Rio Tinto boss Jakob Stausholm bows out with plea for competitive energy price

‘We’re not a company who wants hand outs,’ Jakob Stausholm said delivering his last profit result as Rio boss. He appealed to Labor for energy policy settings that make Tomago viable, and said Rio had learnt a lot from the Chinese about doing business.

Rio Tinto CEO-elect Simon Trott Picture: Supplied

Rio Tinto’s Jakob Stausholm delivered Labor a brutal parting warning that Australia’s energy prices are incompatible with its goal of manufacturing at home, and warned the economy risks being undercut by more competitive markets in the battle for Rio’s capital.

The Rio-controlled Tomago aluminium smelter near Newcastle was evidence of this, Mr Stausholm said delivering his last profit result as Rio boss.

The Dane also described the Pilbara as a “very expensive place to do business” and observed that Rio had learned a lot about how to build major projects “faster and cheaper” from its Chinese partners in the giant Simandou iron ore project in Africa.

Rio’s CEO, who will officially hand the reins to West Australian Simon Trott in August, said the company was not in the habit of asking for hand outs.

Jakob Stausholm, outgoing Rio boss. Picture: Matt Jelonek/Bloomberg

“That’s not the point. The point we’re just making is we have to have access to competitively priced energy. Otherwise it’s impossible to have an aluminium industry that is an export industry. Don’t forget, these aluminium smelters are not producing for the Australian market. They’re producing for export markets.”

The federal government’s flagship Made in Australia policy would require high-level productivity gains and much cheaper energy to be fully realised.

“Australia is a wealthy country. We’re not interested in creating very low paid jobs. So the real question is, can you manufacture and have well paid jobs? The answer is you can, but you must have incredible productivity, and you must have enabling infrastructure. In our case, when I say enabling infrastructure, you must have access to competitively priced energy, because energy is a big part of the equation.”

Mr Stausholm referenced Chinese expertise and capability as Rio prepares to spend some $US13bn on new iron ore mines, plant and equipment in the West Australian Pilbara over the next three years.

“We are very proud [that] we can pay some of the best blue collar rates in the country, but it means that you have to be super efficient in order to have new developments up there,” he said.

“Therefore, we have to keep on re-imagining things, and not learning from China would be a big mistake. And don’t forget, the customer is China. So why can’t you also work with China in terms of the development, in terms of the procurement?”

Jakob Stausholm tours the Oyu Tolgoi copper mine in Mongolia.

Mr Stausholm deflected questions about Rio’s $US10bn-$US11bn capital expenditure budget and whether it could afford such ambition with net debt at almost $US14.6bn.

“We learn to do things faster and cheaper,” he said.

Rio Tinto will pay a slimmer $US1.48 ($2.27) dividend on the back of a 17 per cent fall in net profit to $US4.8bn for the first-half of 2025, and is poised to deliver midterm production growth amid lower iron ore prices.

The mining major booked interim underlying earnings before interest, tax, depreciation and amortisation of $US11.5bn, down 5 per cent, while the dividend was 16 per cent lower.

This largely reflected the 13 per cent drop in the iron ore price for the half, and growing contributions from its copper and aluminium businesses, which delivered $US3.1bn and $US2.4bn in underlying earnings, respectively.

Iron ore earned $US6.7bn.

Rio shipped 150.6 million tonnes of iron ore in the cyclone-affected June half, down 5 per cent, and an annualised rate of 301.2 million tonnes.

Rio’s West Angelas iron ore mine in Pilbara. Picture: Ian Waldie/Bloomberg/Getty Images

Rio on Wednesday reiterated a warning that its 2025 iron ore shipments would be at the lower end of guidance of 323-338m tonnes in the aftermath of four cyclones in the March quarter.

The future of Tomago will be decided under his successor, Mr Trott’s watch.

It is understood Mr Stausholm and other senior executives were dismayed by union action at Tomago that led to rolling stoppages in February and March.

Rio and its minority partners eventually offered a one-off $1500 “cost-of-living” sweetener to more than 500 workers and increased a pay offer to end the strike.

“If we can have long term, competitively priced energy, we can guarantee (the future of Tomago and other aluminium smelters). We’re not trying to have a two or three year solution. We’re trying to have a 20-year solution, so we can create a long-term future of this industry,” Mr Stausholm said.

He praised the Queensland government for acknowledging that reality at the Boyne Island smelter near Gladstone.

Mr Stausholm said he was leaving Rio in good hands and might even attend the official opening of the Simandou mine after devoting so much time to the project.

The Rio result betrayed no sign of a retreat on its ambition to become a big player in lithium, the struggling battery ingredient and big bet of his leadership term.

His departure was brought forward after he and chairman Dominic Barton could not see eye-to-eye on strategy.

Mr Trott will immediately turn his attention to the challenges facing the company, including lithium, its troubled Mongolian copper operation and the mine investment required in WA.

This week, it was revealed Rio plans to be mining iron ore in the Pilbara well into the 22nd century: Rio is seeking approval from WA authorities with an 80-year timeline.

Originally published as Rio Tinto boss Jakob Stausholm bows out with plea for competitive energy price