Rio’s new boss is a crisis veteran facing his biggest test yet
Rio Tinto Group’s new chief executive officer, Jakob Stausholm, has a reputation as a crisis manager and peacemaker. He’ll need both those skills as he takes over one of the toughest jobs in mining.
Rio will look to the 52-year-old Dane to repair relations with investors and authorities after the destruction of an ancient Aboriginal site hurt the company’s reputation, at a time when corporate responsibility has never been so important. Stausholm, who’s been finance chief for the past two years, brings a reputation as a well-liked and inclusive executive who’s dealt with crises in prior jobs in the oil and shipping industries. This will be his first CEO role.
“He brings a very collaborative style which I think is going to be helpful in rebuilding some of the relationships we have around the world,” Simon Thompson, Rio’s chairman, said in an interview on Thursday.
Stausholm replaces Jean-Sebastien Jacques, a hard-charging Frenchman whose sudden downfall sent shockwaves through the industry. In the past, investors have tended to accept that mining, by its nature, is dirty and environmentally destructive. While Rio apologised for the blasts that destroyed a 46,000 year-old heritage site, the company initially backed its CEO. It was caught off guard by a furious backlash from shareholders, who turned their ire on the board and chairman until Jacques was forced out.
Fixing Rio’s relationships here in Australia, where Rio operates hugely profitable iron-ore mines, will be Stausholm’s biggest test. Local politicians this month branded Rio’s actions as “inexcusable” and said that it “knew the value of what they were destroying but blew it up anyway.” Thompson himself jetted into Australia in November to visit the Puutu Kunti Kurrama and Pinikura people, the traditional owners of the caves.
The new CEO will also need to show he can step out from Jacques’s shadow. Some investors had called for an external appointment, to draw a line under this year’s failures and improve a working environment that current and former employees have described in private conversations as difficult. The company’s internal culture has also been criticised on several occasions by Australian authorities probing the Juukan Gorge blasts.
“Finding someone who can steady the ship and not make everyone upset is the right way to go.”Liberum analyst Ben Davis
As a relative newcomer, Stausholm will have the inside knowledge to be effective immediately, but also the fresh perspective to bring about change. Despite the challenges, the miner’s business is booming amid surging commodity prices.
“Stausholm is an excellent, cool-headed and sensible appointment,” said Edward Sterck, an analyst at BMO Capital Markets. “We do not expect an immediate change in Rio Tinto’s corporate strategy, but we do anticipate a transformation in corporate culture over time.“
Since joining Rio two years ago, the new CEO has kept a relatively low profile among the investment community. He’s seen as a more personable and collaborate executive than his predecessor, and is well liked within the company. Yet many of his public appearances were overshadowed by the more charismatic Jacques. At more than 2 metres tall, he is a keen sportsman who competes in triathlons.
“Jakob provides exactly the right balance of continuity on strategy, but a new leadership style,” Thompson said. “On the 1st of January I’m sure he will hit the ground running.“
Stausholm was seen as a rising star during his nearly two decades at Royal Dutch Shell, spending time in Argentina, Denmark, Singapore and later London where he was chief internal auditor, dealing with Shell’s 2004 reserves crisis.
He was hired in 2012 by Denmark’s biggest company, AP Moller-Maersk, and rose through the ranks of the firm’s container-line unit. In 2016, as Maersk started a process to break up its century-old conglomerate structure, Stausholm was promoted to group CFO.
He also took control of technology and transformation, effectively putting him in charge of the historic shift and making him the executive group’s key person to communicate the changes to investors. The company’s shares fell after his sudden departure was announced in 2018.
His experience with dealing with crises at both Shell and Maersk is seen a key strength.
The new CEO will also have to deal with challenges at Rio’s big Oyu Tolgoi copper project in Mongolia, where an expansion is overbudget and behind schedule. Rio’s also facing relationship and reputational trouble over the flagship project.
The company through which it controls the project started arbitration proceedings over the way it’s being funded and US hedge fund Pentwater Capital Management has blasted Rio over the way it’s managed the asset. The Mongolian government has been pushing for an independent review of the delays and cost overruns.
As well as fixing the company’s culture, Stausholm will be expected to maintain a business strategy that has helped its share price soar to the highest in 12 years.
Buoyed by surging iron ore and copper prices, Rio has handed back record amounts of cash to investors, including about $US20 billion ($26 billion) in the past two years. It’s also managed to get out of thermal coal, putting the company ahead of competitors who are under investor pressure to do the same.
“Finding someone who can steady the ship and not make everyone upset is the right way to go,” said Ben Davis, an analyst at Liberum.
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