Want to know how Rio Tinto grew to become the world’s 2nd largest metals and mining corporation over a span of around 150 years? Then buckle up as we dive deep into Rio Tinto’s illustrious past.
An Anglo-Australian multinational company that’s now the world’s second-largest metals and mining corporation, Rio Tinto Company is synonymous with success.
Rio Tinto has explored, mined, and processed some of the most precious and rare minerals over the years, including the famous recently discovered 187.7 carats diamond known as The Diavik Foxfire and the 12.76 carats Argyle Pink Jubilee Diamond that sold nearly for a million dollars. That’s not all. It is also one of the leading producers of iron ore, copper, and aluminum – key metals that are in high demand around the globe.
Here are some stats depicting how the Rio Tinto corporation is faring nowadays:
Right from 1873, when the company was established to today, Rio Tinto has continued to grow and prosper while tackling a plethora of challenges that threatened its very existence. It has had its fair share of ups and downs, but it has always managed to breeze through and shows no signs of slowing down.
Let’s now go back in time to discover and understand Rio Tinto’s past to see how the company grew to become a leader in the metals and mining industry before we come back to the present and visualize what the future has in store for Rio Tinto.
Founded in 1973, Rio Tinto is now one of the leading metal and mining companies globally, with headquarters both in the UK and Australia.
The Rio Tinto Corporation, also referred to as the Rio Tinto Group is a dual-listed company. It includes Rio Tinto plc, which is listed on the London Stock Exchange as a component of the FTSE 100 Index, and Rio Tinto Limited, which is listed on the Australian Securities Exchange as a component of the S&P/ASX 200 index.
Plus, the American depositary shares of the company are also traded on the New York Stock exchange, making it one of the few companies whose shares are traded on three major stock exchanges.
Since the days of old-time, a particular site in southern Spain along with Rio Tinto in Huelva was mined for metals and minerals. From the Iberians and Tartessians to the ancient Romans and Greeks, all mined there.
Lost and left idled for a period of time, these mines were rediscovered around the mid-sixteenth century. In the first half of the 18th century, the Spanish government took charge of the mines and began operating them.
However, in 1873, the government auctioned these mines after years of running them inefficiently and having been distracted by various issues, including political and economic turmoil.
Hugh Matheson, a Scottish entrepreneur, led a British-European investor group that formed a syndicate, consisting of Deutsche bank and a civil engineering firm, Clark Punchard, and Company, to buy the mines.
Having won the bid that transferred ownership from the Spanish government, which also relinquished any right to claim royalties from the mine's production, the syndicate established the Rio Tinto Company on 19th March 1873.
Soon after, additional investments were made to construct new processing facilities, introduce new techniques, and expand mining activities to transform the operations and turn the mine into the world's foremost copper producer – all in less than five years after taking the reins.
Right from the start till 1925, the company was focused internally. It simply wanted to make the most of the Rio Tinto mines and hadn't paid any attention to expanding locally or internationally. One can't blame them.
After all, the company enjoyed tremendous success for the first three decades of operations by colluding and controlling the prices, after which World War 1 dented its progress.
How? By taking the US, one of the primary markets for European pyrites, out of the equation. Hence, Rio Tinto's profits and prominence both declined.
Having learned from the failures to diversify and expand operations when it had the chance, Rio Tinto brought in a new management team in 1925 to turn things around.
Led by Sir Auckland Campbell-Geddes, the new chairman of the company succeeding Lord Alfred Milner, Rio Tinto changed its strategy.
Now the focus was diversification and expansion through organizational, investing, and marketing reforms. Geddes launched a series of ventures to diversify and expand the company by developing new technologies, exploring, and developing new mines outside Spain.
The entry of Rio Tinto in Zambia, referred to as Northern Rhodesia, back in the day marked the dawn of a new era and made it clear that Rio Tinto was no longer a local Spanish copper business but a global powerhouse.
Upon coming across a valuable opportunity, Hugh Matheson promptly formed a syndicate and bought the Rio Tinto mines. It proved to be a great decision as the company soon became the leading copper producer.
However, after failing to diversify and expand, the company faced dire circumstances. With a change in management and strategy, Rio Tinto not only managed to come back from the dead but also began its journey to become a global powerhouse in the metal and mining industry.
This showcases the importance of making the most of opportunities that come your way, diversifying and expanding externally, learning from failures, and keeping the foot on the gas even when things are in your favor.
In the mid 20th century, Rio Tinto decided that it was time to take diversification to the next level and divest from the Rio Tinto mine in Spain, which after 80 years of mining was becoming low-yielding.
This, coupled with the fact that Rio Tinto required capital to expand to new markets and the nationalistic government in Spain, was making it increasingly difficult for Rio Tinto to expatriate profits out of Spain meant that there was no other choice.
Hence, Rio Tinto began aggressively divesting the company and by 1954 had divested two-thirds of the company successfully.
The proceeds helped finance new explorations and ventures in countries, including Africa, Australia, and Canada, among others. The uranium mines in Canada and Mary Kathleen mine in Australia were the new additions to Rio Tinto’s portfolio.
Realizing that the company can grow rapidly, achieve a competitive advantage, expand to different markets, enhance market share, augment the supply chains, and cater to more customers through strategic and financial mergers and acquisitions, Rio Tinto left no stone unturned right from the very beginning to strike partnerships.
In 1929, Rio Tinto expanded its mining operations internationally to Rhodesia. It issued company stock worth 2.5 million pounds to invest in Rhodesian copper mining companies and consolidated its holdings under Rhokana Corporation.
This move worked quite well for the company and helped support the company when the operations in Spain suffered immensely in the following years due to the Spanish civil war, World War 2, and Spain’s nationalistic policies.
The most significant merger in the company’s history was made in 1962. Rio Tinto merged with Consolidated Zinc Corporation, a company founded in 1905 that pioneered an innovative process to extract zinc from the residue, which was left after the extraction of lead and silver.
As a result of the merger, Rio Tinto – Zinc Corporation (RTZ) and Conzinc Riotinto of Australia (CRA Limited), the main subsidiary, was formed. The merger was mutually beneficial as it enabled Rio Tinto to explore new opportunities, which it couldn’t do previously due to lack of financial capital and operating revenue, and it provided Consolidated Zinc Corporation with a broad asset base. CRA, from then onwards, focused its operations in and Australia while RTZ was assigned the task to explore opportunities around the rest of the world.
Thirty years down the line, both RTZ and CRA were merged into a single company – the Rio Tinto group – as the strategic needs of the companies led to conflicts of interest. RTZ became Rio Tinto plc while CRA became Rio Tinto Limited – both were collectively a part of Rio Tinto Group.
In 1968, Rio Tinto merged with U.S. Borax, a leading producer of Borax. It allowed Rio Tinto to diversify and expand its product portfolio and add an essential material to it: Borax. It paved the way for Rio Tinto to become a major producer of refined Borax products in the world, producing around 3 million tons of Borate annually.
In 1985, Rio Tinto acquired a 30% share in Chile’s Minera Escondida copper mine, which is the world’s largest copper-producing mine, strengthening Rio Tinto’s position.
This was followed by Rio Tinto acquiring B.P. Minerals in 1989, becoming the world’s largest copper producer and the leader in iron and titanium.
Through this deal, Rio Tinto gained control of B.P.’s Australian coal assets and a 70.7% share in New South Wales’ coal allied industries.
Rio Tinto acquired Nerco and Cordero Coal Mining Company in the U.S. to further expand in the mining industry in 1994. Just two years later, in 1995, Rio Tinto acquired a 40% stake in Grasberg copper-gold mine in Indonesia, continuing on its merry way of expanding its products portfolio.
At the turn of the century, in October 2000, Rio Tinto acquired North Limited, an Australian company with uranium and iron ore mines, for $2.8 billion. It complemented Rio Tinto’s resources and provided essential rationalization opportunities with current operations.
The same year, Rio Tinto also acquired North Limited and Ashton Mining for $4 billion, supplementing its already exceptional base of resources with more aluminum, coal, diamonds, and iron ore reserves. In the very next year, Rio Tinto purchased the Australian coal business of Peabody Energy Corporation for $455 million.
In 2007, Rio Tinto finalized its largest acquisition by buying Alcan, a Canadian aluminum company, for $38.1 billion in order to diversify beyond its core of iron ore and copper and fast-track its way up in rapidly growing aluminum markets by becoming the top global aluminum producer.
In 2011, Rio Tinto gained a majority stake in Riversdale Mining, a coal mining company in Mozambique, and Coal and Allied Industries Limited in its quest to add coking coal to its portfolio and benefit from the rising coal prices.
In 2012, Rio Tinto bought Richards Bay Minerals (RBM), a South African mineral sands mining and processing operation renowned for its low production costs and extensive deposits. It strengthened Rio Tinto’s titanium oxide portfolio at a time when the demand for it was robust.
Over the years, Rio Tinto acquired and merged with a number of companies worldwide and spent billions of dollars to strengthen its position in different markets, diversify and expand its portfolio, and make the most of synergies to grow at a fast pace as well as dominate.
While some deals worked out, others didn’t. However, one thing remained constant: Rio Tinto’s willingness to grow by partnering up with others.
Rather than re-inventing the wheel, Rio Tinto opted to collaborate with other companies worldwide right from the start. It helped Rio Tinto scale up even in difficult times against market expectations, empowering it to become a leader in the metals and mining industry.
Rio Tinto strives to drive humankind forward.
Its long-term strategy is to develop new and existing assets into safe, reliable, and efficient operations, ensuring the return to all stakeholders is maximized. Moreover, Rio Tinto aims to operate in an ethical and socially responsible manner, doing right by the planet and stakeholders. Plus, its primary focus is on long-term sustainable development.
Following are the primary strategic pillars on which Rio Tinto stands:
Health & Safety: Prioritizes the health and wellbeing of life above all else
Portfolio: Continues to reshape portfolio to leverage low-cost, long-life assets with growth opportunities
People: Builds capability to enhance performance and attracts as well as retains the top talent
Performance: Aims to maximize value from mine to market by achieving operational excellence and efficiency
Partners: Collaborates closely with partners at all stages of the mining lifecycle to benefit everyone
Innovation: Leads the way in developing and utilizing new technologies and techniques
Regardless of the type, size, and location of a company, it cannot function effectively and efficiently without a streamlined process. Period.
Rio Tinto has a holistic 5-step process that’s fine-tuned and perfected over years.
As a company, be it small or large, local or multinational, nothing is more important than having well-defined business and strategic processes.
Rio Tinto has a specific 5-step process, including exploring and evaluating, developing, and innovating, mining and processing, marketing and delivering, and repurposing and renewing whereby it plans, designs and develops, and delivers the end-product to consumers around the globe.
Effective processes help eliminate errors and ensure product quality as well as safety, reliability, and efficiency.
Businesses don’t need any more reasons to invest and define their processes in their quest to achieve a competitive advantage and succeed in the long term.
Rio Tinto produces four main products that are vital for human progress, including
Rio Tinto’s business is complemented by its various groups such as:
Let’s now delve deep into the product categories and operations to further understand how Rio Tinto goes about its business.
Demand for iron ore, a key raw material for the production of steel, has been incredibly strong lately and will continue to do so for the foreseeable future as the world continues to build and the focus on decarbonization is greater than ever.
One of the major producers of iron ore in the world, Rio Tinto has extensive operations and an integrated portfolio of assets, which include:
Rio Tinto produces premium quality iron ore for steel safely and reliably and supplies to the global seaborne iron ore trade.
Excellent heat and electrical conductor, lightweight, recyclable, and non-corrosive, aluminum is widely used everywhere from the transportation, construction, and beverage industry, among others.
Rio Tinto is among the top producers of aluminum. It has a substantial vertically integrated aluminum business spread in different parts of the globe, consisting of bauxite mines, alumina refineries, and smelters such as:
From providing high-quality aluminum sourced for beverage packaging to light alloys for the automotive and electronics industry, Rio Tinto caters to a wide range of demand of businesses worldwide.
Copper is the key mineral, an economic bell-weather, that contributes to the global economy. It is used in power generation and transmission, construction of buildings, manufacturing of electronics, industrial machinery, and automotive. That’s not all. It is helping the world transition and go green by playing an integral role in helping harness the power of renewable energy, be it by its conductive role in wind turbines or electric vehicles.
From Australia and Mongolia to Chile and the US, Rio Tinto’s copper operations are spread worldwide, with different parts accounting for various stages of the mining lifecycle.
The demand for copper is growing with the quest to transition to a low-carbon future and increased urbanization and industrialization. According to Bloomberg, the world will require 10 million tons more copper as demand continues to be robust with supply being constrained.
As such, Rio Tinto’s role becomes even more crucial in catering to the demand of the most critical metal for world economies in a responsible and sustainable manner. This is evident from the copper mark two of its copper mines - Kennecott and Oyu Tolgoi – received.
That being said, it is well-poised for growth and playing its part in propelling the world to a prosperous future with its vast operations, including:
Minerals are the most fundamental and essential raw materials needed for economic, social, and technological development.
As such, Rio Tinto stands as a pioneer in the minerals mining industry, expanding the frontiers and unlocking tremendous growth by offering critical minerals on-demand.
Rio Tinto deals in 5 kinds of minerals, and they are as follows:
With 7 mining sites and operations spread across 6 countries, including Africa, Canada, and the US, Rio Tinto is well-poised to supply essential minerals anywhere in the world, anytime.
Rio Tinto offers four essential products – iron ore, copper, aluminum, and other minerals such as diamonds, titanium, and uranium – that are not only critical to the progress of all economies but are also in high demand worldwide.
By operating in a market where demand is robust, and supply is constrained, Rio Tinto not only stands as an outlier but also achieves its primary goal of driving the world forward while achieving profitability.
Behind the scenes, it is Rio Tinto’s vast and successful operations spread around the globe, right from Australia and Mongolia to Chile and the US, that makes it all possible.
Being at the forefront of the metals and mining industry has meant that Rio Tinto has faced its fair share of backlash and criticism over the years. From being pointed out for causing environmental pollution to disrespect fundamental human rights and using questionable practices in the quest for profits, Rio Tinto has faced it all.
While some criticisms were just, others were not.
The best part is that Rio Tinto has transformed its business conduct and operations over the years to focus on sustainable development, economic prosperity, social wellbeing, environmental stewardship, inclusion, and innovation.
Native title was introduced in the land down under in 1993 in order to protect indigenous groups’ right to property, safeguarding their culture, wellbeing, and religion.
In 1995, Rio Tinto became the first mining company in Australia to accept the rights of Indigenous groups.
Currently, Rio Tinto has over forty agreements around the world and it stands firmly committed to upholding the rights of everyone, everywhere.
Rio Tinto is one of the first companies in the world to apply carbon pricing to its investment decisions.
This showcases that not only does Rio Tinto recognize climate change but also tries its best to mitigate the effect of climate change by accounting for the costs while taking business decisions.
Just before the turn of the century, Rio Tinto actively worked to help establish the Mining, Metals, and Sustainable Development initiative, which paved the way for the International Council on Mining and Metals (ICMM), an institution striving for sustainability in the metals and mining industry.
In 2005, Rio Tinto officially embraced the reality of climate change and published a statement about how it can impact everyone around the globe.
This led to Rio Tinto changing its policies and business operations to alleviate risks, build resilience, look for new opportunities, and grow sustainably.
In 2008, Rio Tinto launched the Mine of the Future™ program in which it leveraged state-of-the-art technologies to give its business operations a boost.
By adopting automation far sooner than any other player in the industry, Rio Tinto depicted far-sightedness and willingness to be bold.
Today, Rio Tinto has the world’s first fully autonomous, long-distance, heavy-haul rail network – AutoHaul,™ which adds significant value to its operations.
In 2010, Rio Tinto accomplished another feat: becoming the first mining company to publish a Taxes Paid report voluntarily.
This depicted the company’s transparency and helped build trust and credibility.
Just when the unethical trade of jewelry was taking the world by storm, Rio Tinto stood up and helped establish the Responsible Jewelry Council (RJC).
The primary goal of this organization was to promote responsible, ethical, and environmentally friendly practices throughout the jewelry supply chain.
In 2015, Rio Tinto signed the Paris Pledge, ushering in a new age of fighting against climate change by targeting to limit the rise in global temperature.
Proving its dedication to sustainability, Rio Tinto introduced the world’s first certified low-carbon aluminum, RenewAlᵗᵐ, in 2016.
It revolutionized the industry as it provided a cleaner start of lifecycles of various products, including smartphones and automobiles.
In 2018, Rio Tinto sold its Australian coal assets, becoming the first major mining company to have ended the usage of fossil fuels.
Rio Tinto set the bar even higher in 2018 when it began constructing its most intelligent mine - Gudai-Darri iron ore mine in Western Australia.
From autonomous trucks and well-integrated mine operation and simulation systems to digital twin technology and an array of design innovations, Rio Tinto went the extra mile to enhance safety, efficiency by harnessing the power of technology and data.
Rio Tinto re-invented the way to do business and led the way in creating sustainable value for all stakeholders, learning from its past mistakes.
By minimizing the negative impacts of its business operations, committing to sustainability, embracing climate change, recognizing people’s rights, investing in innovation and automation, and becoming responsible by ending the use of fossil fuels, Rio Tinto provided its willingness to go beyond the call of duty to do what’s right.
This improved the company’s reputation and proved that doing business responsibly is the way forward.
The success of Rio Tinto recently, even amidst the uncertain Covid-19 times and the destruction of the culturally significant Australian Aboriginal sacred site in Juukan Gorge, Western Australia, which created a lot of negative publicity, showcases the company’s strong business fundamentals.
Now more than ever, Rio Tinto stands firmly committed to continuing to produce essential material required for human progress in a sustainable and inclusive way, generating profits while achieving environmental and social goals.
There’s nothing more common in the world than the ever-evolving nature of consumer preferences and market dynamics. Rio Tinto experienced this first hand when right from incorporation in 1873 to 1925, the company focused internally and limited itself. Sure, it became the leading copper producer and became renowned, but all along, it was losing ground. Why? Because it didn’t put its foot on the gas when it had the time. Hence, the company declined and suffered immensely in the first part of the 20th century. Both the profits and prominence were adversely impacted as World War 1 wreaked havoc and took the US, one of the primary markets for its products, out of the equation.
This highlights the importance for companies – big and small – to keep pushing through good times and bad. Staying hungry, avoiding complacency, and challenging yourself to keep setting the bar higher is key to sustainable success.
Sure, you can have a few specific products or services that work wonders for you and drive growth. However, as a business, it is not a wise strategy to limit yourself to a few products, markets, or consumers.
Rio Tinto learned this the hard way. After failing to expand and diversify in the early 20th century, the company began losing ground and came to the brink of failure. However, by taking some decisive steps such as diversifying the products portfolio and expanding to newer markets outside of Spain, the company paved the way for healthy growth and lasting success.
Rio Tinto actively focuses on mergers and acquisitions, both strategic and financial, to boost its growth. Right from 1929, when the company expanded to Zambia to the challenging times during Covid-19, Rio Tinto has embraced M&A and used them as a tool for growth.
Filling in critical gaps, acquiring new talent and intellectual property, leveraging cost and revenue synergies, adding new products, diversifying to new markets, and saving time as well as long learning curves are just some of the main reasons why Rio Tinto continues to use M&A to drive business growth.
Companies nowadays are more than ever under continuous pressure to grow. M&A can help companies of all kinds across the globe to expand in new markets, gain a competitive advantage, and acquire new technologies as well as personnel. However, proper research and forward-looking analysis are required because while it can help businesses grow, it can hinder progress if not done correctly.
Are you getting the most out of your resources? Are you functioning optimally? Do you have the tools and expertise to deliver quality products and services consistently? If not, then you need to invest in business processes and systems. Period.
Each and every company, regardless of its size, nature of business, and the market it operates in, should prioritize operational efficiency.
Rio Tinto does just that by having specified processes and systems tailored right down to the smallest details.
It boosts efficiency, streamlines the day to day operations, helps produce high-quality products, enhances the flexibility of the company to evolve, and makes it capable of pouncing on any opportunity.
Aluminum, copper, iron ore, minerals such as diamonds, uranium, and titanium – these are some of the products of Rio Tinto.
Guess what they have in common?
They are all in high demand across the world, and customers highly value them. Hence, it doesn’t come as a surprise that Rio Tinto does extremely well as a business.
For any business looking to survive and thrive, it is vital that the solution in terms of the product and service they offer solves a particular problem and addresses their pain points.
Only if the company’s solutions deliver significant value will any business be able to attract, delight, and retain its customers.
In this day and age, customers are extremely conscious of the brands they use and make a part of their life. If customers believe that a brand stands by certain values that align with their own values, they stick with it. Otherwise, they don’t shy away from opting for the next best alternative.
Rio Tinto has, over the years, faced a plethora of challenges and criticisms. From degrading the environment to violating human rights, the list of issues is quite extensive. However, not only did Rio Tinto learn from its mistakes but also rectified them by sticking to powerful core values, which in turn, have driven its business forward.
Sure, at times, it will be difficult to take a stand against issues or stick to your core values, and this is when you’ll be tested.
Stick to your core values and depict to your customers that you can be trusted. All else will follow.
Rio Tinto is a company that’s still a work in progress. It continues to evolve and leaves no stone unturned in redefining the way it does business for the better.
The company is currently well-positioned to embark on new adventures and is looking for M&A opportunities, just like it always is. The prospects for growth are encouraging, and the future looks promising.