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First he had to give up the bonus and now he is giving up the job. Five years after he struck the deal to buy Alcan, the Canadian aluminum company has proven to be Tom Albanese's nemesis. The chief executive of Rio Tinto has agreed to quit following today's announcement that Rio is writing down its assets by $14-billion (U.S.), most of which relates to Alcan.

Aluminum hangs like a glittering albatross over the neck of Rio. The value of the silvery metal has plummeted by almost a third since the market peaked in early 2008, thanks to massive overproduction. But market forces are not the reason for removing Mr. Albanese. The Alcan deal was priced at $44-billion, including associated debt. Early last year, Rio announced an impairment charge of almost $9-billion for the fall in value of Alcan's assets. Add to that the $10-11-billion writedown revealed this morning, and Rio is left with a withered Alcan, almost the half the size of the company it acquired in 2007.

That looks embarassing enough – such a misjudgment that might cost a chief executive his job. But if Mr. Albanese was forced to forgo his bonus in February and if he is leaving without any entitlement to shares and bonuses in Rio's incentive plans, it is not because of asset values, but because of cash. In order to finance the debt side of the Alcan purchase, Rio raised $15-billion by issuing stock to its shareholders. We can now see that every penny was lost.

Meanwhile, in Africa, more Rio shareholder dollars have been washed down the river – in particular, the Zambezi river, where another Rio purchase has come a cropper. Today's writedown includes a $3-billion impairment charge against the value of Riversdale Mining, an undeveloped coking coal asset in Mozambique which Rio acquired less than two years ago for $3.7-billion. Coking coal is an essential ingredient in the making of steel; its price is therefore depressed, thanks to the parlous state of the global steel industry. But that's not the reason for the writedown or for the departure, also announced today, of Doug Ritchie, the Rio executive who led the Rivesrdale Mining purchase. Rio had planned to export coal by barge on the Zambezi River, but the company said today "this option did not receive formal approvals." In other words, Rio had no certainty it had the means to get the coal out when it agreed to buy the asset.

Rio has gone for the safe option in appointing Sam Walsh, head of its hugely succesful iron ore division, to replace Mr. Albanese. Signs of renewed industrial vigour in China should help Rio sell more iron, and the share price recovered today after dipping 3 per cent. Still, it is depressing to discover once again that chief executives of global enterprises can be so easily led astray by the romance of takeovers. For Rio shareholders, the only regret must be that they did not grab the offer from BHP Billiton in 2008 which valued Rio at $147-billion, almost a third more than the company's worth today.