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Rio Tinto CEO to Step Down After $14 Billion Charge

Thursday, 17 Jan 2013 | 2:55 AM ET

Global miner Rio Tinto has announced the surprise resignation of its chief executive after taking a $14 billion charge in connection with Tom Albanese's two most significant acquisitions, Mozambican coal and aluminium.

A mining veteran, who joined Rio two decades ago, Albanese will be replaced by iron ore boss Sam Walsh.

Albanese, who became chief executive in 2007, had until now largely survived the consequences of his damaging $38 billion acquisition of aluminium group Alcan that same year, a top-of-the-market deal when Rio was under pressure from rivals to bulk up or be acquired.

(Read More: Rio Tinto Output Tops Forecast on Resurgent China)

The group has since seen years of losses in aluminium and took a $8.9 billion charge a year ago. It had planned to shrink the division by hiving off most of its Australian and New Zealand assets for sale, but buyers have not flocked.

Rio bought Mozambique-focused coal miner Riversdale in 2011.

Doug Ritchie, who led the acquisition and integration of the Mozambique coal assets when he was head of Rio's energy division, has also stepped down.

Rio said on Thursday the non-cash impairments would include a charge of around $3 billion relating to the Mozambique business, as well as reductions in the carrying values of Rio's aluminium assets in the range of $10 billion to $11 billion.

The group also expects to report a number of smaller asset write-downs in the order of $500 million. The final figures will be included in Rio Tinto's full year results on 14 February.

(Read More: Rio Tinto to Axe Costs, Cautiously Optimistic on China Growth)

"The Rio Tinto Board fully acknowledges that a write-down of this scale in relation to the relatively recent Mozambique acquisition is unacceptable," Rio Tinto chairman Jan du Plessis said.

"We are also deeply disappointed to have to take a further substantial write-down in our aluminium businesses, albeit in an industry that continues to experience significant adverse changes globally."

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