Tom Albanese: Green-tinted Rio
The new boss will leave no stone unturned as the world's second biggest miner tries to scrub its image clean
Sunday 10 December 2006
Tom Albanese does not appear giddy with excitement at the prospect of taking charge of the world's second-largest miner, with a market value of £29bn.
On Wednesday, a day after Rio Tinto announced his appointment as chief executive, the man who is currently group resources director seems more concerned about ticking the right corporate governance boxes, conscious of the mining industry's shoddy track record on environmental and social responsibility.
Speaking exclusively to The Independent on Sunday, within two minutes he declares - unprompted - that the company is a "good corporate citizen".
Analysts at investment bank UBS wrote after last week's announcement that Albanese was "less risk averse" and more "entrepreneurial" than the widely touted candidate for the top job, finance director Guy Elliott. So perhaps it's understandable that he is keen to dispel any notion that he's a power- crazed risk-taker.
Throughout the interview he shows little emotion, and he chooses his words carefully. He does not admit to surprise at his appointment, saying only: "There's always competition and natural uncertainties which take place."
Albanese has worked for Rio Tinto for 13 years and becomes chief executive in May. He is keen to stress his belief that the company must atone for past sins. Visitors to the London offices in St James's Square are handed, and asked to read, a four-page booklet on safety. A television in the reception area shows schoolchildren being taught in one of the company's community programmes in South Africa.
Albanese says Rio Tinto workers have fewer accidents than bank employees. "Woe betide the individual who drives in a company vehicle without a seatbelt," he says gravely. "If someone decided they never wanted to wear a seatbelt while they're driving, Rio Tinto might not be the right place to work."
He denies that this obsession with safety is merely another box-ticking exercise to placate the corporate-governance crowd. "We do have legacies on the environment and social side, which we will always need to bear. The job to improve our reputation is a continuous process."
Asked if he feels mining is an easy target for the environmental and human rights lobby, he generously tells them to bring it on. "We welcome criticism and more importantly engagement."
Albanese has good reason to be contrite. Friends of the Earth has accused the company of forcibly repatriating thousands of villagers in Indonesia to make way for the opening of its Kelian gold mine in the early 1990s. Rio Tinto's website concedes it grappled with "genuine multi-stakeholder challenges", but insists it has now settled all compensation claims over the mine.
Albanese admits: "In the past, there are lots of examples where local stakeholders were not informed; their consent was not required for developments to take place."
He claims that one reason few mines have been opened recently is the length of time needed to consult with locals. "There are very few places in the world where if you are not meeting local stakeholder concerns, you can override that." But he cannot name an example of a local community stopping the company from going ahead with a planned development.
Mining companies have also scarred countless landscapes, he admits. "You can go to virtually any part of the world and you will see evidence of old mining activity. You see evidence that's frankly not pretty."
Rio Tinto mines just about everything: copper, diamonds, aluminium, coal, gold and iron ore. Some 80 per cent of its operations are in North America, Europe and Australia, but it also holds a stake in a diamond mine in Zimbabwe. Albanese hints that if the pariah government of Robert Mugabe pushes the country further into chaos, Rio Tinto could pull out.
"In any country where there is a deterioration in systems," he says, "we would have it on a more active watch list than otherwise would be the case. We are in regular discussions, including saying to the government, 'look, this is what we expect for us to be seen as an investor in this country'."
Albanese is conscious that Rio Tinto should not push its governance credentials too far. However much it presents itself as an environmentally aware company, which plants trees over its old open mines, the work by its nature is dirty and unsustainable. "It's important not to be seen to be schizophrenic, where on one hand we show a picture of a pit with exploding rocks, and on the other a smiling lemur."
The mining industry is booming on the back of record commodity prices. Gold, for example, has doubled in the past three years and hit 25-year highs earlier this year. The profits are streaming in. In August, Rio Tinto reported first-half earnings of $3.8bn (£1.9bn), up a staggering 75 per cent on last year.
Commodity prices are cyclical, but surging demand from China and India has led some to say we are in the midst of a "super-cycle". You get the impression Albanese thinks it won't last. "In 1999 people were proclaiming the end of the business cycle. Now would be the wrong time to proclaim the end of the commodity cycle."
Rio Tinto is unique among its peers in largely sitting out the recent wave of consolidation in the sector. Some say Albanese's appointment could change that, but he plays the responsible executive: "We are all competitive beasts and we all watch how everyone does - but not at the expense of value creation. What we have to do is keep our heads."
Albanese is fascinated by the smallest details. He gets most enthused when bemoaning the bizarre global shortage of truck tyres, which restricts the opening of new mines. He reels off a list of measures taken by Rio Tinto's to ensure its tyres last longer than anyone else's.
Perhaps his obsession with detail means he misses out on other things. Asked if Australia's remarkable Test match victory over England last week led to some teasing by the company's many Australian employees of their English colleagues, Albanese says he did not notice. "I work so hard in my job for Rio Tinto that I don't pay attention."
He means it as a joke, but you get the sense every word is true.
BORN 9 September 1957 - New Jersey.
EDUCATION BSc and Masters degree in mineral economics at the University of Alaska.
1981-83: junior engineer for gold miner Resource Associates.
1985-86: analyst and marketer for Nerco Minerals.
1987-89: vice-president at Nerco Minerals.
1989-2000: chief operating officer at Nerco Minerals, later bought by Rio Tinto. Then managerial positions with Rio Tinto.
2000-04: chief executive of the industrial minerals group at Rio Tinto.
2004-06: chief executive of the copper group and head of exploration.
December 2006: appointed chief executive of Rio Tinto with effect from May 2007.
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