A prominent activist investor has escalated its campaign for Rio Tinto to relinquish its primary listing in London, asserting that the mining giant’s dual share structure has proven catastrophically detrimental to shareholder value.
Palliser Capital’s strongly-worded letter to the board, strategically timed to coincide with Rio Tinto’s investor day, demands an independent review of consolidating the corporate structure into a single Australian entity with Sydney as its primary listing location. The UK-based hedge fund estimates the current dual structure has erased approximately £50 billion in shareholder value.
Rio Tinto’s chief executive, Jakob Stausholm, swiftly dismissed the proposal, stating that unifying the structure “simply did not make any economic sense.” The company’s chief financial officer, Peter Cunningham, highlighted potential costs reaching “mid-single digit billions” in taxation and expressed concerns about share price volatility between London and Sydney markets.
The current ownership structure shows a significant imbalance, with London representing 77% of share capital compared to Australia’s 23%. This disparity has created complications for share-based acquisitions and prevented Australian shareholders from maximising dividend tax benefits.
Palliser Capital, despite holding less than 1% of Rio Tinto’s outstanding shares, has maintained persistent pressure since launching its campaign in May. Their analysis suggests that while the proposed change might trigger some UK investor exits, these would be offset by incoming Australian institutional investors, particularly superannuation funds.
The mining behemoth’s recent strategic moves, including the $6.7 billion acquisition of Arcadium Lithium, demonstrate its pivot towards metals essential for the energy transition. This strategic repositioning occurs against the backdrop of ambitious production growth targets, with Rio Tinto projecting 3% annual growth until 2033.
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