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Rio Tinto reported $14 billion write-down

Staff writer |
The mining giant Rio Tinto announced that its CEO Tom Albanese had stepped down because of a $14 billion write-down on the value of assets.

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A non-cash impairments of approximately $14 billion (post tax) in 2012 full year results include approximately US$3 billion relating to Rio Tinto Coal Mozambique (RTCM), as well as reductions in the carrying values of Rio Tinto's aluminium assets, mostly Rio Tinto Alcan (RTA), but also Pacific Aluminium in the range of $10-11 billion. The compny also expects to report a number of smaller asset write-downs in the order of $500 million.

The company also said that Tom Albanese has stepped down as chief executive by mutual agreement with the Rio Tinto Board, and Iron Ore chief executive Sam Walsh has been appointed as his successor with effect from today. Doug Ritchie, who led the acquisition and integration of the Mozambique coal assets in his previous role as Energy chief executive, has also stepped down by mutual agreement.

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

"Rio Tinto's underlying business and balance sheet remain in good health, and we are taking decisive action to improve our competitive position further with an aggressive cost reduction plan. As announced on 15 January, we had a strong production year in 2012, particularly in our low-cost iron ore business where we produced a record 253 million tonnes. Since the price of iron ore dropped to a low of less than $US90 a tonne last September, prices rebounded strongly reaching a level of around $US150 a tonne earlier this week, albeit in an environment of continuing volatility," added Mr. du Plessis.

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