If you built a composite portrait of Leigh Clifford from the handful of newspaper profiles ever written about him, you would be presented with an archetypal Aussie miner, as tough as the rocks his company digs from the earth. Shortly before taking up, six years ago, the post of chief executive of Rio Tinto — the London-based international mining giant — Clifford famously brandished a clenched fist at a group of environmental activists who stormed the stage at a shareholder meeting. He quickly withdrew when he realised how the picture might look in the papers, but one mining analyst still describes him as ‘a hairy-arsed mining man rather than a polished suit’. In short, he’s the last man you’d expect to find showing off a 16th-century leather-bound Latin volume.
‘It was translated by Herbert Hoover, who was the first managing director of Zinc Corporation, which became the Z in RTZ [as Rio Tinto used to be known],’ he explains, striding over to his ancient copy of Agricola’s De Re Metallica, the founding text of mining and metalurgy, mounted in a glass box in his spacious St James’s Square office. Clifford seems almost patrician as he picks out a copy of the translation from his bookshelf and delivers a quick précis of Hoover’s progress from mining engineer in Australia to president of the United States.
Perhaps six years in Rio’s clubby headquarters, with its leather furniture and fine paintings, has rubbed off on the man who spent a year toiling down a mine after university to gain his mine-manager certificate. Then again, it’s not as if he sprang from the bush; his father was managing director of the Bank of Adelaide. Clifford laughs when asked about his reputation for toughness. ‘At the end of the day, this is not an industry for pussycats,’ he says. ‘I just tell it like it is. I don’t sugar-coat it.’
Bluntness is certainly a feature of his views on corporate social responsibility. ‘Controversy surrounds mining,’ he says, but those who write his industry off as an environmental and social blight on the developing world fail to recognise the benefits it brings. ‘Mining is one of the few ways poor countries can lift themselves out of the poverty trap. The community issues are very important. You’ve got to make sure you’re not an island of prosperity in a sea of poverty. The question is how to make sure the benefits go back to the community.’
Clifford maintains an extraordinarily low profile if you consider that Rio Tinto is among the most important and venerable names on the London Stock Exchange, with a proud 130-year history. When he was installed in 2000, he announced: ‘I don’t expect the company to run very differently from the way it has run in the past.’ And he has largely been true to his word. ‘This isn’t an industry where you can chop and change,’ he says. ‘It’s more oil-tanker-turning.’ He is known for an obsessional focus on cost-cutting and return on investment. Profits have tripled and the share price almost doubled during his tenure.
But that’s not enough for some of his market critics. Over the past year the rest of the industry has seen billion dollar deal after billion dollar deal: CVRD bought Inco, Xstrata bought Falconbridge, Freeport-McMoRan is trying to buy Phelps Dodge, Rusal is merging with Sual. With each deal, prices rise higher. Yet Clifford has steered Rio resolutely to the sidelines, where it has slipped from second biggest in the world mining league to third, overtaken by CVRD. Investment bankers bursting with deal ideas report despondently that Clifford never even gives them an audience.
‘This is the biggest mining boom, probably, since the 1800s,’ he explains. ‘This is a hell of a mining boom. The trick is to ascertain what’s a good deal and what’s froth. The snake oil has been rising: there’s going to be a day of reckoning out there.’ He resents the charge that he has been timid, emphasising his commitment to expansion through mining exploration rather than corporate deal-making. ‘Maybe we’re not flamboyant, but we’re certainly willing to make big bets.’ He points to Rio’s recent decisions to take a potential $1.5 billion stake in a vast Mongolia copper and gold deposit owned by Ivanhoe Mines, and to develop the $1 billion Hope Downs iron ore mine in Australia.
And from 1997 to 2001, while others were slashing costs to survive a mining slump, Rio was in acquisition mode, buying up 11 different companies and mines at bottom-dollar prices. Clifford himself was behind the biggest of these — the $2.3 billion takeover of Australian iron ore producer North. ‘Would we have done things differently if we had known where prices were going to now? Of course,’ he admits. ‘But you can’t drive looking through the rearview mirror.’ Does that also apply to the huge potential of China, which everyone else is so excited about? With the weary air of someone who has batted away the same question every day for the last 18 months, he explains. ‘Everyone says, “Gee, didn’t you anticipate China?” The reality is that the Chinese themselves were surprised by the level of expansion.’ Clifford is convinced that some of the projects being pursued now will end up losing shareholders’ money. ‘The boom has caused people to say, “There’s a new paradigm out there.” Whenever that’s said, I say, “Be cautious.” The reality is that we’re cyclical.’
When Clifford first came to work in London in the late 1990s, there wasn’t even a mining sector among the FTSE indices, he recalls. Rio was lumped in ‘industrials’. Since then the world’s largest miners — BHP Billiton, Anglo–American, Xstrata — have listed in London along with unfamiliar names from Russia, Kazakhstan and elsewhere. ‘It’s a reflection of the attractiveness of London as a financial centre,’ he explains. ‘There’s an understanding of mining here. It goes back to the 1800s. Rio Tinto was formed in 1873 by British investors investing in a mining company in Spain. Zinc Corporation, Broken Hill — they were all backed by British investors.’
Clifford will retire at 60 next May, to be succeeded by Tom Albanese. ‘Dick Giordano [former chairman of British Gas] once said to me, “Retire early enough to do something different.” I thought that was good advice.’ Will he make up for his ten-year stint under overcast London skies by pottering on the beach and working on his golf handicap back in Melbourne? ‘I’m not a sit-on-the-beach kind of guy,’ he retorts, ‘I’m going to be doing something else.’ Whatever it is, it won’t be another mining job — though he’ll keep a foothold in London through his directorship of Barclays Bank. So does he plan to follow Herbert Hoover into politics? Another blunt answer: ‘No chance.’
Richard Orange is energy and utilities correspondent of the Business.