Book Review: Rio Tinto in Australia (1954-1995) by Robert Porter

Following on from his book Consolidated Gold Fields in Australia (see review here) about the rise and fall of a major mining company in the twentieth century, Robert Porter has written Rio Tinto in Australia: The Origins and Formation of an International Resources Company 1954–1995, about the rise and rise of another mining company with a parent in the United Kingdom.

Porter’s latest book covers the period 1954-1995, during which the subsidiaries of United Kingdom-based Rio Tinto and Consolidated Zinc worked independently in Australia until 1962 when a merger created a single subsidiary company: Conzinc Riotinto of Australia (CRA) with a mainly Australian management. 1995 marked a major change to the current dual-listed company structure.

The Rio Tinto company, based in the United Kingdom, took its name from the large copper mining and smelting operation in Spain but expanded its mining interests in the early 1950s, spinning off the Spanish operations and becoming the world’s largest producer of uranium oxide, which was sourced from Canada and later Australia. Much of this expansion was due to Val (later Sir Val) Duncan and Sir Mark Turner. The initial targets in Australia were in the Northern Territory, but after some disappointments turned to the uranium deposit east of Mount Isa, subsequently named Mary Kathleen. The Commonwealth government was deeply involved in approvals and negotiations with the customer, the United Kingdom Atomic Energy Authority. Jim Keast was appointed technical director and led a team, which Porter describes as producing a model for a remote mining operation, with housing designed for the hot climate, without the need for air conditioning. These were the days long before fly in-fly out personnel. Mining operations commenced in 1956 and the first uranium oxide was produced in 1958.

Rio Tinto explored a wide range of potential mining and processing opportunities encompassing most metals and industrial minerals through the Rio Tinto Mining Company of Australia. Asbestos was one commercial mineral investigated but subsequently dropped, as was aluminium, but construction materials including aggregates and bricks, and coal mining were part of the mix through the 1960s.

Rio Tinto’s interests in asbestos and manganese led to exploration for iron ore in the late 1950s, initially at Koolyanobbing in Western Australia and as magnetite at Savage River in Tasmania. This path eventually led to the Pilbara, meetings with Lang Hancock and Peter Wright, who had pegged iron ore deposits, and the later development of the large high-grade hematite iron ore deposits, one of the three major pillars for CRA along with aluminium and copper. However, there were still many other stakeholders to deal with, including the Western Australian government, potential Japanese customers, an embargo by the Commonwealth on iron ore exports, and partners to finance a large-scale development,

Consolidated Zinc grew out of The Zinc Corporation Limited, which was registered in 1905 to recover zinc from Broken Hill lead and silver ore tailings. The company subsequently became a miner and the assets were transferred to London as part of a capital reconstruction. The company also had shareholdings in mining, and lead and zinc smelting at other locations in Australia, and amalgamated with Imperial Smelting Corporation in 1949 to form the Consolidated Zinc Corporation. The interests of the combined company included mining, smelting, mineral sands, oil exploration, timber milling and chemicals, and management of the Rum Jungle uranium mining operation for the Commonwealth government from 1953.

The company had skilled and extremely capable managers, engineers, metallurgists, and geologists who had generally emerged from the Broken Hill operations, and in particular Maurice (later Sir Maurice) Mawby. In the mid-1950s the exploration arm of the company discovered bauxite at Weipa on Cape York, with Comalco being formed to supply bauxite to the existing Bell Bay alumina plant and aluminium smelter, of which Consolidated Zinc had acquired the Commonwealth government’s two-thirds interest. Kaiser Aluminum from the USA was brought in as a partner to establish an expanded integrated aluminium industry in Australia.

In the early 1960s Rio Tinto in London was searching for other commodities and jurisdictions to replace the diminishing demand for uranium from Canada, and the political uncertainties of Rhodesian copper. At the same time Consolidated Zinc was examining potential merger partners to finance further investment. Casual discussions with Rio Tinto turned more serious and in 1962 a merger was announced with a new company The Rio Tinto-Zinc Corporation Limited (RTZ) to be formed, and described as a marriage of finance with opportunity bringing together the financing strength of Rio Tinto and the potential projects of Consolidated Zinc.

There was an agreement that the Australian subsidiary would be named Conzinc Riotinto of Australia (CRA), in which some shares were offered to the public. The head office for the combined entity, in the eastern end of Collins Street, Melbourne was originally built by Consolidated Zinc and became the base for CRA.

There were similarities with Consolidated Gold Fields of Australia with a variety of metals and commodities and some minority shareholdings, as described by Porter in his previous book. A difference was that CRA generally had a majority interest in companies and a formidable collection of people, technical and financial skills which CGFA generally lacked.

The supporting cast was a list of mining luminaries including Maurice Mawby, Russel Madigan, Frank Espie, Struan Anderson and Jim Keast, all of whom had worked at Broken Hill. Consolidated Zinc geologists discovered a large high-grade haematite deposit in the Hamersley Ranges, and this was developed with RTZ and Kaiser Steel from the USA, and named Mount Tom Price after the Vice-President of Kaiser Steel. The development entailed the construction of a town, mine, railway to the coast and a new port. This was followed by interests in other Pilbara deposits, and research into downstream processing because of legislated requirements for secondary processing in the original leases, but also business opportunities in the USA and Europe.

Large scale copper mining on Bougainville Island in Papua New Guinea by Bougainville Copper started in 1972. This was a year before Papua New Guinea gained self-governance and three years before independence in 1975. Both the Weipa and Bougainville projects involved massive upheavals of indigenous peoples’ traditional lands, environment, and economies, and strained CRA’s capabilities in these areas. In the case of Bougainville, it later also threatened PNG’s stability. 

Later in the book the Bougainville crisis is described as beginning in 1978 with the Panguna Landowners Association being formed to press for increased compensation payments to landowners, and the continuing escalation with arson, sabotage and violence up to 1990, with the decision for retrenchment of 2,000 employees.

Sir Maurice Mawby was approaching retirement and a new executive director, Rod Carnegie, was appointed in 1970 and then managing director in 1972, with Mawby’s approval, and brought many new ideas to CRA. Carnegie as a previous experienced management consultant with McKinsey was keen to improve company productivity and initiated more direct responsibility for production, as well as safety and training programs, and cuts to the number of management levels.

Carnegie enlivened the entrepreneurial spirits of CRA and there were soon some pointed questions from London regarding CRA’s intrusion into RTZ’s geographical territory and the wisdom of some of CRA’s investments. He also enthusiastically pushed for naturalisation of CRA with a reduced interest held by RTZ.

Porter, in a chapter titled ‘Strained Relations with London’, describes CRA by the mid-1980s as an increasingly independent business operation that managed its interests and finance, with less consideration of London’s views. In addition, CRA considered exploration as a significant part of the mining business, compared to RTZ’s lower priority for this activity. Poor financial results for CRA in the early 1980s prompted sales of non-core businesses, and investigations into the purchase of German steel interests, partly because of technologies held by these companies which would be of use in fulfilling promises to the Western Australian state government to process iron ore within the state.

There were discussions with BHP about CRA taking a minority interest in BHP, and consideration of naturalisation of CRA by reducing RTZ’s interest to 49%. At a board meeting of CRA in July 1986 it was confirmed that CRA would achieve naturalisation in 1986, with Carnegie being advised that his services would no longer be required as Chairman and Chief Executive Officer, but would stay on the boards of CRA and RTZ in a non-executive capacity from 1987. However, Carnegie’s direct association with CRA ended by the end of 1986 and Porter praises him as “bold, expansive, and independent in his thinking. He was an unusual and imaginative chief executive aided by the contribution of a number of strong and talented management personnel”.

John Ralph was appointed to succeed Carnegie as Chief Executive and brought greater stability to the relationship between RTZ and CRA, and in addition rationalisation of CRA’s portfolio eventually selling non-mining investments in biotechnology, ceramics, chemicals, and German steel making. Exploration continued to be supported with expenditure exceeding $100 million per annum in the period from 1987 to 1994. The assets of subsidiary Australian Mining and Smelting included many of the Broken Hill based activities formerly at the centre of Consolidated Zinc, and had been a major contributor to revenues in the 1950s, but were now presenting operational, environmental, and financial challenges to CRA. A listed company, Pasminco was formed in 1988 to merge the lead, zinc, and smelting assets of CRA and North Broken Hill Peko, with CRA’s interest in Pasminco gradually reduced until the remaining 10 per cent interest was sold in 1995.

John Ralph retired as chief executive in 1994 and was succeeded by Leon Davis, who instigated a review of strategy by CRA’s best and brightest and this included CRA’s relationship with RTZ regarding international investment, an issue which had long been a sore point. RTZ had been developing or buying operations around the world and divesting non-mining operations, Davis recognized that CRA would need to complement RTZ’s global ambitions. Work began on how this would be achieved, and the conclusion was that a dual listed company structure of RTZ and CRA would be formed, for which there were precedents including Unilever and Royal Dutch Shell.

There were some forceful representations made to the Commonwealth government regarding the conditions sought by the Commonwealth to approve the dual-listed structure, given that CRA would lose its naturalised status. Extraordinary shareholder meetings for both companies on 20 December 1995 approved the new structure, and the new merged entity was formed on 1 January 1996. Porter describes the event as CRA being folded back into the ownership and control of a London based company, and the efforts of previous generations to some extent diminished.

In researching for this book Porter has had access to some of the Conzinc Riotinto of Australia (CRA) business records held at the University of Melbourne, including records of Rio Tinto, CRA, Consolidated Zinc and associated companies, besides many private and public sources. He also spoke to people associated with CRA, and others who assisted with access to information. The book is divided into five sections book-ended around the period of Rod Carnegie’s ascendancy, and each section has a timeline to assist the reader. I would have appreciated some snapshots of CRA’s business structure and partner companies during the period from 1962 to 1995.

Porter traverses a large amount of territory. There are many fly-on-the-wall revelations of board discussions and dealings with state and federal governments, including quite forceful discussions at the highest levels of government. The development of environmental, social and governance issues in relation to the mining industry is quite apparent in the book in admittedly quite challenging locations, societies and politics such as Bougainville.

This book is essential reading for anyone wanting to understand the origins of Australia’s current resources driven economy, and will also appeal to those who lived and worked in the industry from the 1960s to the 1990s. There is much detail but Porter does not get bogged down and drives the narrative at a smart pace. Having said this, it is worth a second reading to catch some more gems, if the reader is so inclined.

Robert Porter, Rio Tinto in Australia. The Origins and Formation of an International Resources Company, 1954–1995, Connor Court Publishing, Redland Bay, 2023. Hardback, ix & 494 pages, 2 maps and illustrations/images. Retail price $65