Banging the patriotic drum at Rio Tinto

February 2, 2010

Dear Mayne Reporters,

Three knights, one Lord and the chairman of Cazenove, that very British stockbroking outfit. That's what Rio Tinto shareholders encountered at the AGM in Brisbane's Sofitel Hotel today when all 15 directors turned up to show that this last bastion of the British empire is still mightily commited to Australia.

Chairman Paul Skinner, a plummy Shell man who joined the Rio board in 2001, held court with a mixture of charm and snootiness whilst his goons were doing their best to ensure there was no public record of the exchanges at what might be the last AGM of Rio Tinto if BHP gets its way.

Rio Tinto have refused to provide transcripts of past AGMs, they declined to webcast today's event and then they forced all shareholders to leave bags in the cloak room this morning. On spotting a recording device in my pocket, the goon then insisted on confiscating it. This has never happened to me before in more than 300 AGMs.

Given that the vast majority of large Australian companies both webcast and allow recordings of their AGM, this was just completely over the top and forced an opening exchange with Lord Plum that demanded the company make some sort of record of the coming exchanges - either transcripts or audio - available for the public and shareholders alike. He seemed to agree, but I've lost all faith in these clowns doing the right thing.

Even that very basic process of revealing and displaying the proxies didn't happen this morning and it was far too much to ask the directors up for election to deign to actually speak to us assembled shareholders.

Rio Tinto is a major mining house which pretends to be a dual listed company but in practice is only 15% Australian owned and is now down to a miserable two Australian resident directors on a board of 15. These clowns ran today's meeting like it was some sort of clandestine M15 meeting, so I wasn't going to give any quarter on the big question of the day - why isn't Rio Tinto headquartered in Australia given a majority of its assets are Down Under?

Lord Plum was determined to limit the opportunities for debate so he cut me down after the first domicile question, not allowing a follow-up about the implications of wall-to-wall Labor Governments for London-based Rio which owns more than $100 billion worth of Australian assets.

This meant that the rest of the headquarters argument had to be prosecuted through the various other resolutions. The first was the remuneration report? Why was our Winchester-based chairman collecting 667,000 quid a year when his BHP equivalent Don Argus is on less than half that? Is this over-the-top pay packet serving as a disincentive against shifting the headquarters to Australia?

An even snootier chairman of the remuneration committee, Sir Richard Sykes, took to the micropone to defend Lord Plum who labours oh-so-hard three days a week for a fixed salary. Lord Plum then joked about not putting in all his time sheets, suggesting he's actually an executive chairman which is another governance black mark.


The second crack at general business was a multi-headed China question which covered everything from the cover of the annual report, to those supposedly broken iron-ore contracts, the spot price shipment boycott, the $15.5 billion Chinalco share raid, Kevin Rudd's assistance in trade negotiations and even a recent speech CEO Tom Albanese failed to deliver at the China Development Forum.

The AFR reported that Tom had a prepared speech which ripped into the Chinese on things like its fixed currency and those $1.8 trillion in foreign reserves. Only problem being, he failed to deliver it to the Chinese leadership. Was this evidence our leader was a brash American lacking sensitivity about dealing with China?

The answers came thick and fast from Lord Plum, iron ore chief Sam Walsh and Albanese himself who completely ignored the undelivered speech question whilst talking up the dialogue and the prospect of future Chinese joint ventures.

Walsh predictably blamed the press for beating up the iron ore price stand off but said Rio was on track to exercise a 15 million tonne “minus option” in its Chinese contracts this year in favour of the more lucrative spot market.

Lord Plum gave Kevin Rudd a pat on the back for speaking Mandarin and pointedly said Chinalco dropped in to see him one day after the share raid. He's clearly still miffed about not getting any early warning.


Whilst Australia remains the poor cousin when it comes to board representation, the three Alcan directors who scored Rio board seats as part of last year's $40 billion takeover were all up for re-election this morning.

I didn't manage to get a word out of any of them but a shake of the head established that BHP board representation was not one of the many conditions that the Canadian government placed on the Alcan deal, if the Big Australian's takeover does go through.

Lord Plum also said there were no “poison pills”, just plenty of employment and operational undertakings that BHP would have to observe.


We've given Rio Tinto a tickle-up before over this headquarters question before, which might explain why Lord Plum was so effusive about all these vast investments in Australia in recent times. By joves, Rio even employs 560 Aboriginals - more than any other company.

However, when it came to Skinner's re-election I got up to speak against it on the basis that shareholders would be better off if snooty Poms stood aside and allowed a shift Down Under.

The arguments in favour were many and varied. Kevin Rudd's election ushers in a new dawn and Labor don't particularly warm to snooty Poms.

It was all very well for Rio Tinto to hire John Howard's nephew to look after government relations over the past few years but things are different now.

Key issues such as uranium mining, the dispute over the Shovelenna iron ore deposit in WA, infrastructure access issues with Fortescue metals, carbon taxes and the like will all be easier to negotiate if Rio is Australian-owned, Australian-run and Australian-based, which is certainly not the case presently.

One shareholder asked about a restart of the Bougainville Copper mine in PNG and this just demonstrates the point - Rudd and Labor will be far better placed to deal in the immediate region than Howard's crowd and would do more on the Bougainville issue if Australia as a nation had some skin in the game.

I even invoked the big republic push coming out of the 2020 summit as evidence of the shifting sands but was cut down by one the knights acting as chair before being able to say that British-educated Alexander Downer is no longer foreign minister, preferring to appear at lunches celebrating the Queen's birthday instead these days.

Despite making an array of points, the proposal went down like a lead balloon. You could hear the sound of a one-armed man clapping at the Sofitel.

A grey-haired Shirley from the Gold Coast declared London to be the centre of the world and another shareholder decried the excessive patriotism.

Given that resource nationalism keeps popping up all over the world, whether by Vladimir Putin's asset grabs or Tony Blair's tax hikes on North Sea oil, Rio Tinto really should stop treating Australia with contempt before a Labor politician actually pops up and publically declares it should be Australian-based.

Lord Plum said the board had a lovely dinner last night with Queensland Premier Anna Bligh and a few of her Ministers. It's a shame none of them took some of these knights and lords aside for a polite word, in that great tradition of Queensland's whatever-it-takes AWU faction.

Gotta fly, the plane out of Brissie has just been called.

Do ya best, Stephen Mayne

* The Mayne Report is a multi-media governance website published by Stephen Mayne with occasional email editions. To unsubscribe from the emails click here.