* Names Rio Tinto general manager marketing as new CEO
* To focus on realizing Ovoot Tolgoi's production potential
* Shares rise 7 percent
Sept 12 SouthGobi Resources Ltd fired
Chief Executive Alexander Molyneux just more than a week after
Aluminium Corp of China Ltd (Chalco) dropped a $926
million bid for the company that strained its relationship with
the Mongolian government.
The coal miner named Ross Tromans, who was general manager
marketing at Rio Tinto Coal Australia, as its new CEO.
Tromans' appointment strengthens the company's links with
global miner Rio Tinto Ltd .
SouthGobi's majority shareholder, Turquoise Hill Resources
Ltd, formerly Ivanhoe Mines Ltd, is majority-owned by
Rio Tinto and five directors with links to Rio joined the board
in a shakeup a day after the Chalco deal collapsed.
SouthGobi, which is listed in Toronto and Hong Kong
, did not give any reason for the termination of
Molyneux, who had been at the helm since October 2009. The
company could not be immediately reached for comment.
"We are committed to operating SouthGobi and realizing Ovoot
Tolgoi's production potential," said Chairman Kay Priestly,
referring to SouthGobi's flagship coal mine in Mongolia.
Mongolia, close to China and home to some of the world's
biggest unexploited mineral deposits, is one of the hottest
destinations for mining investment.
But the government is wary of the growing Chinese presence
in the sector and suspended SouthGobi's mining licences
following the bid by state-controlled Chalco.
SouthGobi said last month that operations at the Ovoot
Tolgoi mine had been halted since June 30 and were not expected
to resume in the third quarter.
Chalco dropped its bid for a majority stake in SouthGobi
after meeting stiff political opposition in Mongolia, citing
difficulty in gaining regulatory approvals.
"With the Chalco transaction, you had a deterioration of the
relationship between the company and the Mongolian government,"
said Meredith Bandy, an analyst at BMO Capital Markets.
"Not that any one person is responsible for that, but if you
shake up the management team, it may help," she said, referring
to Molyneux's termination.
"You are seeing them switch out a lot of ... the management
team with what used to be Ivanhoe people and now they are being
replaced with Rio Tinto (people)," Bandy added.
"Rio Tinto is probably trying to clean up and sell the
company. They are not the long-term holder."
SouthGobi said Deputy Chairman Sean Hinton would lead the
company until Tromans's appointment is confirmed by the board.
SouthGobi's shares, which have fallen 19 percent since
Chalco dropped the bid last week, rose more than 7 percent to
C$2.34 on the Toronto Stock Exchange on Wednesday.