Rio Tinto energy and minerals boss Bold Baatar plans to bring his private equity experience to running a Ventures business that will chase new minerals associated with technological disruption, with the miner prepared to buy and then sell projects to make cash.

Earlier this year, The Australian revealed Mr Baatar had been given a brief to search for new investments and tie-ups in commodities that will benefit from changing global trends such as the push towards renewable energy.

The move is seen as one that could further differentiate Rio from its major peer, BHP Billiton, which under chief executive Andrew Mackenzie is firmly focused on large projects in four key commodities: iron ore, coal, copper and petroleum.

Mr Baatar, a former Wall Street investment banker who spent a decade working on leveraged buyouts and selling companies for the largest private equity firms, said buying, improving and selling assets was now seen as a way to add more value.

“We will be seeking to maximise returns through active portfolio management,” Mr Baatar told a London resources conference. “This means having the discipline to buy and then monetise. We will continuously analyse the growth profile of our assets against the set return of thresholds, being ready to sell at the right time for the right value.”

He noted this approach in his minerals and energy business was a very different approach to Rio’s management of its big iron ore, copper and aluminium businesses.

The recent decision to sell Rio’s Hunter Valley coal assets to Yancoal Australia in a $US2.69 billion ($3.4bn) deal was an example of Rio’s willingness to sell assets at the right time for a good price, he said.

“Thermal coal has been historically important for Rio Tinto and exiting at the right time was hard but required discipline,” Mr Baatar said. “This private equity mindset will be increasingly important, allowing us to recycle capital and continuing to grow and pioneer in new areas and commodities.”

The Ventures business and its focus on trends was spurred by work on Rio’s Jadar lithium and borate deposit, discovered in Serbia in 2004. Jadar has the potential to become one of the world’s top three producers of lithium, where demand is forecast to surge on the back of increased demand for lithium-ion batteries in electric cars.

Mr Baatar said Rio was focused on trends like continued Chinese urbanisation, growing global interconnection of markets, longer lifespans and working lives and shrinking populations in many Western economies. “These trends and shifting consumer preferences for environmentally friendly technology are generating new opportunities for other minerals and metals which are currently not in our portfolio but essential for human progress,” he said.

He has previously declined to flag the minerals Rio is looking at for fear of driving prices higher.

“Our Ventures business will look for strong partnerships with asset owners and joint venture partners,” Mr Baatar said.

“We’re seeking partnerships where we can add value from our track record of engineering and operating excellence, sales and marketing channels, existing customer relationships and technical expertise.”

Projects at pre-feasibility stage or later will be targeted by Ventures, while Rio’s exploration team would continue to seek earlier stage projects.

Mr Baatar said the world was facing the biggest technological disruption since Rio started 145 years ago, demanding a dramatic shift in the way miners thought.

“If the disruptive revolution has taught us anything, there is no industry that is immune — Silicon Valley is taking industry after industry,” he said.

The mining industry needed to work with the engineers of the disruption, or it would join the ranks of Eastman Kodak and Nokia, Mr Baatar said.

“In 20 years’ time, we will see this era as a key turning point for our industry,” he said. “We have never before seen such a coming together of trends and challenges.

Published Date:2017-07-20