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Rio Tinto taps insider Stausholm for CEO in surprise pick after cave destruction

  • A parliamentary inquiry has called on Rio to pay restitution to Indigenous Australians affected by the destruction and also fully reconstruct the rock shelters.
Published December 17, 2020

Rio Tinto Ltd on Thursday named Chief Financial Officer Jakob Stausholm as its next chief executive, defying expectations it would pick an external candidate to repair its image after its destruction of sacred Aboriginal rock shelters.

The destruction of the 46,000-year-old Juukan Gorge rock shelters, while legal, sparked public and investor uproar that ultimately led to the resignation of not just incumbent Jean-Sebastien Jacques, but also two deputies.

Stausholm, who joined Rio as CFO in 2018, is now tasked with the tough job of repairing strained relationships with investors and the Aboriginal community, while reforming the company to improve oversight.

Rio's choice to tap an internal candidate was a surprise, with most bankers and investors expecting the company to choose an outsider to start with a clean slate.

The appointment of a Danish CEO after Frenchman Jacques will also come as a surprise to Australian investors, who have argued that a new CEO should have local experience and be based in the country that provides 85% of Rio's profits.

"The market's going to hate it," said a Melbourne-based fund manager, who declined to be named due to the sensitivity of the issue.

"I view Jakob as a bit of a caretaker CEO while they work out what they really want," he said.

As well as navigating Australia's trade tensions with China, potential aluminium plant closures and job losses, a new CEO will have to manage cost overruns at the company's biggest growth project in Mongolia, a new iron ore mine in Guinea and legacy issues in Bougainville.

A parliamentary inquiry has called on Rio to pay restitution to Indigenous Australians affected by the destruction and also fully reconstruct the rock shelters.

Rio said Stausholm will take the position effective Jan. 1, 2021, and Peter Cunningham will be appointed as chief financial officer on an interim basis.

"(Stausholm) knows the business quite well. It's an easier transition. But people probably wanted a bit more of a radical change," said a Sydney-based fund manager, who also declined to be named.

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