Everything about Rio Tinto Group totally explained
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 Paul Skinner.
History
The origins of both the firm Rio Tinto and its name (
Spanish for
Dark Red River) are in
southern Spain. The
Rio Tinto river was the site of an ancient
mine (External Link
) which supplied the
Phoenicians,
Ancient Greeks,
Carthaginians and the
Roman Empire. Its water is actually red-colored because of its high mineral contents, that also make 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.
Resources
The group produces a number of mineral commodities in its various divisions:
Rio Tinto wholly owns
Hamersley Iron, which owns and operates a number of mines in
Western Australia either wholly or jointly with several partners. Its partners on some projects notably include several Chinese corporations.
Rio Tinto also owns 53% of
Robe River Iron Associates and 59% of the
Iron Ore Company of Canada.
Iron made up 18% of revenue in 2003 and was responsible for 36% of the group's profit. It is the world's second-largest producer of iron ore.
Future iron ore mines are being developed at
Simandou in
Guinea.
The copper division not only produces copper itself, but also a considerable quantity of
gold from its mines in
Australia,
Indonesia,
South Africa,
Chile, and the
United States, some as part of joint ventures. The group owns
Kennecott Utah Copper Corporation. The copper group was responsible for 23% of turnover (of which 55% was copper and most of the remainder gold) and 32% of profits in 2003.
Energy
The company's energy group includes
coal mining operations in
Australia (
Rio Tinto Coal Australia) and North America, and
Energy Resources of Australia, which operates the
Ranger Uranium Mine near
Kakadu National Park in Australia. The energy group also operates the
Rossing uranium mine in
Namibia. This group contributed 20% of turnover and 11% of profit.
Industrial minerals
The Industrial minerals group extracts
talc,
titanium dioxide,
salt,
borax, amongst several others. These operations are scattered across
Australia, the
United States, and
Africa. This group contributed 15% of turnover and 11% of earnings.
Rio Tinto owns
Comalco, which mines
bauxite (aluminium ore) in
Weipa,
Queensland, operates alumina refineries in
Gladstone, Queensland. It also operates two aluminium smelters in Australia at
Bell Bay (
Tasmania) and
Boyne Island (Queensland, 59% interest), and one in New Zealand at
Tiwai Point (79% interest). The group also operates the
Anglesey Aluminium smelter at
Holyhead in the
United Kingdom. This group contributed 16% of turnover and 14% of adjusted earnings.
The company's diamond operations are best known for the
pink diamonds produced at the
Argyle diamond mine in Western Australia, which produces over 90% of the world's supply of these gems and around 30% of the world's annual production of all natural diamonds. The company also owns 60% of and manages the
Diavik Diamond Mine in
Canada's
Northwest Territories, and the
Murowa diamond mine in
Zimbabwe.
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.
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 hasn't 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.
Further Information
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