Rio Tinto Says Africa Key to Growth Even After Costly MisstepsBy
Africa remains largest untapped mineral resource, Baatar says
Rio lost billions on earlier deals, sparked regulatory probes
Rio Tinto Group said resource-rich Africa is still central to the company’s growth strategy despite a succession of failed investments and scandals in the last 10 years.
The continent will expand its production and consumption of metals over the next decades as the economy grows and becomes more industrial, Bold Baatar, Rio’s chief executive of energy and minerals, said in a speech at Bloomberg Intelligence’s LME Week Forum in London.
"Africa is the largest untapped source for growth for our industry, and a lot of the minerals of the future will come from the continent," Baatar said. "Our future with the East lies in Africa, and together we can participate in its transformation journey."
The track record of success for the world’s biggest mining companies in Africa over the last decade has been poor. Firms, including Rio, spent billions expanding into new African assets as metal prices soared during the commodities super-cycle of the late 2000s, only to see much of the value lost as prices collapsed in later years.
Rio spent $3.7 billion in 2011 on a coal project in Mozambique and years developing the $20 billion Simandou iron ore project in Guinea. It later abandoned both projects. Rio’s former chief executive officer and ex-chief financial officer were charged with fraud by U.S. authorities who alleged they inflated the value of the Mozambique coal assets.
For future projects to succeed, partnerships with African states, financiers and customers must "change beyond the traditional models and include different types of joint ventures and different project-financing models," Bataar said.
Rio exited Zimbabwe in 2015, but still has more than 10,000 workers in Africa, along with assets in Namibia, Guinea, Mozambique, South Africa and Madagascar.