months — there had been 14 changes to Rio’s board and executive leadership team.
Despite its long history, Rio is now very much the house that JS built. But his successor may need to do a fair bit of renovating.
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