Nirio Mendoza GEOS 543C Best Practices and Projects Stages Fall 2009 University of Arizona Geosciences Department

Nirio Mendoza GEOS 543C Best Practices and Projects Stages Fall 2009

Outline
Rio Tinto history Analysis of strengths Analysis of weaknesses Currents facts Assessment and conclusions

Making profit selling fools gold?

A broad geographic spread of operations

1 Minas de Rio Tinto

2 Rhodesian copper belt

History
The Rio Tinto Company founded at 1873 by Hugh Matheson when acquired Minas de Rio Tinto At the end of 1880s leading the World market for sulfur and copper. In 1925 Sir Aucklan Geddes nominated as chairman. At 1920s decided take part of newly-discovered Northern Rhodesian copper belt. At 1930 established American subsidiary Pyrite Company Incorporated to produce Cu, Zn, Pb, iron sinter. At 1954, two-third of the Spanish business was sold. At 1962, created The Rio Tinto-Zinc Corporation (RTZ), as the result of a merger British The Rio Tinto Company and the Australian The Consolidated Zinc Corporation.

History (cont.)
Between 1962 and 1968, discoveries and development of many projects were executed: Palabora (Cu) in SA, Rossing (U) in Namibia, etc., also acquires Borax Group. At 1995, the RTZ Corporation PLC and CRA (Conzinc Rio Tinto of Australia Limited) unify as a dual listed company. At 1997, again changed name: The RTZ Corporation PLC became Rio Tinto plc (based in the UK) , and CRA Limited became Rio Tinto Limited (based in Australia). Between 2000 and 2007: coal, aluminium, iron ore, diamonds was acquired, added further strength to Rio Tintos already exceptional resource base. The last acquisition for $ 38B was the Canadian aluminium producer Alcan Inc., becoming the global leader in aluminium.

Initial Strengths (from 1873 to 1954)

Landscape with huge ore resource Oligopoly, market power Strategic operational engineer to survive during the pyrites world
introduction of railroad steam shovels

Strategic alliances in Iberia (1878), America Pyrites Producers (1884?), and European Pyrites Producers (1928), also with the chemical and fertilizer producers Strategic renegotiation of term of purchase, although they had paid less the real cost Highly capitalized international firm, with borrowing low cost Strategic boards changes, after Matheson and Fielding, Geddes stage characterized by high-order entrepreneurial
ability to perceive new productivity opportunities

Delegation responsabilities, attractive promotion, bonus to hire high skilled crew. Diversification; as consequence of necessity?
Recovery sulfur from smelter was gas Iron contaminated with Pb, Zn

Opportune adventure in Rhodesian copper belt

Initial Weakness (from 1873 to 1925)

Matheson-Fielding era: Low-order entrepreneurial, focused to exploit full potential of the Minas de Rio Tinto. No single executives had scientific or engineer training Low cost open-air calcinations teleras method to recovery low grade copper:
First anti-smoke league

Extravagant initial production by human and muless power Staff concentrated on improving existent methods instead of look for alternatives Activities totally centralized or diffuse
When they decided to enter into a large scale production, but with not supported human resource

Open-air calcinations teleras heap roasting method Rio Tinto Mine (1890)

Currents facts

A consistent and successful strategy

Always looking for the maximization of shareholder value Diverse and high operational experienced boards Strategic international and local multi-team group working since initial stage: Case of Madagascar Landscape with high potential

High standard: health, safety, environments and community responsibilities

Ready to satisfied the growing metal consumptions
www.riotinto.com

Positive finance
Recent earnings strength continues

Strength in diversity

Future operations
1st Expansion Brownfield 2nd Greenfield exploration

Rio Tinto has a strong pipeline of Greenfield opportunities for the next generation of projects

Assessment and Conclusions

Multicommodities
Value based on its landscape Multitask international team High operational experienced boards

Viable collaborative relations with the community