Rio Tinto Group

2008/9 Schools Wikipedia Selection. Related subjects: Companies

Rio Tinto is a multinational mining and resources group founded originally in 1873. The group is one of the world's largest mining companies, with a pre-tax profit of approximately US$10.2 billion in 2006 on consolidated turnover of $25.4 billion. It is the largest coal mining company in the world.

Since 1995, Rio Tinto has been a dual-listed company. Rio Tinto Limited, formerly known as CRA, is listed on the Australian Securities Exchange, with Rio Tinto plc (formerly RTZ) listed on the London Stock Exchange as well as New York Stock Exchange (under ticker RTP). The two companies are managed as a single economic unit by a unified board, with a share in either company entitling the owner to the same voting rights and dividend payouts. RTZ shareholders made up 76.7 percent of the new unified entity, which is primarily managed from London.

Its current chief executive is Tom Albanese and the company board is chaired by Lucky Bauer.

History

Both the firm Rio Tinto and its name come from southern Spain, where the Río Tinto (Spanish 'Red River') was the site of an ancient mine which supplied the Phoenicians, Ancient Greeks, Carthaginians and the Roman Empire. Its water is red-colored because of its high mineral content, that also makes it highly acidic.

In 1873 N M Rothschild & Sons of London and de Rothschild Frères of Paris joined with other investors to acquire the Spanish government's money-losing Rio Tinto mines. The new owners restructured the company and turned it into a profitable business. From 1877 through 1891, the Rio Tinto mine was the world's leading producer of copper. By 1905, the Rothschild interest in Rio Tinto amounted to more than 30 percent. Alfred Milner, 1st Viscount Milner served as chairmen for a period before World War One.

In 1962 the (British) Rio Tinto Company acquired a majority stake in Consolidated Zinc, an Australian company, and was renamed the Rio Tinto-Zinc Corporation (RTZ). The Australian company was renamed Conzinc Riotinto of Australia (CRA) but retained a separate corporate identity, with an increasing proportion of its shares being held by the Australian public.

The current dual listed company structure was created in 1995.

Rio Tinto is one of the first companies listed on the ASX to have reached a share price of over $100. Poseidon had previously climbed from 80 cents to $280 before collapsing in 1969-70 after a major discovery of nickel ore.

On November 14, 2007 Rio Tinto bought Canadian aluminium company Alcan Inc. for $38.1 billion, in a move that creates the world's biggest aluminium company. Rio paid $101 per common share. Alcan's Chief Executive Dick Evans leads the new division, renamed Rio Tinto Alcan and its headquarters situated in Montreal.

On November 8, 2007, rival mining company BHP Billiton announced it was seeking to purchase Rio Tinto Group in an all share deal. This offer was rejected by the board of Rio Tinto as it "significantly undervalues" the company. Another attempt by BHP Billiton for a hostile takeover valuing it at US$147 billion was rejected on the same grounds. Meanwhile, the Chinese Government-owned resources group Chinalco and the US aluminium producer Alcoa purchased 12 per cent of Rio Tinto's London-listed shares in a move that could block or severely complicate BHP Billiton's plans to buy its rival. In the six months from November 1, 2007 to April 1, 2008, Rio Tinto's daily closing NYSE share price increased 16% from US$361 to $420, soaring and dipping along the way between $478 and $331.

Other commodities

Rio Tinto owns the Borax company that produces borax and is famous for the "20 Mule Team" trademark which it shares with the Dial Corporation.

Rio Tinto also produces bauxite, gold, titanium, lead, zinc, cobalt, nickel and uranium.

Technology

The company also has a technology group conducting research and development, notably including the HIsmelt iron smelting process, and an exploration group.

Criticisms

Environmental, political, safety and labour rights concerns have been raised against Rio Tinto by both environmental groups and unions, in particular the Construction, Forestry, Mining and Energy Union (CFMEU). The CFMEU ran a campaign against the company which tried to de-unionise its workforce after the introduction of the Howard Government's Workplace Relations Act 1996.

Another has been Rio Tinto's involvement in Papua New Guinea which triggered the Bougainville separatist crisis. While RTZ has put a lot of energy into cleaning up its tainted human-rights image from the aftermath of crises like the above, many critics feel the company has not substantially changed.

Rio Tinto has also won an award for ethical behaviour, the Worldaware Award for Sustainable development. However, although this award was decided by an independent committee, it was, like some other WorldAware Awards, sponsored by another multinational corporation (in this case, the sponsor was Tate and Lyle). Rio Tinto has, in turn, sponsored its own WorldAware award, the Rio Tinto Award for Long-term Commitment, which was awarded to a variety of local and multinational players including in 1999 to Shell Pakistan.