Reorganising for better results

What do borates, talc and salt have in common? Beyond imparting a wide variety of benefits to hundreds of products we use every day, they are now being extracted, refined and marketed under common management. Rio Tinto Minerals was formed in early 2006 to integrate and optimise three of Rio Tinto’s industrial minerals businesses – Rio Tinto Borax, Luzenac and Dampier Salt.

Bringing these businesses together under common management helped reverse a steady decline in earnings by reducing complexity and eliminating duplication. Over time, the goal is to enlarge the business – through acquiring assets, prudently expanding capacity against strict investment criteria and leveraging scale and commercial expertise to capture growth in emerging markets.

At the year end, Rio Tinto Minerals employed 3,000 people working at 50 facilities on five continents to serve more than 2,500 direct customers worldwide. It is distinguished by its geographical spread, market focus and position, long life ore bodies and relative stability through the commodity price cycle. The global operational headquarters have been relocated to Denver and the global commercial headquarters are in Chiswick, London.

The new Rio Tinto Minerals has streamlined its sales and administrative function, closing three laboratories and three offices. In its operations, it divested less profitable product lines and operational sites, built boric acid capacity, approved new salt capacity and improved its plant efficiency, mine planning and energy use. In the marketplace North America remains the most profitable region for its products. Developing economies such as China, eastern Europe and India hold promise for the future, thanks to their rising living standards and demand for higher quality raw materials.

Rio Tinto Minerals supplies nearly half the global demand for refined borates from its mine in California, one of the richest deposits on the planet. Borates are naturally occurring mineral salts containing boron and other elements. They are key ingredients in a wide variety of household and commercial products.

The company’s talc operations originated as a cottage industry in the mid-nineteenth century in the French Pyrenean village of Luzenac. Over the years, the enterprise has flourished to become the world’s leading talc producing group, supplying 25 per cent of global consumption from mines in Austria, Australia, Canada, France, Italy and Spain.

Talc – hydrated magnesium silicate, the softest mineral on earth – possesses unique properties that enhance performance in countless applications, including paper, paints, putties, roofing materials, plastics, automotive parts, ceramics, and personal care products.

Rio Tinto Minerals is the world’s largest exporter of solar salt. Its operations, developed in the 1960s and 1970s to meet increasing demand, are located in the north west region of Western Australia, an ideal site for solar salt production owing to the hot dry climate, low rainfall and easy access to shipping facilities on the Indian Ocean. Rio Tinto holds 64.9 per cent equity in its three salt operations.

Salt produced by Rio Tinto Minerals is mainly used by the chemical industry and in food processing, food products and road de-icing.

Industrial minerals make a difference to our lives and so do the people who produce them. In their first year working together, Rio Tinto Minerals people have achieved:

• Better safety performance than before the reorganisation, putting Rio Tinto Minerals on track to achieve world class standards.
• Better profitability, securing price increases across all three product lines.
• Better return on investment in sustainable development, through partnerships with major customers, creating stronger relationships and improving energy efficiency.
• Better alignment with markets and customers, through rationalising product lines, building capacity for high value products and broadening institutional knowledge across its foundation businesses.

Rio Tinto Minerals met its targets in a year of profound change and, in the process, built value beyond the bottom line – constructing an efficient business model for managing and operating smaller businesses, and developing critical operations and commercial talent with a greater appetite for risk and flexibility within the Group.