Rio to delay further former CEO's bonuses
Regulators continue to investigate payments to a consultant on an iron-ore project in Guinea.
Rio Tinto Group plans to further delay paying outstanding bonuses to its former chief executive as regulators continue investigating payments to a consultant on an iron-ore project in Guinea.
In 2017, the company said it would postpone any short- and long-term incentives owned to Sam Walsh for a minimum of two years. Rio is now planning to extend that time period.
“Given investigations remain ongoing the board has asked Sam to agree to a further deferral until the investigations have concluded,” a Rio spokesman said on Tuesday.
Mr Walsh retired as CEO in July 2016, months before Rio announced that it alerted authorities, including the US Department of Justice and the UK’s Serious Fraud Office, about payments related to the Simandou iron ore project. The investigation is centered on a $10.5 million payment to an external consultant in 2011 for assisting on negotiations with Guinea’s President Alpha Conde.
Rio later terminated contracts of two senior executives, arguing they failed to maintain standards in the company’s code of conduct. Leaked emails showed former CEOs Tom Albanese and Mr Walsh, then head of Rio’s iron-ore unit, discussing the payment.
Mr Walsh has previously said that he always acted lawfully and in accordance with his duties while at the company.
In its 2016 annual report, Rio said that any long-term incentive plan payments, including so-called bonus deferral and performance share plans, that would have vested up to 2020 will be impacted by the agreement and will affect awards going back to 2013.
The value of these awards changes with company performance. In 2016, Walsh’s total pay package was $11.4m, which includes long-term incentives of $6.8m that were deferred.
The Simandou deposit in Guinea was once one of the most prized mineral assets, but a bitter dispute over the licence, collapsing iron-ore prices and huge infrastructure costs, saw Rio abandon plans to build it.
Separately, Rio and Mongolia said on Monday they signed a deal for the supply of power to the miner's giant copper mine extension at Oyu Tolgoi by mid-2023, with both sides saying the framework agreement marked a step forward after a protracted dispute.
The Oyu Tolgoi project is central to Rio Tinto's push to diversify its portfolio away from iron ore, but it has faced a series of challenges as Mongolia's fragile government wrangles over how to maximise benefits for the country.
First production at the $5.3 billion underground expansion located near the southern border with China is scheduled for early next decade, creating one of the world's biggest copper suppliers.
The construction of a 300 megawatt plant, close to the Tavan Tolgoi coalfields, to supply electricity to the mine will start in 2020 under the new agreement.
The plant is expected to be operational by mid-2023, slightly later than the 2022 date mooted after the government cancelled an earlier power agreement in February.
Updated: January 2, 2019 02:07 PM