Rio Tinto Group

Rio Tinto had its origins in one of the earliest examples of the privatization of government property. In 1873 a consortium of European businessmen, led by London banker Hugh Matheson, arranged to pay the government of Spain, then facing a financial crisis, some £3.5 million for the celebrated copper mines of Rio Tinto in southern Spain’s province of Huelva. As soon as the transaction was complete, Matheson and his partners formed the Rio Tinto Co. in London. Making ambitious promises about the firm's likely performance, Matheson took the company public in a period when mining shares were popular.

The mines lived up to the expectations. By 1884 Rio Tinto was the greatest mining center in the world, with more than 13,000 tons of copper produced along with 1.4 million tons of pyrite ore, from which sulfur was extracted for the production of sulfuric acid. The company benefited from a plan by Hyacinthe Secrétan, head of the Société Industrielle et Commerciale des Métaux, to corner the market on copper in the late 1880s and drive up the price of the metal. Yet Secrétan overextended himself, and his company went bankrupt, leaving Rio Tinto and other producers with substantial losses.

The company, nonetheless, proceeded with its ambitious plans for the mine, including the construction of a rail line to ship out both ore and the copper produced on site. Over the following decades Rio Tinto became one of the largest employers in Spain and found itself the frequent target of labor and political campaigns. Yet the company, with its Spanish workforce and British managers, kept on mining copper ore.

After the First World War, however, demand for the company's ore declined as some of its major customers, especially in Germany, switched to a new method of making sulfuric acid that did not require pyrites. The company struggled during the Depression, especially since the Spanish government initially would not permit layoffs or wage reductions for the miners. Later in the 1930s the rise of worker militancy and civil unrest forced the company to evacuate British managers and their families. The mines fell into the hands of Republican forces, but they were soon retaken by Franco's Nationalist troops, who subsequently executed many of the workers. The company was widely criticized as a supporter of the fascist seizure of power.

The mines continued to operate during the Second World War (Spain was a non-combatant), but it was difficult to make deliveries to customers. After the war Rio Tinto struggled to rebuild the operation but was hampered by its outdated equipment and the foreign currency controls of the Spanish government. By the early 1950s there was growing sentiment to return the mines to Spanish control. This was done in 1954, with the sale of the famed copper source to a new entity called Compañía Española de Minas de Rio-Tinto S.A. for £7.7 million and a one-third interest in the new company, the remainder of which was held by a group of Spanish banks.

By this time Rio Tinto had expanded it operations beyond the Spanish mines. In the late 1920s the company began buying properties in Northern Rhodesia (now Zambia), where a large copper deposit had been discovered. It became the largest shareholder in Minerals Separation Ltd., which had interests in the area, and also made a substantial investment in the Rhodesian Congo Border Concession Ltd. Auckland Geddes, chairman of Rio Tinto at the time, worked with South Africa's Ernest Oppenheimer to block American investment in the Rhodesian mines. They formed a company called Rhokana Corporation Ltd., with Geddes as the chairman.

In the 1950s the company accelerated its progress toward becoming a global mining giant, widening its reach to Canada, Australia, and South Africa. Yet a much larger step in that process came in 1962, when Rio Tinto merged with Consolidated Zinc to form Rio Tinto-Zinc. Consolidated started out as Zinc Corp., which was founded in 1905 to develop Australian zinc and lead deposits at the rich lodes of the Broken Hill area. It later moved into zinc smelting through a merger with Imperial Smelting and made the first discovery of bauxite in Australia. The combined company Rio Tinto-Zinc thus had extensive operations Down Under, held through its subsidiary Conzinc Riotinto (later CRA).

In 1968 RTZ widened it scope once again by purchasing the British firm Borax Holding, the main property of which was United States Borax and Chemical. That company mined sodium borate and produced the borax used in the cleanser 20 Mule Team (once touted by actor Ronald Reagan), in glass fibers and a variety of other industrial applications.

During the 1970s RTZ began mining copper in Papua New Guinea and Canada and uranium in Namibia (much of which ended up in the hands of South Africa) while expanding iron ore production in Australia and moving into oil exploration in the North Sea (an activity it later abandoned). In the following decade the company acquired Pennsylvania Glass Sand and the Potash Co. of America, later merging them to form U.S. Silica.

The biggest deal of the 1980s for RTZ was the purchase of the 15-country mineral operations of British Petroleum, including Kennecott Copper, for some $4.3 billion in 1989. The acquisition made RTZ one of the largest mining companies in the world.

In 1992 RTZ announced plans to sell its majority stake in Canada’s Rio Algom, but at the same time it became active in the diamond rush occurring in that country. The following year RTZ, through Kennecott, moved into U.S. coal mining by announcing plans to acquire two companies: Nerco Inc. and Cordero Mining.

In 1995 RTZ merged with its Australian affiliate CRA to form RTZ-CRA Ltd., though the two entities continued to operate somewhat independently and maintained separate stock listings. In 1997 the company restructured itself into six global units, three based in London and three in Australia, and the two parents were renamed Rio Tinto PLC and Rio Tinto Limited.

In 2007 Rio Tinto made a $40 billion bid for Canada’s Alcan aluminum group, topping a previous bid by Alcoa. A few months later, Rio Tinto itself was targeted by rival BHP Billiton in a $140 billion hostile takeover bid. Rio Tinto rejected the offer and then complicated matters by arranging to sell 12 percent of its London shares to a joint venture of Aluminum Corporation of China (Chinalco) and Alcoa. In February 2008 BHP Billiton increased its offer to $147 billion, but Rio Tinto continued to resist and European antitrust authorities raised objections. In November 2008 BHP finally withdrew the bid.