SYDNEY (Reuters) - The U.S. Securities and Exchange Commission on Tuesday charged mining company Rio Tinto Plc (RIO.L) (RIO.AX) and two of its former top executives with fraud, saying they inflated the value of coal assets in Mozambique and concealed critical information while tapping the market for billions of dollars.
In a lawsuit filed in U.S. federal court in Manhattan, the SEC said Rio Tinto, former Chief Executive Officer Thomas Albanese, and former Chief Financial Officer Guy Elliott failed to follow accounting standards and company policies to accurately value and record the assets.
The Mozambican coal business was acquired for $3.7 billion in 2011 from Riversdale Mining and sold a few years later for $50 million.
2007 - India’s Tata Steel signs a joint venture with Australia’s Riversdale Mining to develop coal projects in Mozambique.
2008 – Thermal coal futures prices rise above $200 per tonne.
2010 – Riversdale gets green light to build $800 million coal mine in the country’s northwest. Riversdale has predicted that the Benga project will produce some of the lowest-cost coking coal in the world. It later turns out that Mozambique’s coal is costlier than competing supplies, especially from neighboring South Africa.
2010 - Mozambique’s transport ministry says that Mozambique will use the Zambezi river to enable inland coal assets to get to a port, which has yet to be fully developed.
2011 – After a price crash following the global financial crisis, coal prices soar back as high as $130 per tonne amid expectations that demand from India and China will result in an undersupplied market for decades to come.
2011 – Rio Tinto gets Mozambique coal assets as part of $3.7 billion acquisition of Riversdale Mining.
2011 - Rio Tinto’s chief executive for energy Doug Ritchie describes the Mozambique operations as the “greatest undeveloped seaborne coking coal region in the world.”
2012 - Rio issues a $3 billion bond and an around 1.8 billion euro bond with a 500 million British pound tranche. Some 95 percent of the sterling bonds go to UK investors including fund managers, insurers and pension funds.
2012 - Mozambique’s government says it will not let Rio Tinto use the Zambezi River to transport coal to the Indian Ocean for export. That means the coal can only get to ports via unreliable railways, which also lack the capacity to handle the coal. The ports are also not sufficiently developed to handle large-scale coal exports.
2013 – Coal prices drop back below $100 per tonne.
2013 - Rio Tinto writes off about $3.5 billion on the operation.
2013 - Albanese resigns at request of board.
2014 – Rio Tinto sells Mozambique coal assets for $50 million.
2014 - Albanese named chief executive of Indian mining company Vedanta Resources Plc VED.L, where he serves until September 2017.
2017 - The U.S. Securities and Exchange Commission charges Rio Tinto, along with Albanese and Elliott, with fraud.
2017 - Albanese issues statement saying there is no truth in any of the charges. Elliot will vigorously contest the charges, according to a spokeswoman for the former executive. Rio Tinto says it will defend itself vigorously against the SEC’s allegations.
Reporting by James Regan and Henning Gloystein