Rio Tinto’s promotion of internal candidate Jakob Stausholm to be the next CEO has surprised investors but is being widely supported as a strong choice as the mining giant embarks on the mammoth huge task of repairing relationships following the Juukan Gorge disaster.
Mr Stausholm, 52, was this week named as successor to outgoing CEO Jean-Sebastien Jacques who resigned amid outrage over Rio’s decision to blast through Aboriginal rock shelters in Western Australia to make way for a large iron ore mine expansion.
Shareholders had been expecting the next CEO to be an external Australian-based candidate in recognition of the magnitude of Rio Tinto’s failures this year and the need to signal meaningful change in the country that accounts for the vast majority of its earnings.
But the promotion of Rio’s chief financial officer Mr Stausholm – a London-based Danish citizen – was met with open minds by prominent investors and analysts, who said he had the inside knowledge to allow for a smooth transition, as well as the relatively fresh perspective of someone who only joined Rio Tinto in 2018.
Camille Simeon of Aberdeen Standard Investments, one of Rio’s largest shareholders, supported the appointment of Mr Stausholm, whom she described as “focused, disciplined and hard-working”.
“He is not external, but he’s only been there a couple of years so he doesn’t have a very long tenure. Yet he still has some corporate knowledge of Rio so there’s probably quite a good balance there,” Ms Simeon said.
Although some investors and politicians such as federal Treasurer Josh Frydenberg had called for the dual-listed miner’s board to choose an Australian as the next CEO, Ms Simeon said Aberdeen was more concerned about whether the candidate had the “right skills and experience” to rebuild Rio’s reputation with the investment community, regulators, governments and traditional owners.
“They have to build stakeholder relationships across a number of groups,” she said. “It’s having the skills to be able to do that that’s important. We feel like he does have the right skills and experience.”
Mr Stausholm will be based in London, but he intends to spend a significant amount of time in Australia as international travel restrictions begin to ease.
Although he is not Australian, Mr Stausholm is a former non-executive director of ASX-listed oil and gas giant Woodside Petroleum and used to come to Australia on a monthly basis.
Colleagues of Mr Stausholm have described him as a strong “relationship-builder” and a “good listener”.
Prior joining Rio Tinto in 2018, Mr Stausholm held senior roles with AP Moeller-Maersk, facility service provider ISS, Statoil and Shell, where he worked for 19 years in roles spanning Europe, Latin America and the Asia-Pacific.
Analysts have foreshadowed the risk of Rio’s internal CEO selection being perceived in the market as indicating little change in the company’s overall strategy.
“We think criticism could potentially come from some investors and the media that this wasn’t a big enough change following the magnitude of Juukan Gorge,” Royal Bank of Canada mining analyst Tyler Broda said. “However we would counter that by noting Jakob’s approach appears to be collaborative and he has strong beliefs around environmental, social and governance (ESG) issues and the need for mining companies to continue to progress. We think his understanding of what’s come before and especially of what needs to happen following the last six months will help Rio to re-emerge.”
Mr Stausholm’s appointment was widely welcomed on Friday, with many investment banks highlighting his strong financial background and disciplined approach to capital allocation.
“[Mr] Stausholm is an excellent, cool-headed and sensible appointment,” BMO Capital Markets’ Edward Sterck said. “We do not expect an immediate change in Rio Tinto’s corporate strategy, but we do anticipate a transformation in corporate culture over time.”
The departure of Mr Jacques, announced in September, followed months of escalating investor pressure to ensure accountability over blasting of the Juukan Gorge. Although legally sanctioned, the site’s destruction went against the wishes of the traditional owners, the Puutu Kunti Kurrama and Pinikura people, who were left devastated and said they were not aware of Rio’s plan to destroy the site until it was too late for the explosive charges to be removed. Rio Tinto has apologised and conceded multiple failures in its engagement with the PKKP in the lead-up to the blast on May 24.
Mr Stausholm will assume leadership of Rio Tinto’s response to the federal parliamentary inquiry investing the circumstances surrounding the disaster and the wider mining sector’s treatment of traditional owners.
Rio Tinto investor HESTA, a $52 billion superannuation fund, said investors would be “watching closely” how Rio’s board and new senior leadership team take action to improve governance and oversight and respond to the federal inquiry.
“Investors have an expectation of significant and lasting change,” HESTA chief Debby Blakey said. “A vital first step is opening up all agreements with traditional owners to an independent review.“
HESTA has been leading a push among other prominent shareholders for Rio’s board to commit to an independent external audit of all its agreements with First Nations people.
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Source: Thanks smh.com