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Rio Tinto chief executive Tom Albanese is seen in a November 2012 file photo.TIM WIMBORNE/Reuters

It was a wrong bet on China that crushed Tom Albanese's dream for Alcan Inc.

When the chief of Rio Tinto PLC took out the Montreal-based aluminum maker in Canada's largest-ever takeover deal in 2007, aluminum prices were at 35-year highs, and he believed they could go quite a bit higher.

The decision proved costly. Mr. Albanese resigned Thursday, along with another senior executive, as Rio Tinto announced a $14-billion (U.S.) writedown attributed mostly to its aluminum assets.

The charges included some $3-billion in impairments on coal assets acquired in Mozambique in 2011 and about $500-million in smaller asset writedowns.

For the aluminum business, it was the second writedown in as many years, bringing the total impairments on Rio Tinto's Alcan acquisition to $20-billion, or more than half the $38-billion price tag.

The huge hit is arguably the deepest wound yet on a global mining industry facing the harshest headwinds in decades, from huge cost runups to a murky outlook on demand and a scarcity of new resources. It's an environment that has been so difficult to navigate that many of the the world's largest mining companies, among them Canada's Barrick Gold Corp. and Kinross Gold Corp., have changed their top executives.

"The Rio Tinto board fully acknowledges that a writedown of this scale in relation to the relatively recent Mozambique acquisition is unacceptable," chairman Jan du Plessis said in a statement. "We are also deeply disappointed to have to take a further substantial writedown in our aluminum businesses, albeit in an industry that continues to experience significant adverse changes globally."

Mr. Albanese and Doug Ritchie, head of Rio's energy division, leave the company after leading a $4-billion acquisition of Mozambique-focused coal miner Riversdale in 2011.

The deal has soured since then as Rio failed to secure permits to ship the coal along the Zambezi river.

But China is at the root of the troubles.

When Mr. Albanese became chief executive officer in 2007, aluminum was trading at $1.20 a pound. The metal, used to make automobiles lighter and more fuel efficient, and to transmit electricity across long distances, trades at about 91 cents a pound today, barely meeting global average cash costs.

Ever since he steered Rio Tinto to acquire Alcan, and even as aluminum prices slumped to as low as 76 cents a pound during the financial crisis, Mr. Albanese has pointed to China to explain why the expensive purchase would eventually make economic sense.

Chinese producers, which supply virtually all of the country's aluminum, he predicted, would be throttled by low-cost producers such as Alcan, which had the advantage of cheap hydroelectric energy.

China, Mr. Albanese promised, would be forced to scale back attempts to meet growing domestic demand and eventually become a net importer.

"It's going to be all about the China story," he promised hours after Rio's victory in the takeover battle for Alcan.

He also rightly predicted that rising energy costs in China would open the door to new suppliers. What he had not counted on was that those suppliers would end up coming from China's north and west, where it has developed a new aluminum smelter business using cheap thermal coal to generate electricity.

"One of the key developments of recent years has been that, really, China continues to have the objective of maintaining self-sufficiency in aluminum production," said Patricia Mohr, vice-president of economics and commodity market specialist at Bank of Nova Scotia.

"At some point they will have to start importing more," she said, adding, however, that higher prices like the $1.20 a pound seen in 2007 are likely still years away.

The slump in aluminum prices, which led to the writedown, has triggered so many rounds of asset sales, closings and job cuts that Alcan is today a shadow of the global giant Rio Tinto acquired in 2007.

Following the sales of several divisions, including its packaging, engineered and specialty products groups, Alcan today employs only 16,000 employees, compared with 68,000 before the takeover. Its total production capacity is now about one-third of its 2007 levels.

Mr. Albanese was replaced immediately by Rio's iron ore chief Sam Walsh, but he won't be leaving the company until July 16 as he helps transition his duties. He and Mr. Ritchie are to walk away with no lump-sum payments, forfeiting their annual short-term bonuses for this year and last.

"While I leave the business in good shape in many respects, I fully recognize that accountability for all aspects of the business rests with the CEO," Mr. Albanese said in tendering his resignation.