Sam Walsh is a curious mix of plain-spoken modesty and polished style. With his cherubic face and easy smile, the Australian chief executive officer of Rio Tinto, the world’s second-largest mining company, would make the perfect Santa Claus. He is addicted to Coca-Cola, loves to tell stories and has a dotty obsession with milk jugs, the little porcelain ones you find on tea or coffee trays.
In China, he once paid for an entire dinner set just so he could nab the one jug that went with it. “I pulled the milk jug out and stuck it in my pocket,” he says, grinning. “The store owner went mad because she was left with a dinner set without a jug.”
Yet he is also addicted to fine suits – Canali is his brand – collects modern art and, along with his wife Leanne, is a regular at London’s Royal Albert Hall.
His easy-going manner is deceiving; his job is to fix the damage inflicted on the company by an epic spending spree that was highlighted by the $38-billion (U.S.) purchase in 2007 of Montreal’s Alcan, probably the biggest, stupidest resources deal of the last decade. He is doing it with the steely efficiency of the great white sharks hunting in the waters off his home town of Perth, Western Australia.
Since January, when he was plucked from Rio’s iron ore business to run the whole show, he has put the mining company through a counter-revolution that has seen billions cut from capital spending and expenses. The new focus is on shareholder value, not relentless expansion. Call it mining in the age of austerity. “In terms of the fix-up job, I think we’re already there,” he said over breakfast in his sixth-floor office of Rio’s central London headquarters. “The businesses are motoring along. You can feel the momentum.”
That wasn’t the case last year, when Rio lost $3-billion, its first annual loss in decades, and half the company was either for sale or rumoured to be for sale. Tom Albanese, Mr. Walsh’s predecessor, was ousted – punishment for the open-cheque growth strategy that had triggered writedowns of $28-billion in the aluminum businesses alone.
My breakfast with Mr. Walsh was not our first encounter. We had met in September, when he and the CEOs of Newmont Mining and Anglo American popped up at a Vatican mining conference in Rome that was hosted by Cardinal Peter Turkson, president of the Pontifical Council for Peace and Justice. The meeting was billed as a “day of reflection with the mining industry,” though there wasn’t a lot of kneeling and praying. Mr. Walsh said the event was designed “to open a dialogue where mining interfaces with the community.”
The article I wrote about the odd little Vatican event concluded that, given the mining companies’ often sorry history of spoiling the Edens bestowed on them, “it may be easier for a camel to pass through the eye of a needle than a mining boss to enter the kingdom of God.” To which Mr. Walsh replied in an e-mail: “I have however recognized for some time that getting me through the eye of a needle is going to be quite a challenge, but I enjoy challenges.”
That’s why he was eager to take the top job at Rio.
Mr. Walsh said he had no idea he would emerge as Mr. Albanese’s successor, even though he had been running Rio’s most profitable business – iron ore – and had earned a good reputation as the company’s Mr. Fix-it.
“My wife and I were in Singapore the weekend [before Mr. Albanese left],” Mr. Walsh said. “We were ensconced in the Raffles hotel. I woke in the morning to a flurry of e-mails. ‘Drop everything, come to London, come as you are. There is an emergency board meeting.’ So I said to Leanne that I’ve got to get a suit, a white shirt and a tie, and thank God I did. By Thursday of the following week, I was appointed CEO. I was fronting the media, and I don’t think a Hawaiian shirt would have done the trick. I was wearing the suit I had made in Singapore in 24 hours.”
Mr. Walsh had thought his age – he was 63 when he was appointed – would have worked against him. When I tell him he really doesn’t look a day over 62, he laughs heartily.
Breakfast is ample. We are treated to eggs benedict, Greek yogurt topped with fruit, salmon, assorted berries, coffee and tea. There is no server. Mr. Walsh himself rises to pour the coffee and clear the plates. The office is far from luxurious. The furniture seems one step above IKEA, but I notice some rather striking oil paintings.
Mr. Walsh is an unlikely mining CEO because he is not a finance man, engineer or geologist. The son of a postmaster, he was born in Melbourne, received a commerce degree from the University of Melbourne and, keen to work at an international company, joined the Australian division of General Motors.