SYDNEY, Oct 18 (Reuters) - The U.S. Securities and Exchange
Commission on Tuesday charged mining company Rio Tinto Plc
and two of its former top executives with
fraud, saying they inflated the value of coal assets in
Mozambique and concealed critical information while tapping the
market for billions of dollars.
In a lawsuit filed in U.S. federal court in Manhattan, the
SEC said Rio Tinto, former Chief Executive Officer Thomas
Albanese, and former Chief Financial Officer Guy Elliott failed
to follow accounting standards and company policies to
accurately value and record the assets.
The Mozambican coal business was acquired for $3.7 billion
in 2011 from Riversdale Mining and sold a few years later for
2007 - India's Tata Steel signs a joint venture with Australia's
Riversdale Mining to develop coal projects in Mozambique.
2008 – Thermal coal futures prices rise above $200 per tonne.
2010 – Riversdale gets green light to build $800 million coal
mine in the country's northwest. Riversdale has predicted that
the Benga project will produce some of the lowest-cost coking
coal in the world. It later turns out that Mozambique’s coal is
costlier than competing supplies, especially from neighbouring
2010 - Mozambique’s transport ministry says that Mozambique will
use the Zambezi river to enable inland coal assets to get to a
port, which has yet to be fully developed.
2011 – After a price crash following the global financial
crisis, coal prices soar back as high as $130 per tonne amid
expectations that demand from India and China will result in an
undersupplied market for decades to come.
2011 – Rio Tinto gets Mozambique coal assets as part of $3.7
billion acquisition of Riversdale Mining.
2011 - Rio Tinto's chief executive for energy Doug Ritchie
describes the Mozambique operations as the "greatest undeveloped
seaborne coking coal region in the world.”
2012 - Rio issues a $3 billion bond and an around 1.8 billion
euro bond with a 500 million British pound tranche. Some 95
percent of the sterling bonds go to UK investors including fund
managers, insurers and pension funds.
2012 - Mozambique's government says it will not let Rio Tinto
use the Zambezi River to transport coal to the Indian Ocean for
export. That means the coal can only get to ports via unreliable
railways, which also lack the capacity to handle the coal. The
ports are also not sufficiently developed to handle large-scale
2013 – Coal prices drop back below $100 per tonne.
2013 - Rio Tinto writes off about $3.5 billion on the operation.
2013 - Albanese resigns at request of board.
2014 – Rio Tinto sells Mozambique coal assets for $50 million.
2014 - Albanese named chief executive of Indian mining company
Vedanta Resources Plc, where he serves until September
2017 - The U.S. Securities and Exchange Commission charges Rio
Tinto, along with Albanese and Elliott, with fraud.
2017 - Albanese issues statement saying there is no truth in any
of the charges. Elliot will vigorously contest the charges,
according to a spokeswoman for the former executive. Rio Tinto
says it will defend itself vigorously against the SEC's
(Reporting by James Regan and Henning Gloystein)
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