The Business On... Tom Albanese, Chief executive, Rio Tinto
Friday 24 December 2010
King Coal himself?
Almost. Mr Albanese leads Rio Tinto, which has just unveiled a recommended $3.9bn (£3.3bn) cash offer for the Mozambique-focused coal group Riversdale Mining.
Coal? In this day and age?
Coal is red hot at the moment. China and India are consuming copious amounts to power their economies, and Rio is aiming for a bigger slice of the action.
Yep. The former Portuguese colony boasts swathes of untapped reserves. Moreover, producing coal in Mozambique costs roughly the same as in Australia, which accounts for the majority of world coal production. In contrast, producing coal in the UK or northern Europe costs up to three times more.
And Riversdale offers...
Some prized coking coal assets. That particular variety is essential in the production of steel, which is booming thanks to Chinese demand. China's crude steel output, for example, is expected to end the year at 624 million tonnes, up 8 per cent on the levels seen in 2009.
So, Mr Albanese – he likes big deals, does he?
He helped push through Rio's ill-timed purchase of Alcan, the aluminium miner. That left Rio saddled with a chunk of debt, something which came back to haunt it during the credit crunch.
Bet the market didn't like that
Not quite, no. Although by no means alone, Rio had a rough time as investors fled, taking fright from the debt. But Mr Albanese has mounted something of a comeback.
A comeback, you say?
Yes. He's worked hard to make the company leaner and better focused on its asset portfolio, so much so that City scribblers are now hailing the return of the "old Rio". The Riversdale plans in particular have been welcomed by analysts and commentators alike. Just as he attracted criticism for the debt leftover by the Alcan deal, Mr Albanese has won plaudits for engineering the Rio Tinto recovery.
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