RIO Tinto brought the curtain down on a disastrous investment in Mozambique’s coking coal industry after it agreed to pay a $28m fine to the US Securities and Exchange Commission (SEC).
Bloomberg News said the penalty settled fraud charges brought by the SEC against Rio Tinto and two executives in 2017. In its charges, the SEC claimed the value of the Mozambique assets had been inflated.
Rio Tinto bought Riversdale Mining in 2011 for $3.7bn. The business was sold for $50m in 2014 following a series of impairments totalling nearly $3.3bn.
The SEC alleged that Rio executives had sought to hide the setbacks and their impact on the true value of the assets from the company’s board of directors, audit committee and investors. Rio Tinto said it would pay the penalty without admitting or denying the charges against it.
Rio will also retain an independent consultant to advise on its impairment and discourse policies.
Former Rio Tinto CEO Tom Albanese also reached a settlement with the SEC and will pay a $50,000 penalty, without admitting to or denying the allegations, said Bloomberg News.
Jan du Plessis, Rio Tinto’s then chairman, said at the time of the impairments that they were “unacceptable”. Shortly after Albanese and Doug Richtie, head of Rio Tinto’s energy business, quit the company.
Rio Tinto hoped to produce 1 million tons (Mt) of coal from the $500m Benga mine in Mozambique during its 2012 financial year, growing to 1.5Mt in 2013. A second stage development would see output expanded to 6Mt a year (Mtpa) of coking coal and a further 4Mtpa of thermal material from the mine.