MINER DETAILS — Watching the `new’ Rio unfold

When Rio Algom’s directors meet later this month, the entire spectrum of corporate philosophy will be up for discussion. It will be the first board meeting in 36 years without representation from “Mother RTZ,” the British mining conglomerate that controlled Rio since it was formed by amalgamating Joe Hirshhorn’s nine Elliot Lake uranium mines in 1956.

The “new” board will have to set guidelines for management now that there is no single major shareholder.

Still at the helm, and apparently strongly committed to the newly independent company, is 60-year-old Colin Macaulay, president and chief executive officer. He is a Canadian who spent his early years in mining in Manitoba and Elliot Lake, Ont., and much of his career in the RTZ fold. He joined Rio after running RTZ’s Rossing Uranium in Namibia.

What has changed, says one insider, is that decisions by Rio management no longer have that “extra layer of scrutiny” and, as a result, the company should be able to move faster to participate in promising projects.

RTZ says it sold out because it had chosen Kennecott to be its North American vehicle. But liability for the Elliot Lake uranium operations and perhaps a general unease with the climate for investing in Canada may have also been factors.

RTZ says it realized a $65-million loss on the sale of its 51% stake in Rio, but it is hard to believe RTZ did not do quite well from its investment. After 32 continuous years of profitability and paying a $250-million special dividend in 1991, Rio still holds some very significant assets — including $182 million in cash.

It will be interesting to watch what course Rio’s now unfettered management embarks upon.

—————————

Small mining companies, their directors and consultants, all potentially face financial ruin by violating environmental regulations purely by accident or even through retroactive legislation. Ontario’s Matachewan Consolidated Mines is an example — held responsible for an accidental spill of tailings generated decades earlier under different legislation.

Environmental risk is of such concern that the Prospectors and Developers Association of Canada has come up with an environmental liability insurance package called Geoguard. Designed by the Mitchell Group insurance brokers, it is the first such insurance put together for the mining industry. It covers pollution insurance, outside directors insurance and professional liability insurance.