INSIDER: Jakob Stausholm’s tall task at top of Rio Tinto to repair miner’s battered reputation

Few people were more surprised than Jakob Stausholm when he was chosen to lead Rio Tinto out of the darkest chapter in its 148-year history. After the disaster at Juukan Gorge and calls from shareholders for fresh blood at the top, it was widely anticipated the besieged mining giant would go for an external appointment. Even Stausholm himself was not expecting to get a tap on the shoulder — despite putting his hand up for the role. “I was absolutely convinced that the focus of the board was on external candidates,” he tells Insider in one of his first major sit-downs as global chief executive. “I prepared myself for various scenarios so I knew nothing was a given ... but I also felt I had a plan that no other external candidate could have because they didn’t know the company.” The softly-spoken Dane, who stands almost 2m tall and is based in London, is not who investors, analysts or the public were expecting to take the helm of one of the world’s biggest miners at a time of crisis. Stausholm possesses some distinctly un-CEO-like qualities: he has a self-effacing demeanour and smiles easily and often. He is also a first-time CEO and a relative newcomer to Rio, having only joined the miner in September 2018 after a brief stint at shipping giant Maersk Group and 19 years at Shell. But actions speak louder than words, and while it’s far too early to tell whether Stausholm will prove to be the right person to pick up the pieces, he’s off to a promising start. He spent three of his first four months as CEO based in Western Australia and locked eyes with traditional owners whose prized cultural heritage Rio obliterated. These first steps at the start of his tenure shows he has the mettle to face the company’s problems head-on. JAKOB’S LADDER The active 52-year-old, who has already cycled 45km around the river the morning of this interview, has taken a shine to the west and its outdoor lifestyle. It’s certainly not his first time in WA — he used to visit monthly when he was on the board of Woodside Petroleum. But the trip does mark his longest unbroken stint in Rio’s iron ore heartland and his first during a global pandemic, which saw him stuck in hotel quarantine for two weeks. On this particular occasion, Stausholm has traded his usual seaside haunt at Cottesloe’s Ocean Beach Hotel for sweeping views of the city at Kings Park. He rented a flat for a couple of weeks next to Jacob’s Ladder, which he fondly calls “my ladder”. “Sometimes it’s good to get out on the bike, sometimes it’s good to go for a run and sometimes it’s good to go on cross-country skis,” Stausholm says. “I love it (cross-country skiing) — it’s one of my passions, but it doesn’t really work in Perth.” The WA spirit of entrepreneurship also appeals to Stausholm, who has started reading former premier and resource development pioneer Charles Court’s book I Love This Place. The Margaret River wines aren’t a bad drawcard either — the well-travelled Dane reckons the State has some of the best chardonnays in the world. Stausholm’s career has given him unique experiences all over the globe, from skiing with engineers in Canada in -20C conditions to running through local towns in Madagascar with security guards in tow. He might just be Rio’s most thrill-seeking — and athletic — chief executive yet. “I guess I have a bit of a high-curiosity gene,” Stausholm says. “I’m not just there for getting into the office — I’m here to observe and learn everything around us, and getting out is a fantastic opportunity. “I try to do that everywhere I go.” THROWN IN THE DEEP END Never in his life has Stausholm met as many people as he has over the last few months following Rio’s blasting of two 46,000-year-old Aboriginal rock shelters at Juukan Gorge in the Pilbara. In a list of the worst disasters for any fresh CEO to walk into, the self-inflicted cultural heritage catastrophe would likely take the cake. But Stausholm has gone in with his eyes wide open and an eagerness to make amends — and do better in future. The Juukan incident in May last year involving the Puutu Kunti Kurrama and Pinikura people made international headlines and sparked a Federal parliamentary inquiry. The probe ultimately resulted in the resignations of three senior executives, including Stausholm’s predecessor Jean-Sebastien Jacques. Stausholm has travelled to Canberra, Sydney, Brisbane and Melbourne, as well as Perth and the Pilbara, during his “necessary” trip Down Under. He spent over 31/2 months here after landing in WA in late January. But it’s been more than an apology tour. It was also important to Stausholm that he make time to speak to people who have walked in his shoes. He met former chief executives Leigh Clifford, Leon Davis, John Ralph and Sir Roderick Carnegie in Melbourne to better understand the strengths and weaknesses of the business, formerly known as CRA. “I’ve basically spoken to everyone who is still alive,” Stausholm says. His ambition is for Rio to be as strong on Indigenous affairs and heritage management as it is on safety, and not to lose its “winning achievement culture”. Stausholm says people like Davis, who broke ranks with the mining industry and recognised native title, took Rio on a “fantastic journey”. “When you deal with very big companies with long histories culture sticks, and therefore understanding a bit of the history gives you a deeper understanding of the culture and tells you about some of the strengths that you might need to re-nurture,” Stausholm says. “It also tells you about a few things that we’ve got to change. “We have a duty to set the bar high here.” LANDING THE TOP JOB While the top job hasn’t increased his stress levels compared with the “relentless” demands of his previous gig as finance chief, Stausholm says the chief executive role has required him to give more of himself. It’s doubtful any of his predecessors faced the same intense scrutiny amid the heightened awareness for environmental, social and governance issues brought on by Juukan Gorge. “The exposure on you as a person is completely different than being CFO,” Stausholm explains. “You have to give a little bit more of yourself in the CEO position because you’re being projected. Ultimately it’s not about me, it’s about the company, but the way I behave is a projection of Rio Tinto.” Stausholm confesses he partly designed the CEO role himself because “there’s no one to really tell me what I should do”. He put his hand up for the promotion believing his intimate knowledge of Rio’s mining operations was advantageous, particularly given the pandemic and border restrictions. His gut was right — but the role was hardly handed to him on a silver platter. He went through no less than 10 interviews during “some stressful months” before Rio decided to give him his chance. “It was a very intense process ... but on the other hand it kind of focused my mind,” Stausholm says. “It gave me a little bit of time to think through if I was prepared to do that, and the answer was yes. “I really fundamentally feel that we have so many great people, so many great leaders in Rio Tinto and we have gone through a really, really painful period of time. Should I just extract anything positive of that, it’s that everyone had a desire to get Rio right.” Stausholm says he instinctively felt an internal solution could change the company more — and faster — than an external hire. He has travelled to almost all of Rio’s operations, a huge undertaking at any time let alone during a global pandemic. “At least I have been around and seen almost all our sites in the world, and therefore I thought this will make Rio be able to move much faster on our change journey,” he says. “That was my conviction and I said ‘You’ve got to go for it’.” STEPPING INTO THE SUN This is one of the first occasions in which Stausholm has agreed to step into the spotlight since he was picked for the top job. It’s been part of his strategy to give his new executive team breathing room to work on defining the future of Rio together. Stausholm has been guided by four principles: ensuring Rio is the best operator, has impeccable environmental, social and governance credentials, excels in development and growth, and has a strong social licence. “That is kind of a little bit of a North Star right now, but we’ve got to work on it now as a team,” Stausholm says. “I needed to have that because I had to think about who would be the players who would help us in that direction.” Rio ended up in a “horrible” spot last year not just as a result of Juukan but because it had become “too inward-looking”, Stausholm says. He believes the miner was “not focused enough on the society that we are an important part of”. “Some companies can decide to do so but I’d argue Rio Tinto is simply too big to try to be invisible, and that’s what we’re trying to change as fast as we can,” Stausholm says. “The feedback was very clear here in Western Australia that we were not seen as being very visible, and of course when something terrible happens, suddenly you realise you didn’t have as strong an external network as you really needed.” The lion’s share of Rio’s profits come from WA. Rio’s iron ore division represented nearly 92 per cent of the extraordinary $US12.4 billion ($16b) annual underlying profit figure it reported in February. WEST NOT NECESSARILY BEST Stausholm accepts Rio hasn’t nurtured Australia and WA enough, vowing to “get that right” and look at better ways to give back to communities beyond making donations and paying billions of dollars in tax. But pulling up stumps and moving headquarters 14,537km from London to Perth — a seemingly obvious fix that has even been backed by Premier Mark McGowan — appears to be firmly off the table. Stausholm worries it would make the miner appear small, saying: “I just would caution against trying to be too local in that way. “What I have experienced is when I travel outside of Australia with Rio, people are saying ‘You’re such an Australian company’, and when I travel in Australia they say ‘You’re not Australian enough’.” He wants to get to a stage where Australians are proud of Rio for being a global company, saying the fact Perth engineers are working on projects in far-flung places like Africa, Serbia and Mongolia warrants celebration. “We are creating well-paid jobs for well-educated Australians, here in Australia, because we have that global business. I think that’s actually what really makes Rio very, very interesting,” Stausholm says. He also argues a relocation is not necessary given Rio’s biggest office is located in Perth, and points to the fact he has appointed a number of talented Australian leaders in his executive team to help strengthen ties. Three key roles were given to executives with strong connections to the Pilbara during the overhaul in January, with Simon Trott from the Wheatbelt town of Wickepin handed the reins of Rio’s iron ore operations. Rio also announced this month that former WA treasurer Ben Wyatt had been appointed to its board. But there is an element of politics — Stausholm has to be careful he is not seen to be playing favourites, which risks upsetting other parts of the business that are also significant contributors. “Our business activities in Quebec, Canada, is almost as big as here in Western Australia, and that’s also important,” he says. “There’s probably a feeling right now in Canada ‘Where’s Jakob?’ Unfortunately I can’t go there because of COVID ... but as soon as the world opens up I need to go to Canada.” China, which has hit Australia with a string of trade bans but so far spared iron ore, is also high on Stausholm’s travel list for when borders reopen. Rio sells more than 50 per cent of its commodities, including the steelmaking material, into the Middle Kingdom. “We have our biggest shareholder, we have our biggest customers, we have competitors there,” Stausholm says. “It’s just very important to be connected into China and we have good relationships there ... that obviously are difficult to nurture during a pandemic.” Since leaving Perth he has travelled to New Zealand, where he met Prime Minister Jacinda Ardern and visited Rio’s aluminium assets; Serbia, to meet President Aleksandar Vucic and discuss the miner’s Jadar lithium project; and Denmark. FUTURE FOCUS How long will it take to regain trust and restore Rio’s social licence? Stausholm doesn’t have the answer. He says his mental mindset is that it will take years — but that’s no excuse not to keep inching towards progress. “I think the key thing is to be humble about saying it takes several years because there will be a good day when you say wow, we’ve really turned the corner, but you don’t know. You might get a rainy day afterwards,” he says. “It’s not that kind of a goalpost; it’s about achieving a state that you want to continuously nurture in the future.” PKKP director Burchell Hayes tells Insider he has been encouraged by meetings so far with the new chief executive and his “openness and willingness” to meet traditional owners. “But the real test will be if he can achieve true change within Rio Tinto,” Hayes says. Stausholm, while recognising the global economic recovery remains precarious, intends to leave a stronger company with a more robust future portfolio to his successor. “I should say that’s a high bar because it’s a fantastic company ... but I do think there are several areas where we can further strengthen ourselves,” he says. Along with bolstering heritage management, Stausholm is passionate about climate change and has set goals for Rio to reduce indirect “Scope 3” emissions — produced by its customers — which the miner had long resisted taking account for. Rio has also announced new climate goals, to partner with customers on delivering technologies to cut the carbon intensity of steelmaking by at least 30 per cent from 2030 and to develop carbon-neutral steelmaking technologies from 2050. Stausholm is of the view achieving net-zero carbon emissions by 2050 “will require a lot of mining”. He says the transition will include solar cells, wind turbines, transmission lines, electrical vehicles, which all require resources such as iron ore or copper, aluminium and lithium. “So it plays very well to us,” he says “But — and this is why I’m pushing this deep learning from Juukan Gorge — I think society will keep on pushing us for setting higher standards for how we mine and we should be at the forefront of that.”

INSIDER: Jakob Stausholm’s tall task at top of Rio Tinto to repair miner’s battered reputation

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