Rio Tinto (NYSE:RIO) is undergoing a major restructure under a newly appointed CEO, Simon Trott, who took over the role on Monday. On Wednesday, he unveiled a radical simplification of the miner's operations into three core business units: iron ore, copper, and a combined aluminium–lithium group.
Trott, who previously headed the company's coveted iron ore division, said the changes would deliver sharper focus and greater accountability across the group.
"A simplified business structure, grounded in our fundamental commitment to safety and with a sharper focus on the most compelling opportunities we have, will enable us to deliver new standards of operational excellence and value creation," he said in a press release.
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With extensive knowledge of the iron ore business, Trott appointed industry veteran Matthew Holcz as the division leader. The consolidated unit will integrate Rio's vast Western Australian operations with the Iron Ore Company of Canada and, once developed, the giant Simandou project in Guinea.
Meanwhile, the company is merging its lithium business with its aluminium portfolio. Jérôme Pécresse will manage the business, comprising Atlantic Operations Aluminium, Pacific Operations Aluminium, and Lithium. By combining downstream-focused businesses, Rio aims to drive efficiency, implement productivity initiatives, and strengthen its exposure to future-facing commodities.
Other parts of the business are now under review. The miner's borates operation in California, its Richards Bay Minerals unit in South Africa, and the iron and titanium operations in Quebec have all been shifted to Chief Commercial Officer Bold Baatar for a strategic assessment. Those reviews could lead to divestments as the company narrows its focus on higher-return areas.
The overhaul also brings significant executive departures. Kellie Parker, who played a key role in repairing Rio's damaged reputation after the 2020 destruction of a sacred Indigenous site in Australia, will leave after 24 years with the group. Sinead Kaufman, head of minerals and once a contender for the chief executive post, is also departing.
Strategic resets are not unusual following CEO appointments, but this time, they come at a turbulent period for the firm. Subdued iron ore and lithium prices, combined with rising costs, have dragged its half-year profit down to $4.8 billion in July – the lowest since 2020. Its minerals division, now under review, has been cash-flow negative for two years, with weak demand for borates and titanium weighing heavily on earnings.
Restructuring efforts are noticeable even in the gold sector, which benefited from an extraordinary recent performance of the yellow metal. Leading gold miner Newmont (NYSE:NEM) announced job cuts on Wednesday to combat the 50% surge in all-in sustaining costs over the past five years.
Price Watch: RIO stock is trading lower by 0.21% to $61.82 at last check Wednesday.
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