Rio Tinto Group Chief Executive Officer Jean-Sebastien Jacques will step down amid an investor backlash over the destruction of ancient Aboriginal heritage sites in Australia.
The change comes only weeks after Chairman Simon Thompson said Jacques had the board’s backing to handle the fallout from the company’s destruction of the ancient sites. Chris Salisbury, iron ore unit CEO, and Simone Niven, group executive of corporate relations, will also exit. Jacques will remain in his role until the end of March next year, or a successor is appointed, Rio said Friday in a statement.
Talks with about 75 investors and Indigenous community leaders in the past few weeks made clear that many were unsatisfied with penalties delivered by a board-led inquiry that found no single individual was at fault for the blasts and reprimanded the three senior executives by trimming bonus payments, Thompson said in a phone interview.
“It became clear that this issue of individual accountability was just an obstacle to rebuilding trust,” Thompson said. “If these three individuals do not have the confidence of critical stakeholders to lead the required changes then we have got to move on.”
Explosions in May to open up a mining area at an iron ore operation impacted two rock-shelters—shallow, cave-like structures—in the Juukan Gorge region of Western Australia’s Pilbara region. The sites, used by Aboriginal Australians for cooking and shelter as long as 46,000-years ago, were among the most significant of their type in the country, according to archaeologists.
“Repairing those relationships”
The successor to Jacques, CEO since July 2016, will need to convince investors, regulators and legislators in Western Australia that Rio can address governance failings in its iron ore unit—the division that accounted for more than 90% of first-half earnings. The new CEO will also take on a flagship copper mine expansion in Mongolia that’s been beset by delays and a budget blowout.
That will likely require an executive with experience of Australia’s iron ore sector, an ear for community relations and the capability to usher through complex growth projects, said Andy Forster, senior investment officer at Argo Investments Ltd., which holds Rio shares. “Clearly a big issue for the next few years is just going to be repairing those relationships,” he said.
Rio, which is headquartered in London and has been criticized for a lack of understanding about community issues in Western Australia, should move to appoint an Aboriginal person to its board, Marica Langton, associate provost at the University of Melbourne, and a prominent Indigenous academic told Bloomberg Television Friday in a interview.
While the May explosions were lawful under a state government decision, Rio has been accused of failing to act on information that later showed the heritage sites had greater significance than first understood.
Jacques also told a Parliamentary committee hearing last month that the region’s traditional land owners, the Puutu Kunti Kurrama and Pinikura Aboriginal Corporation, were not made aware that Rio had three alternative options that could have avoided damaging the Juukan Gorge shelters. The PKKP will continue to …read more