Rio Tinto in Australia charts Rio Tinto’s establishment and remarkable growth in Australia. From exploration in the 1950s, the acquisition of the Mary Kathleen uranium deposit, and the 1962 combination with Consolidated Zinc to form Conzinc Riotinto of Australia (CRA).

CRA established itself as the major contributor to Australia’s post-war mining scene. CRA’s efforts contributed to some of the main building blocks of Australia’s post-war economy and the Australian mining sector – Comalco, Hamersley iron ore and the Bougainville copper operation. In the 1960s, CRA’s expenditure was at a greater rate than that for the Snowy Mountains Scheme, regarded as one of the great Australian nation building exercises, while in the twelve years after 1962, CRA contributed $2.7 billion to Australia’s balance of payments surplus of $3.3 billion. By the end of 1994, CRA had a market capitalisation of over $10 billion and was Australia’s second largest resources company and third largest company.

Many individuals played a role in CRA’s development, not least legendary mining figure, Sir Maurice Mawby, regarded as Australia’s most significant post-war mining individuals. Broken Hill born and educated, under his direction the Australian portfolio was transformed over the 1960s and early 1970s.

Rod (later Sir) Carnegie was appointed to CRA as Mawby’s successor in 1970. Aged 37, Carnegie could not have been more different to Mawby in terms of background and experience. At the time it was still rare for chief executives to be appointed from outside of the company concerned. In the case of a mining company, it was also unusual for a chief executive not to be trained as a mining engineer. Carnegie was neither. Melbourne, Oxford and Harvard university educated, Carnegie worked as a consultant for McKinsey & Co in New York. Carnegie would be described as one of the nation’s brightest business executives, knighted for his services to industry at the age of 45 years.

Despite their differences, Carnegie and Mawby were both Australian nationalists, believing that it was their role to contribute to the development of Australia’s national resources and the prosperity of the country. The pursuit of profit was not a prime motive for either.

CRA projects in the 1960s and early 1970s were of Australian national significance. CRA achieved what one of its major competitors in Australia, BHP, had conveyed as inconceivable: the development of major iron ore deposits in a remote location, with no infrastructure and with production linked to international markets. CRA’s major portfolio transformation from its prior reliance on the lead and zinc assets of Broken Hill, and Mary Kathleen Uranium, was achieved with the cooperation and support of governments.

Mining development was a national effort. Mawby’s relations with prime ministers, ministers and senior departmental officials were an essential basis for this cooperation. Men like Robert Menzies and Charles Court were instrumental in facilitating bold nation building outcomes. There was a shared common interest, and appreciation of the importance of major risk capital, often sourced from overseas, while recognising the need to preserve national interests.

The relationship between CRA and the Australian Government became less productive as political anxiety and public criticism grew about the role of foreign capital and overseas control of the Australian resources sector. This was reflected in the virulent economic nationalism of the Whitlam Government and the strained relationship between the company and R. F. X. Connor as the responsible minister.

As a foreign owned and controlled company, CRA was restricted in its business opportunities in the 1970s. Carnegie’s repeated attempts for CRA to ‘gain a guernsey’ in the Australian minerals sector, generated varied plans. That ministers and senior public servants would contemplate options from public equity in CRA through to the acquisition of London parent, RTZ, to achieve the Australianisation of CRA – with CRA potentially having a similar status to that of QANTAS – reflects a government-corporate interaction of extraordinary dimensions and opportunity.

The development of the large, low-grade copper and gold deposit on Bougainville was CRA’s most complex undertaking and a remarkable achievement. CRA led the Australian Administration and Department in Canberra in many areas in terms of the interests and welfare of Bougainvilleans. The project was informed by an enlightened perspective of how a modern industrial venture could be best managed and how engagement, based on anthropological advice, could be handled with the populace of a mainly subsistence, tribal based country. Yet, the circumstances of the mine’s closure and the ensuing civil war on Bougainville, as well as the inability for improved tailings disposal arrangements or extensive environmental remediation work to be undertaken, have informed the critical assessments of the operation. The tragic events that occurred on Bougainville reveal the complexity of the challenges that CRA encountered and was unable to fully anticipate or manage.

The process of CRA’s naturalisation was Carnegie’s major achievement, yet not without professional consequences for him. CRA could not compete on an equal footing for business opportunities with the likes of BHP, Western Mining Corporation and CSR. A change in CRA’s status as a foreign owned company was required. Carnegie also recognised that the attraction, retention, and motivation of CRA’s employees would be aided if they were working for outcomes in the best interests of Australia and Australian shareholders, as opposed to a foreign entity. A process for CRA’s naturalisation was put in place.

Carnegie’s challenges in pursuing CRA’s expansive strategic goals became evident as the company moved closer to achieving naturalised, or majority Australian share ownership. London became increasingly concerned about aspects of the strategic direction of the company and its investments, including a planned involvement in the German steel industry and a combination with BHP. London’s view was that Carnegie was already acting as if he were an independent chairman of an independent Australian company.

‘Strategic instabilities’ became evident between Melbourne and London. With CRA’s naturalisation nearing, London reasserted control. It did this with the ultimate tool at its disposal – the removal of a chief executive, in July 1986.

John Ralph, a Consolidated Zinc and CRA veteran of over 30 years, was the logical successor. He provided continuity to many aspects of the organisational approach that he and Carnegie had developed but also repaired a fractured relationship between London and Melbourne. The redefinition of the role of the London office and of RTZ, and CRA’s move to majority Australian ownership, had, in some respects, fundamentally changed the basis of London’s relationship with CRA.

In the context of the globalisation of resource markets in the 1990s, the application of centrally controlled processes for strategic and financial decision-making, became a logical next step for the RTZ group, informed by its history of past instabilities in having major, partially controlled entities. The dual listed company (DLC) structure of 1995 provided a solution to how the portfolio could be structured and managed in an integrated manner between what were, in effect, two separate companies. With the DLC, the core basis of the corporate entity and objectives Carnegie had worked to achieve, and that had philosophically been the direction of Mawby – the Australianisation of CRA – was unwound.

Many saw Australian national interests being usurped, that Rio Tinto in London was capturing huge strategic value in key assets such as Hamersley without paying a takeover premium. With the DLC structure a new corporate entity was formed. In some senses, Rio Tinto in Australia had come full circle from 1954.

Robert Porter’s career was spent working in corporate roles, including in the resources sector. ‘Rio Tinto in Australia’ is his fifth book and is available through Connor Court Publishing: www.connorcourtpublishing.com.au.