London - Rio Tinto has named its copper and coal division head Jean-Sébastien Jacques as its next chief executive, replacing veteran Sam Walsh and marking a shift for the Anglo-Australian mining major that has long focused on iron ore.
Jacques will join the board and become deputy chief executive with immediate effect. He will take the helm in July, when Walsh retires, and is in line for a potential pay package of £4.8m including bonuses and share payouts. His basic salary will be £1.08m.
Analysts speculated yesterday that his arrival could signal a harder intention to look at copper and other deals. Iron ore makes up almost 90 percent of Rio's earnings while copper and coal currently account for just 6 percent of its profits. But in recent months, Rio has faced calls from investors to rebalance as iron ore prices and the steel industry languish. And with many mid-sized and even large rivals struggling, billions of dollars worth of mines have come up for sale.
“The board has decided that J-S is the right person to lead Rio Tinto in an increasingly complex world filled with both challenges and opportunities for our industry,” the chairman Jan du Plessis said.
Walsh had been expected to move on this year, though investors and analysts had been divided on a likely replacement. The 66-year-old took charge three years ago after the abrupt ousting of Rio's then boss Tom Albanese.
He was considered a safe pair of hands at a time when the company had to contend with the fallout from a string of costly investments that had turned sour, such as the 2007 purchase of aluminium giant Alcan.
While Walsh did drive down production costs for iron ore, Rio ran into trouble with the toughest mining downturn in decades and slumped to a net loss in 2015. Last month, bowing to pressure from investors and rating agencies, it scrapped its long-standing “progressive” dividend policy, which it had promised never to cut.
Jacques, 44, worked on the strategy team at Tata Steel before joining Rio in 2011, and he won praise from analysts for the way he negotiated the $4.4bn (£3bn) financing agreement needed for an expansion of the giant Oyu Tolgoi copper mine in Mongolia. Jacques's skills, analysts and investors said, would serve the company well in negotiating any deals.
“It'll be interesting to see how he approaches things,” said Brenton Saunders, a portfolio manager at BT Investment Management.
“Every time you have a discussion with him, you certainly get the impression that he thinks out of the box and that he's not your conventional kind of CEO.”
Hunter Hillcoat, an analyst at Investec, said: “Clearly the board wanted some new blood. Sam was very risk averse and very critical of the direction that Rio had taken in the past in terms of the investments it made.”
Shares in Rio rose 104.5p or 5 percent to close at 2,034p.