20/04/2009 - 15:39

Shareholders vent anger at Rio

20/04/2009 - 15:39

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Rio Tinto shareholders have shown their displeasure with the miner, casting a strong protest vote against the re-election of director Rod Eddington and the company's remuneration report.

Rio Tinto shareholders have shown their displeasure with the miner, casting a strong protest vote against the re-election of director Rod Eddington and the company's remuneration report.

The dual-listed miner today held the second part of its annual general meeting in Sydney, following last week's meeting in London where shareholders reportedly vented their frustration at the company.

The frustrations centre on the $US19.5 billion Chinalco deal, which was not up for a vote due to pending regulatory and government approvals in Australia, the United States and China.

The Chinalco agreement will allow the Chinese entity to double its shareholding in Rio and take stakes in key assets, including iron ore assets in the Pilbara.

"I see there have been substantial failures of the management and board over the last two years," one shareholder said to the packed meeting in Sydney.

"You are selling a stake to Chinese government interests at a lower price than BHP's offer," the shareholder said, referring to an aborted takeover bid by BHP Billiton last year.

"My concern is your ability to buy at the top of the market and sell at the bottom," said John Cook, another shareholder.

The main focus for protesting shareholders was the re-election of Perth-born director Sir Rod, who was also a director of the collapsed Allco Finance Group and is a close confidant of Prime Minister Kevin Rudd.

Sir Rod received most of the protest votes compared to other resolutions put to investors at both meetings, with around one share voting against him for every two that were in favour.

Overall, 450.1 million shares were cast in favour of Sir Rod's re-election compared to 246.1 million against.

Voting on the company's remuneration report was also met with strong opposition, with 145.8 million shares voting against its approval compared with 611.9 million in favour.

However, despite the apparent anger at Rio's deal with Chinalco, shareholders strongly supported the election of new chairman Jan du Plessis.

Mr du Plessis, along with chief executive Tom Albanese, today continued to spruik the merits of the Chinalco deal to shareholders.

"We are committed to pursing the Chinalco transaction," Mr du Plessis told shareholders after becoming chairman at the global miner's annual general meeting in Sydney on Monday.

"I don't like the idea of a plan B.

"Chinalco was attractive in early February for financial and strategic reasons and our stance hasn't changed."

Mr du Plessis was appointed in March after chairman-elect Jim Leng quit the board over the Chinalco deal.

Some shareholders have expressed concern at the level of control the deal would give China over key Australian iron ore mines, where they are the chief buyer of the product.

But Mr Albanese said Australia had a large stake in the outcome of the proposed deal.

"There is currently an opportunity for Australia to position itself for a mutually rewarding relationship that could define the next few decades," Mr Albanese said.

Mr du Plessis talked down reports that BHP Billiton representatives had met with Rio Tinto over the weekend to discuss another possible takeover bid.

He said he had never met BHP Billiton chief Marius Kloppers, nor had he met with BHP Billiton's chairman Don Argus on Sunday.

BHP Billiton abandoned a hostile takeover bid late last year, citing the global economic crisis and Rio Tinto's debt, which was mostly incurred due to its purchase of Alcan.

After Rio bought Alcan at the peak of the commodities boom two years ago its debt soared, forcing the Anglo-Australian miner to undertake a range of measures to help pay off the hefty bill.

Mr Skinner said it would turn out to be an excellent investment.

Issuing the company's outlook at the meeting, Rio Tinto's departing chairman Paul Skinner said a synchronised global recovery was unlikely for at least 12 months.

Mr Albanese was likewise downbeat about the recovery of Chinese metals demand, saying it was expected to rise at a low single digit rate in 2009.

"This is much slower than the over 20 per cent rates of growth realised in recent years and will not be enough to offset a much bigger decline in consumption in other markets," Mr Albanese said.

Rio Tinto's shares fell on Monday, with analyst Gavin Wendt saying it was likely to be temporary.

"Rio is going through a pretty tough couple of days because they had a similar meeting in London and I think the same thing happened to their share price there, but they bounced back," Mr Wendt said.

Rio Tinto closed at $57.90 down $1.22, or 1.59 per cent.

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