Rio Tinto (NYSE:RIO), the second-largest global miner, has fended an activist investor campaign to abandon its long-standing dual listing structure.
U.K.-based hedge fund Palliser Capital, which has campaigned for the effort, required a 75% majority but fell short, reaching only 19.35%, below the 20% threshold that would have mandated further shareholder engagement.
Palliser, which owns around $88 million worth of Rio shares, has criticized the existing structure as an "unmitigated failure" that has led to $50 billion in value destruction and constrained Rio's ability to execute large-scale mergers and acquisitions. The group argued that a simplified structure could better align Rio with global peers and boost investor returns.
However, Rio's board countered that restructuring would come at a steep cost. Chair Dominic Barton noted the board had already conducted a thorough review with input from five external consultants.
"All of this work showed that a unification of the DLC would be value destructive for the group and its shareholders," he said per AFR. The miner cited potential tax implications and significant legal complexities to maintain the status quo.
Rio operates as two entities -- one listed in London and the other in Sydney -- but functions as a unified business, sharing profits and costs. Under Palliser's alternative structure, Rio would remain UK-listed through a secondary listing while governed by a new parent company domiciled in Australia.
At Rio Tinto's annual general meeting in Perth on Tuesday, CEO Jakob Stausholm also addressed broader strategic themes, including the role of critical minerals in the company's future portfolio. Rio already produces scandium and is exploring options to extract gallium from its aluminum operations. But both Stausholm and Barton expressed caution, citing limited market scale and uncertain demand.
"That's why you don't typically see the top five [miners] in this space," Barton said, according to Mining.com, explaining that while Rio has opportunities, it must carefully assess scalability and market conditions before proceeding.
Management reaffirmed its long-term investment strategy, confirming a $13.3 billion commitment to new mines and equipment in Australia's Pilbara region over the next three years. Key projects include expansions at Western Range, West Angelas, Hope Downs 1, Greater Nammuldi, and Brockman 4, alongside ongoing studies at Rhodes Ridge. This development could become Australia's largest iron ore mine, potentially producing more than 100 million tons annually.
Price Action: RIO shares are trading higher by 1.96% to $59.70 premarket at the last check on Friday.
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