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Rio Tinto's dealmaking hunt brings back memories of disastrous takeovers

Exclusive: The mining industry is well-known for its dealmaking obsession and Rio Tinto was one of the worst offenders with a series of disastrous takeovers

Rio Tinto and Glencore reportedly considered a tie-up earlier this year(Image: Rio Tinto)

Rio Tinto is on the hunt for a new chief executive with a flair for dealmaking, sparking discussions about its capacity for strategic acquisitions as it aims to move beyond historical blunders in the mining sector.

Chair Dominic Barton is reportedly in search of a leader who can execute major takeovers while simultaneously reducing costs and boosting productivity – a combination that's considered quite exceptional, as reported by .

The mining sector has historically been fixated on mergers and acquisitions, having gone through a spree of transactions from 2006 to 2011.

However, the landscape shifted when commodity prices fell for an extended period, leading to criticism of miners for their extravagant spending on deals.

Rio Tinto was among those most heavily censured, with a string of failed acquisitions culminating in the departure of CEO Tom Albanese in 2013 after the company faced enormous writedowns. The firm had to acknowledge a $14bn (£10.3bn) loss following its purchases of Canadian aluminium company Alcan and coal miner Riversdale Mining.

Rio Tinto looks to future deals

The company is in need of an individual with a "bold vision" to elevate the business and "widen the gap against competitors," according to Dan Coatsworth, an investment expert at AJ Bell.

However, Coatsworth warns against falling into the trap of "previous mistakes" by pursuing transformational deals that have historically "ended up destroying value."

This development comes at a time when the mining industry is anticipating a surge in mergers and acquisitions, with leaders including Rio Tinto's outgoing chief Jakob Stausholm advising caution to avoid hasty and imprudent deal-making.