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Rio Tinto CEO Tom Albanese steps down


Mining giant Rio Tinto says its chief executive Tom Albanese will step down immediately.

Rio Tinto said its iron ore chief executive Sam Walsh has been appointed as the company's new chief executive.

The diversified global miner also announced it expects to book a non-cash impairment charge of $US14 billion ($A13.30 billion) post tax in its 2012 full year results.

The impairments include approximately $US3 billion ($A2.85 billion) relating to Rio Tinto Coal Mozambique as well as reductions in the carrying values of Rio Tinto's aluminium assets, including Alcan Pacific Aluminium, which are in the range of US$10 billion ($A10.45 billion) to $US11 billion ($A10.45).

Melbourne-based Rio made the announcement after the Australian sharemarket closed on Thursday.

The Group also expects to report a number of smaller asset write-downs in the order of $US500 million.

The final figures will be included in Rio Tinto's full year results when the company reports to the market on February 14.

In a statement Rio Tinto said Tom Albanese had stepped down by mutual agreement with the company's Board.

Doug Ritchie, who led the acquisition and integration of the Mozambique coal assets in his previous role as Energy chief executive, has also stepped down by mutual agreement, the company said.

Rio Tinto chairman Jan du Plessis said the board fully acknowledges that a write-down of this scale in relation to the relatively recent Mozambique acquisition is unacceptable.

"We are also deeply disappointed to have to take a further substantial writedown in our aluminium businesses, albeit in an industry that continues to experience significant adverse changes globally," Mr du Plessis said.

Rio Tinto said Mr Albanese and Mr Ritchie would not receive lump sum payments, short-term performance bonuses for 2012 or 2013 or long-term share awards for 2013.

Under the company's 2009 performance share plan award to Mr Albanese, related to 2009 to 2012, he will receive shares worth around 1.6 million pounds.

He also has unexercised share options granted between 2003 and 2009 worth about 10.7 million pounds ($A16.30 million).

Perth-based Mr Walsh will receive a base salary of $A1.9 million, a 15 per cent increase on his previous base pay.

Mr Walsh's total remuneration, including bonuses, will rise 15 per cent to $7.8 million.

He will be relocated to London in the new role.

Rio Tinto said further deterioration in aluminium market conditions in 2012, combined with strong currencies in certain regions and high energy and raw material costs, has had a negative impact on the current market values in the aluminium industry.

It also said the development of infrastructure to support the coal assets Mozambique is more challenging than Rio Tinto originally anticipated, due to local approvals for barge transport on the Zambezi River.

These infrastructure constraints, combined with a downward revision to estimates of recoverable coking coal volumes on the RTCM tenements, have led to a reassessment of the overall scale and ramp up schedule of RTCM, and consequently to the impairment announced today, the company said.

Mr Albanese has been at Rio Tinto for more than 30 years while Mr Ritchie has been at the company for 27 years.

Mr du Plessis said Rio Tintos underlying business and balance sheet remain in good health.

We are taking decisive action to improve our competitive position further with an aggressive cost reduction plan, he said.

On Tuesday the world's second biggest iron ore producer's full year result of 253 millions tonnes (mt) beat its own guidance of 250mt by 1.2 per cent and topped last year's 245mt by four per cent.

After the iron ore price dropped to a low of less than $US90 a tonne last September, prices have rebounded strongly reaching a level of around $US150 a tonne earlier this week, albeit in an environment of continuing volatility, Mr du Plessis said.

He added that the new CEO Mr Walsh was an experienced executive who was ideally placed to cast a fresh eye over how the company addressed the challenges and opportunities in the business, and derive greater value from it.

"I will be working flat out to build an even stronger, more valuable Rio Tinto business for shareholders and for our many other stakeholders," Mr Walsh said.

In a statement Mr Albanese said that he had left the business in good shape in many respects, but he fully recognised that accountability for all aspects of the business rests with the chief executive.

Mine Life Resources analyst Gavin Wendt said Mr Albanese's departure and the $US14 billion ($A13.30 billion) writedown were clearly linked, given that they were announced together.

"It's the chap at the top who has to take responsibility," Mr Wendt said.

"It is connected, otherwise it would be a strange co-incidence to announce them at the same time.

"You'd delay the announcements perhaps, or make the resignation prior to the writedown."

Mr Wendt said the Mozambique project was taking much longer than planned and major companies such as Rio were realising the difficulties involved in doing business outside Australia.

"It puts some of this whole political risk talk in Australia in perspective," he said.