Rio Tinto chairman Simon Thompson will step down within the next year in response to investor opprobrium over the mining company’s destruction last year of a 46,000-year-old sacred indigenous site in Western Australia.
The Anglo-Australian miner said on Wednesday that Thompson, a Briton, would not seek re-election at the company’s annual meetings, scheduled for April and May 2022, and that it would begin a search for a successor.
Thompson’s decision to stand aside followed a storm of criticism over the board’s initial decision not to fire any of the executives responsible for blasting two ancient rock shelters at Juukan Gorge in May 2020 — an event that provoked a global backlash against Rio.
Pressure from Australian pension funds and other investors forced the resignations of former Rio chief executive Jean-Sébastien Jacques and two other senior executives in September last year.
However, Rio’s disclosure last month that Jacques was awarded a 20 per cent pay rise in 2020 despite the cave blasts scandal drew renewed accusations of a lack of accountability at the miner.
Thompson said in a statement on Wednesday that he “was ultimately accountable for the failings that led to this tragic event” at Juukan Gorge, which overshadowed Rio’s other successes in 2020, including the biggest dividend in its history.
“The tragic events at Juukan Gorge are a source of personal sadness and deep regret, as well as being a clear breach of our values as a company,” he added.
Thompson, a former investment banker and senior executive at miner Anglo American executive, joined Rio’s board in 2014, and become chairman four years later.
Another Rio director, Michael L’Estrange, who led a controversial board inquiry into the destruction of Juukan Gorge that critics said largely absolved senior management of blame, will retire before the company’s annual meeting in London next month.
It was L’Estrange’s report, and the board’s initial decision to impose only financial penalties on the executives responsible for the blasts, that triggered the shareholder backlash.
With Rio run from London but making the bulk of its money in Australia, the company is expected to face pressure to appoint an Australian as its next chairman.
“The resignations of Mr Thompson and Michael L’Estrange provide an opportunity to increase the Australian profile at board level,” said Ian Silk, chief executive of AustralianSuper, the country’s biggest superannuation fund.
Former Centrica boss Sam Laidlaw, one of two independent Rio directors leading the search for a new chairman, said the board accepted Thompson’s decision and was grateful he had agreed to provide an important period of stability for the miner’s new Danish chief executive Jakob Stausholm, who was appointed in January after two years as Rio’s finance director.
Last month, Thompson was accused of breaking a pledge to the traditional owners of Juukan Gorge when Rio replaced the acting head of its iron ore business with a permanent appointment. The company later said it should have communicated the executive changes “in a more collaborative way”.
“There is no realistic prospect of Rio rebuilding relationships, trust and reputation while those responsible for the degradation of its culture and social performance remain on the board,” said James Fitzgerald of the Australasian Centre for Corporate Responsibility.
“The departure of Rio Tinto’s chair, Simon Thompson, and director, Michael L’Estrange, suggests that the company understands this.”
The departures are the latest in a string of changes at the top for Rio. Three of its 10-person board — Jennifer Nason, Hinda Gharbi and Ngaire Woods — joined within the past 12 months.
Twice weekly newsletter
Energy is the world’s indispensable business and Energy Source is its newsletter. Every Tuesday and Thursday, direct to your inbox, Energy Source brings you essential news, forward-thinking analysis and insider intelligence. Sign up here.