Rio Tinto has appointed the Australian-born boss of its powerhouse iron ore division, Simon Trott, to succeed Jakob Stausholm as chief executive.
Rio chairman Dominic Barton announced the move on Tuesday, saying he and the Board agreed the company could unlock “significant value” from its existing portfolio by improving operational performance and lowering costs.
Trott, 50, was born in the West Australian farming town of Wickepin south-east of Perth. He has spent more than 20 years at Rio, and before running the iron ore division, was the company’s chief commercial officer.
The announcement comes less than two months after Rio said Stausholm’s term as chief executive would end this year. The Danish accountant had led the miner since December 2020, but Barton told shareholders that it was a “natural moment” to appoint a successor ahead of an era where Rio wanted to “double down to deliver greater operational performance”.
Stausholm’s departure came after a period of tension between the chief executive and the Rio board. However, Barton and Stausholm have appeared together at multiple social events in June, suggesting their professional relationship has remained intact to some degree.
Trott will lead Rio through a period when US President Donald Trump’s trade war is roiling commodity markets and as conflicts in Ukraine and the Middle East threaten to disturb trade routes.
He is expected to try and make Rio less complex and bureaucratic, meaning staff headcount in some areas of the company could be reduced. Trott’s iron ore division has already reduced its headcount by about 3 per cent – or about 480 people – over the 12 months to the end of December.
Mergers and acquisitions with other big miners and unification of Rio’s structure will also be big issues for Trott to juggle in the near future.
Trott’s four years in charge of the iron ore division saw record high iron ore prices and billions of dollars of investment in new mines like Western Range in the Pilbara. But it has also included challenges including persistent cost increases, a struggle to maintain product quality and the slow process of rebuilding relations with native title custodians after the destruction of the Juukan Gorge, an ancient rock shelter, for Rio’s iron ore mining operation.
Yindjibarndi Nation chief executive Michael Woodley has worked with Trott to implement an indigenous land use agreement for iron ore mining near Roebourne in WA, and said Rio had made an “excellent choice”.
“I find Simon to be very respectful, straight-forward and always willing to assist,” he said. “The other thing I really like is he is always available.”
Woodley said the people of the Pilbara would be encouraged to see a West Australian chosen to lead the biggest exporter of the region’s ore. The last time an Australian ran Rio was in 2016, when Sam Walsh’s term ended.
Trott will inherit a company in good financial shape; according to JPMorgan analyst Lyndon Fagan, Rio’s $US13.5 billion ($20.6 billion) of net debt equates to a gearing ratio of about 19 per cent. Earnings this year are forecast to be about 16 times larger than its interest payments on borrowings; an important measure of its ability to repay its debt.
But he will also face a challenge to maintain dividend payment levels, as Rio’s finances are increasingly squeezed between higher spending on growth projects and lower revenues from weaker commodity prices.
Rio’s spending on new mines, equipment and decarbonisation is scheduled to rise to about $US11 billion each year in the forseeable future, well above the $US6.2 billion spent in 2020.
The company’s most important product, Australian iron ore, was fetching $US98.60 a tonne on Monday, according to S&P Global Platts. JPMorgan expects that the iron ore price will average $US95 a tonne in 2026 and the federal budget assumes further falls in coming years.
Iron ore prices were above $US100 a tonne for the majority of Stausholm’s term and hit record levels above $US233 a tonne in May 2021.
Analyst consensus measured by VUMA suggests Rio will report a $US10.02 billion underlying profit this year, lower than the $US10.86 billion reported for 2024 and less than half the record $US21.4 billion result announced in February 2022. The same group of analysts expect Rio’s earnings will edge lower again in 2026 to $US9.96 billion. If that prediction is correct, Rio will have reported four consecutive years of shrinking profits.
At the same time as shrinking profits, the board has decided to give shareholders a smaller proportion of earnings as dividends. Shareholders received 60 per cent of earnings as dividends last year, down from 79 per cent of the much bigger earnings pool in 2021.
WAM Leaders portfolio manager Matt Haupt said Trott was the “perfect candidate” and the news “should be taken well” by investors.
“Rio needs operational focus as the portfolio is largely set now,” he said, regarding lithium and copper acquisitions made during Stausholm’s term.
Trott will be hoping Stausholm’s acquisitions will become bigger revenue generators in future and reduce the company’s reliance on iron ore. Rio paid $US6.7 billion for Arcadium Lithium this year, in a deal that was sealed at a time of very low lithium prices. If prices for the battery mineral were to return to the high levels seen in 2023, the assets acquired by Rio should be capable of generating billions of dollars of revenue.
The Stausholm era has also left Rio with greater control of Mongolia’s Oyu Tolgoi copper and gold mine, after a $US3.3 billion buyout of minority shareholders in the project in 2022. Oyu Tolgoi could be one of the world’s top five copper mines if developed to its full potential, at a time when the commodity is expected to be in hot demand.
However, to fully capitalise on Oyu Tolgoi’s potential, Trott will need to solve Rio’s fractious relationship with the Mongolian government. Rio and Mongolia are still feuding over a long-standing tax dispute and historic, but unproven, claims of corruption at the mine dating back close to 15 years.
