Another week, another blue-chip in the dock. The US Securities and Exchange Commission has brought fraud charges against London-based mining giant Rio Tinto and two former executives in relation to an ill-starred coal venture in Mozambique. Whatever its legalities, this was a colossal corporate cock-up.
In 2010, Rio paid $3.7 billion for Riversdale, an Australian company that controlled large coal deposits in the Tete region of Mozambique. The plan was to send coal by barge 400 miles down the Zambezi river to the coast, for shipping to Chinese power stations. But the coal reserves proved disappointing, while the Mozambique government refused to permit the barge operation and a rail link proved too expensive. Rio’s chief executive Tom Albanese (already tainted by an earlier takeover disaster, of Alcan) lost his job. Riversdale was sold by his successor for a token $50 million to an Indian consortium which is reported to be thinking of converting the coal to gas, to make it easier to transport.
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