The FTSE 100 miner bought its Alcan aluminum arm in 2007 for $38bn, shortly
before the markets crashed, a bad deal which Mr Albanese has previously
acknowledged happened “on my watch”. It has now written down a “staggering”
$25bn of the price paid, noted analysts at Jefferies.

Mr Albanese last February said
he would not take an annual bonus
as the company posted an $8.9bn
write-down on the value of the aluminum assets. Rio then said in November
that more write-downs were expected at its aluminium arm, as the metal’s
market continues to struggle with overcapacity and climbing costs.

The company on Thursday blamed the further decline in market conditions seen
last year, as well as high energy and raw material costs and strong
currencies in some countries, for the latest write-downs, which were focused
at Alcan.

As for the $3bn Mozambique write-down, that reflected the bulk of the $4bn
acquisition cost of Riversdale, its coal assets in the east of the African

Rio Tinto said developing infrastructure around the coal assets has been more
challenging that it anticipated, after it could not get approvals to
transport coal by barge along the Zambezi River, and that it has also had to
cut its estimates of the coking coal it can recover.

In addition, the coal sector has seen the shale gas revolution in the US flood
the market with natural gas, pushing down coal prices as a result and
causing pain for the industry.

Rio Tinto said it would also report around $500m of smaller asset write downs,
with the final figures to be revealed in its full-year results on February

Charles Gibson, head of mining at Edison Investment Research, said “When
a company writes off the equivalent of approaching one sixth of its market
capitalisation, the CEO has to carry the can. Rio was however until today
one of the more stable miners – investors may wonder what else is out there
in the sector.”

The shares dived more than 4pc following this morning’s surprise announcement,
but later recovered some of their losses to trade down by around 1.7pc at

Kate Craig, an analyst at Liberum Capital, said the market knew more
write-downs were coming and that they were “not incommensurate“ with its own
valuation of the assets.

“Rio appears to be taking the front foot on write-downs and appears to have
been more proactive on culpability than Anglo [American] – launching
management changes and cost cutting before the market has asked for it,” she

“Sam Walsh is the logical replacement for Albanese and has a strong
operational heritage and may be more focussed on iron ore growth, which the
market will like.”

Taking over as chief executive, Mr Walsh will see his potential remuneration
package increase by 15pc to Australian $7.8m, with a base salary of
Australian $1.9m. He will also receive relocation costs to cover his move
from Perth, Australia to London and will receive unspecified London housing

Mr Albanese’s departure makes him the latest in a line of exiting mining chief
executives as the commodity price boom wanes. Cynthia Carroll is leaving
Anglo American, while BHP Billiton is working to find a successor to Marius
Kloppers. Mick Davis at Xstrata is also departing, although that is because
the company is merging with commodity trading giant Glencore.

Rio Tinto chief Tom Albanese exits over $14bn writedown, admitting … –
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