Albanese’s future as Rio boss in balance

Confirmation that Rio Tinto will spurn its agreed deal with Chinalco and instead launch a $15billion ­(£9.2billion) rights issue sent its shares to a seven-month high, gaining 281p to £30.01. Meanwhile BHP Billiton, which has agreed to pay $5.8billion (£3.6billion) to create an iron ore joint venture with Rio in Western Australia, gained 99p to £15.55.

Although the collapse of the Chinalco deal has been greeted with euphoria by investors, the future of Albanese is uncertain despite well-regarded chairman Jan du Plessis’ public support.

Charles Kernot, an analyst with Evolution, said: “He has to go. He tied his colours firmly to the mast with Chinalco and insisted that the transaction was the only strategy that was worthwhile for shareholders.

“But look at the share price today now the deal is dead.”

Albanese’s position may be deemed untenable after he ramped up the company’s debt by acquiring aluminium company Alcan in 2007 and then spurned a $66billion takeover from BHP prior to his U-turn on the Chinalco deal. Yet Kernot said that unhappy shareholders might be reluctant to force Albanese out while the company is conducting its rights issue, especially as there is no obvious candidate to replace him.

Concerns have also emerged that relations with Chinalco may have soured as the company is still Rio’s largest shareholder with a 9 per cent stake and is also one of its largest ­customers.

The two parties are set to meet to discuss the rights issue over coming weeks and insiders said that Albanese, if he leads the discussion, could receive a frosty reception.

Xiong Weiping, president of Chinalco, said: “We are very disappointed with this outcome.”

Rio’s decision to team up with BHP on iron ore is also likely to enrage the Chinese, who were concerned that the two companies could gain a stranglehold on the market.

Albanese said: “We have an excellent relationship with Chinalco and I remain very positive about the potential for future collaboration.”