ADRIAN RAUSO: Three reasons for Rio Tinto CEO Jakob Stausholm’s bombshell exit

The market has digested the shock news that Rio Tinto’s head honcho is on the way out, seemingly not of his own volition, a decision which could have massive ramifications for the global mining industry and leaves a raft of unanswered questions.

Jakob Stausholm’s imminent departure announced on Thursday afternoon has “surprised the market”, Citi analyst Paul McTaggart said on Friday morning, with RBC Capital Markets expressing the same “surprise” sentiment.

Investors have showed signs of being spooked by the looming exit. Rio’s share price is down more than 1.4 per cent in afternoon trade, outpacing the 0.4 per cent its nemesis BHP lost on market.

As the hours tick by from the leadership bombshell, consensus is growing that Mr Stausholm was pushed out by Rio’s board rather than stepping down on his own terms.

“It definitely looks like he was booted out, it doesn’t feel like it was mutual and I’m hearing the same thing from a couple of large-ish Rio investors,” one fund manager, who spoke on the condition of anonymity, told The Nightly.

“As to why he was pushed — I think that’s very much up in the air.”

Assuming Mr Stausholm was given his marching orders by the board, led by chairman Dominic Barton, the reason (or reasons) why could shed light on Rio’s future strategic direction.

This strategic direction dictates the investment flows for tens of billions of dollars a year, undoubtedly having a major ripple effect on the mining ecosystem and economies across the globe.

There are multiple pressure points throughout the $165 billion Rio Tinto beast that the board could want fresh blood to focus on alleviating.

Its WA iron ore rival BHP is streaking ahead as the most efficient miner in the lucrative Pilbara region. Mr Stausholm himself in February said the axe needs to swing on jobs to get margins back on track.

Could the Rio board feel Mr Stausholm, who was brought in as the friendly Dane to mend the miner’s relationships following Juukan Gorge five years ago, doesn’t have the ruthlessness to make brutal cuts across the iron ore business?

Rio’s massive Simandou iron ore foray across the Indian Ocean in Guinea is also causing anxiety — the West African country’s rulers cancelled more than 50 mining licences this month alone. Mr Stausholm signed off on the $10b Simandou investment last year.

Or was the board agitated by the outgoing chief’s huge splurge on lithium investments — now nearing $20b — as the price of battery commodity continues to plummet?

The likes of BHP, Anglo American and Glencore are bearish on lithium and have instead been betting the bulk of their chips on copper in the decarbonisation race.

Our next major insight into what’s next for Rio is set to come before the end of October, when Mr Stausholm’s successor is picked.

Analysts have Rio’s iron ore chief Simon Trott and chief commercial officer Bold Baatar as the frontrunners for the top job.

They are said to be followed closely by Sinead Kaufman, who oversees the broadly-termed ‘minerals’ division, and copper chief executive Katie Jackson.

An external hire will likely be considered, but the competition for a top-tier candidate is set to be fierce given BHP is rumoured to be hunting for a new chief executive.