Bloomberg reported that Cameron McRae, CEO and President of Oyu Tolgoi LLC will step down in November after his 3-year contract ends. He was appointed as a CEO after Keith Marshall left in 2011. McRae has over 30 years of mining industry experience working in South Africa and Zimbabwe, one of the few and experienced senior veterans.
Mr.Mcrae is leading the company in the most disputed times with the government. He has been cleaning the mess that has former Ivanhoe Mines (currently Turquoise Hill Resources) VPs, managers and the former CEO Keith Marshall left. One of the biggest mess he cleaned was establishing the amount that has been invested into the Oyu Tolgoi area before the Investment Agreement was made. Keith Marshall wrote a letter to the government confirming the amount which late new management of OT LLC and the government had to settle. The amount was around USD 250 million lower than that of Rio Tinto insisted.
It was also at Mr.McRae’s tenure, the company’s public relations VP has been replaced with Houston Spencer after he saw that OT LLC is not doing well on informing and promoting the public about the project. It was Spencer’s team that created anger among the public after putting images of milk and bread representing the 76:24 ratio of profit. Many scrutiny go around the PR policy of OT LLC as being a corporate bully.
The news that has been published on Bloomberg regarding the resignation of the CEO is not an accident or someone with a loose mouth talked to a reporter. We view it as an intention from Rio Tinto to end the dispute before Mr.McRae leaves the position. The dispute between two sides is both painful and boring. It is creating uncertainty for both public and international investors. Everyone wants to get over the dispute and carry on with the business. However, Rio Tinto’s style of prolonging and transparency lacking approach along with the government’s inconsistency and instability has been a perfect cocktail of the current debacle.
We hope that the two sides will resolve the dispute as it is in their best interest to accelerate the project in terms that is profitable for both. We also hope, Mr.McRae will not leave before it happens. Another inconsistency will create another prolonging situation. Hence, a research concluded that average CEO tenure is 4-6 years.