Jakob Stausholm has been in charge of Rio Tinto a year and the scale of the task facing him is becoming clear.
A company-commissioned report by former Australian sex discrimination commissioner Elizabeth Broderick last week revealed shocking levels of bullying, discrimination and abuse at the 149-year-old mining group, which is the world’s biggest producer of steelmaking ingredient iron ore.
More than a quarter of women surveyed said they had been sexually harassed and almost 40 per cent of men who identified as Aboriginal and Torres Strait Islander said they had experienced racism.
“I am really disturbed by the things we are learning about,” Stausholm told the Financial Times. “As management, we own the culture and when we know these things we have an obligation to address them.”
By publicly exposing the company’s workplace failings, Stausholm hopes to bring about the change needed to create a less hierarchical and more open-minded Rio.
“If you want to be transparent inside the company it is probably the best thing to be transparent externally as well,” said the 53-year-old Dane, who commissioned the report and has promised to implement all its 26 recommendations.
A former Shell and AP Moller-Maersk executive, Stausholm was Rio’s finance director for two years before being named CEO in December 2020 in the wake of an international outcry over the company’s destruction of an ancient Aboriginal site. The Juukan Gorge incident cost several executives, including Stausholm’s predecessor Jean-Sébastien Jacques, their jobs.
The selection of an internal candidate with limited operational experience was not universally welcomed by shareholders. Nor was his first big investor presentation in October, when he set out plans to invest $7.5bn over the next nine years to halve the company’s carbon emissions.
But Stausholm, who likes to submerge himself in data and pore over reports, has started to win round investors and analysts.
“Shareholders seem to like him,” said Richard Hatch, analyst at Berenberg. “It was a bit of a surprise when he got the role but he’s been very consistent on strategy, focusing on free cash flow, shareholder returns and, importantly post-Juukan Gorge, Rio’s ESG credentials.”
George Cheveley, portfolio manager at asset management company Ninety One, believes Stausholm was right to focus on culture.
“Everyone focused on the decarbonisation plan but the first half of the investor day was all about culture, people and organisation,” he said. “But these things are actually crucial for Rio. He’s trying to change the way Rio is run and makes decisions.”
The workplace culture report came shortly after Stausholm had chalked up his first big win as boss of the $90bn company, when he detonated several tonnes of explosives in the Gobi desert to begin caving work at Rio’s most important growth project.
Oyu Tolgoi — Mongolian for Turquoise Hill — will be one of the biggest copper mines in the world once it reaches full capacity from 2028, producing 500,000 tonnes a year of a crucial energy transition metal.
Its $6.9bn underground expansion had almost come to a standstill because of bitter disputes over power, tax and who bears responsibility for the delays and cost overruns — the budget has blown out from $5.3bn.
Those disputes have been put to bed after Rio subsidiary Turquoise Hill Resources agreed to write off $2.4bn of debt Ulan Bator had agreed to pay back out of its share of the mine’s profits.
“So what does this write-off really mean? It basically means the government will receive dividends earlier,” Stausholm. “And if you are working with a partner or a co-owner that doesn’t receive a dividend, it is very difficult to get that kind of mutual positive benefit.”
Stausholm is keen to heap praise on Bold Baatar, the Mongolian national he picked to run Rio’s copper business.
“Bold has made a huge contribution,” he said. “He has a much better understanding of what is going on in Mongolia than I do.”
And he is reluctant to criticise his predecessor Jaques. “I don’t want to point any fingers but I think the reality is we did not have the relationships we needed to have,” he said. “We had the agreements but not the relationships and you actually need both.”
Stausholm hopes the debt deal with Mongolia will send a message to Rio’s partners in other parts of the world — namely that mining, if done correctly, can bring “mutual prosperity”.
Oyu Tolgoi is one of four projects Rio needs to get back on track to tap rising demand for the commodities needed in a low-carbon economy and rev up its share price, which has flatlined over the past year even though the company’s financial position is strong thanks to high iron ore prices.
Its $2.4bn Jadar lithium project in Serbia was plunged into doubt last month after Belgrade arbitrarily revoked Rio’s licences to mine and explore ahead of elections in April.
In Africa, Stausholm said he is “absolutely committed” to developing Simandou, the fabled Guinean iron ore deposit that is one of the great untapped prizes in mining.
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He visited the country in December to meet Colonel Mamady Doumbouya, the former French legionnaire who seized power in a military coup last year.
“We have a team on the ground. We are meeting regularly with the government and making progress. I think we are doing the right things,” he said.
However, he can point to fewer tangible signs of progress at Resolution, a giant underground copper mine in Arizona.
Resolution has been left in limbo after the Biden Administration rescinded an environmental impact study that was needed to complete a key land swap agreement. “We are working toward progressing the project,” he said.
Advancing Rio’s key projects is not the only challenge facing Stausholm. He also needs to improve Rio’s operational performance, particularly that of its flagship Australian iron ore business, which has struggled to hit output targets and needs to complete several new mines to improve product quality.
“If you look at our operational performance we still have opportunities to do better,” said Stausholm, who is under no illusions about the task ahead of him. “There’s plenty do.”