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Tue, Feb 10, 2009 - Page 10 News List

Rio Tinto’s Leng resigns just before becoming chairman

NOT STEPPING UP No reason was offered for Jim Leng’s resignation, but the ‘Financial Times’ said there had been arguments over Chinalco investment plans

BLOOMBERG

Rio Tinto Group, the world’s third-largest mining company, said chairman-elect Jim Leng quit less than a month after he was named to replace Paul Skinner.

Skinner, scheduled to step down on April 20, agreed to remain until mid-year, London-based Rio said in a statement yesterday. No reason for Leng’s departure was given and Amanda Buckley, a Melbourne-based spokeswoman for the company, declined to comment.

Rio shares rose as much as 7.6 percent amid speculation it may soon sell a stake to Aluminum Corp of China (中鋁) to reduce its US$38.9 billion debt. Leng clashed with chief executive Tom Albanese over investment plans by the Chinese company, known as Chinalco, the Financial Times reported yesterday.

“The chairman-elect resigns with no explanation and that coincides with rumors of a placement to Chinalco,” said Prasad Patkar, who helps manage the equivalent of US$800 million at Sydney-based Platypus Asset Management. “It makes you wonder if Rio’s board was fractured on how best to address the company’s need for debt reduction.”

Rio, traded in Australia and the UK, rose A$2.32 to A$49.07 yesterday afternoon on the Australian Stock Exchange. It gained 6.5 percent in London on Friday.

Rio said last week it was in talks with Chinalco to raise cash by selling debt and stakes in some units to reduce the borrowings it took on when it bought Alcan Inc in 2007. Rio is seeking to offload US$10 billion in assets this year to repay loans.

The London-based company is also in talks to sell assets worth US$5 billion to Japan’s Mitsui & Co, the Wall Street Journal reported on Friday.

BHP Billiton Ltd, which in November dropped a US$66 billion takeover bid for Rio Tinto partly because of its debt, would also be interested in buying stakes in some Rio assets, chief executive Marius Kloppers said last week.

Rio expects to appoint a new chairman by the middle of this year, yesterday’s statement said.

Leng, deputy chairman of Tata Steel Ltd and chairman of the Indian company’s European unit, was announced as Skinner’s successor on Jan. 14. He was chairman of Corus Group PLC from June 2003 before the company agreed to a £6.2 billion (US$9.2 billion) takeover by Tata two years ago.

Leng was also chief executive of chemicals maker Laporte PLC from 1995 to 2001, when it agreed to be acquired by German company Degussa-Huels AG.

Skinner, 63, may be hired by BP PLC as chairman, the Daily Telegraph reported in October.

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