Trott’s ‘safe’ pair of hands to change the ‘feel’ of Rio Tinto and pare back lithium bet, analysts say

Simon Trott is a ‘safe’ pair of hands for Rio Tinto who will change the ‘feel’ of the global mining business and is poised to pare back his predecessor’s lithium bet, according to analysts. The verdict of Mr Trott’s appointment to the top job at Rio was broadly well received by number crunchers at local and international stockbroking firms and investment banks. “The market is likely to see the appointment as a ‘safe’ one, giving the reins to the head of Rio’s most important business, with operational experience and perceived to be less inclined towards mergers and acquisitions compared to other candidates,” Amos Fletcher at Barclays said. “With uncertainty resolved and a mandate focused on increasing shareholder value via reducing costs and complexity, we expect the market to take his appointment positively.” UBS expressed the same sentiment. “We think the appointment of Mr Trott as CEO will be received positively by the market as his relatively steady hand and focus on simplification will help refocus Rio after some expensive M&A,” it stated. Euroz Hartleys analyst Kyle De Souza said the local broking outfit was pleased with Mr Trott’s appointment. “We see this as a positive appointment, which will change the ‘feel’ of Rio Tinto locally and internationally significantly,” he said. “Imagine one of the biggest miners in the world with someone who knows how to work with their hands at the top! Can only be a good thing in my books.” Rio’s outgoing chief, Danish native Jakob Stausholm, and his predecessor, Frenchman Jean Sebastien Jacques, both had relatively limited mining experience before taking the top job. But both executives had built an international profile at huge multinational firms — Mr Jacques was among the top brass at Indian steelmaker Tata and Mr Stausholm was chief financial officer of Danish logistics goliath Maersk. Mr Stausholm was bullish on lithium and under his leadership Rio had spent more than $10 billion over the past year acquiring and developing lithium assets while the battery commodity’s price dwindled. Deutsche Bank’s Liam Fitzpatrick believes the changing of the guard at Rio may usher in a retreat on lithium. He based his assessment on comments made by Rio chairman Dominic Barton to investors and analysts. “The tone on lithium was interesting and suggests the company is aware of concerns over low returns and over investment. Barton stated that the company does not want to invest too aggressively with a focus on picking the best opportunities and capital discipline,” Mr Fitzpatrick said. “Simon Trott was one of the leading internal candidates and his appointment should not come as a surprise to the market.” A number of other business and political heavyweights on Wednesday also gave their two cents about Mr Trott’s appointment. Premier Roger Cook piled on the praise. “It’s a cracking, cracking appointment. I’m so proud of Simon. I’m so proud of his team,” Mr Cook said. “It’s an endorsement of everything that they’ve done to maintain Western Australia as one of the great mining jurisdictions in the world. “And now we have a homegrown product, a boy who grew up in the Wheatbelt who now is heading up one of the largest mining companies in the world. We’re very proud of him, and we think he deserves it. He’s done a great job for Rio Tinto in WA.” Mining billionaire Gina Rinehart also congratulated Mr Trott while urging him to remain in Perth and shift Rio’s London headquarters to the Western Australian capital where Rio already has a sizeable white-collar presence.