Ali Cain talks to Rio Tinto CEO Tom Albanese about the lessons he has learnt from running one of the world’s biggest mining operations.
Ali Cain: What are the most challenging, rewarding and exciting aspects of your job?
Tom Albanese: The size and geographic spread of Rio Tinto’s operations presents a significant challenge, but it is also one of the most rewarding aspects of my job. Making sure I am in touch with what is happening at all of our projects around the world can be hard work, but I draw a lot of inspiration and enjoyment from the people I work with, which makes my job a lot easier.
We are in incredibly exciting times now, for Rio Tinto and the sector. China’s economic emergence, matched with greatly stepped up M&A activity, not to mention strong share price performance compared to other sectors, has created a very dynamic environment.
The sustainable development work that Rio Tinto carries out is also a very rewarding aspect of the job. We work very closely with the countries and communities in which we operate, ensuring that we respect their laws and customs and work in a socially and environmentally responsible way.
It is incredibly satisfying to see the positive impact that the company can have on the local communities and environments where we operate.
What is your advice for new CEOs in terms of how they can best prepare themselves for a similar job?
I’m passionate about what I do and I think that is one of the prerequisites for success for any job. You must also be adaptable to change, be prepared to take on new challenges, go outside of your comfort zones, and always be ready to learn.
As the CEO of such a large company, what one thing has surprised you the most?
In less than two years, Rio Tinto has moved from being a relatively unknown company, in a relatively quiet sector, to a very visible player in an increasingly geopolitical industry. There is a lot more newsprint devoted to Rio Tinto than I ever would have expected.
What are the three most important things to keep in mind when running a big, multinational company?
I think it is important to keep an eye on the bigger picture, to keep the right balance between what are short-term, immediate items, such as current performance, safety and production issues, and those longer-term strategic aspects, such as growth and innovation.
The culture and values within the organisation are also crucial – it is important to put the right face forward not just for the stakeholders, but also for employees. Over the last 12 months, we have refined and evolved the Rio Tinto brand into something that is more modern, more appealing to our employees, and we have a culture of open communication within the business.
As a business with operations in so many different parts of the world, I think it is important to uphold the same strong principles across the organisation. I believe we have become well-known for our leadership positions in areas such as operational excellence, employment safety, environmental performance, biodiversity, water management and climate change, and I think it’s important for us to maintain that focus wherever we are in the world.
Who has most inspired you in business?
I have always been inspired by those who were passionate about their roles, who looked for solutions, and were not afraid to speak their mind or work hard to accomplish what they wanted to achieve. These are the individuals who inspire me to work harder, better and smarter.
What is the best training for a CEO to run a takeover defence?
I don’t think you can ever be ‘trained’ to run a takeover response. What we have at Rio Tinto is a very strong team of energetic people from within and outside the company focused on delivering our message to all stakeholders. The most important thing is that whatever we do is focused on delivering shareholder value.
It is also important that, as CEO, you don’t let it distract you or anyone else in the company from running the business, and I think we have successfully achieved this. At the end of the day, it is all about value.
What is the biggest hurdle the mining industry is facing at the moment?
Certainly one of our biggest challenges at the moment is simply keeping up with the demand we are seeing from the developing world, particularly from China and India.
In China, we are seeing the equivalent of two Manhattans being built every year; billions of people moving from rough housing areas, where the homes had maybe a light bulb or two, to comfortable apartments that are fully wired and air conditioned, with lights in the ceiling and refrigerators. Billions of people are moving into what any economist would describe as a ‘metal-intensive’ phase, and the sector continues to be supply-constrained.
Whether you believe in de-coupling or not, the fact of the matter is that we have an increasingly large part of the global economy, led by China, continuing to grow at remarkable rates, to the extent that we still see global growth expectations of 4% for 2008.
This is largely unchanged from a year ago, despite considerable weakness in the US and elsewhere. This growth is driving very strong demand in the metals sector, which is sometimes hard to imagine from Wall Street or London.
What is Rio’s biggest hurdle?
The mining industry is witnessing unprecedented global demand for its products. For miners, making sure that the human resources and infrastructure are in place to deliver this product to customers is a major challenge.
Rio Tinto invests a huge amount of time and effort to ensure that we have the best people and technology in place to deliver our product faster than our competitors.
In this market of strong demand and markets, we see continued pressure on costs. These are both associated with the costs of mining and running our operations, costs to build new capacity, and the costs of access to land and mineral rights.
What do you think are Rio’s three most valuable assets?
Resources, people and technology. Obviously our portfolio of Tier 1 – large, long-life, low-cost assets is key to our leading position in the mining industry, but we wouldn’t be where we are today without the contribution from the people who work at Rio Tinto.
It is their expertise and focus on safety, performance, cost and delivery that really drives us forward. Our technology is also one of our most valuable assets, enabling us to take significant steps forward, like our industry-leading aluminium smelting technology, AP50, and our development of driverless trains in our iron ore operation in the Pilbara in Australia.
Some of your mines are located in very remote places. How do you keep a handle on an empire that spans such a large area?
One of Rio Tinto’s most valuable assets is its people. Having a strong team at every level of the business enables us to operate across many different parts of the world. Our product group CEOs are leaders in their respective sectors, and they are supported by teams with a similar level of commitment and enthusiasm. That certainly makes my job a lot easier!
But it’s important to stay both physically and mentally fit to stay on top of a very active travel schedule, living in different time zones on a regular basis. I love to travel and visit new places, even if they are sometimes very remote. This certainly helps in a role which requires more than two thirds of the time being on the road.
