Rio Tinto Group's calamitous $3.7 billion coal deal in Mozambique, involving a plan to barge the fuel hundreds of kilometers down the Zambezi River, keeps coming back to haunt the world's second-biggest miner—already grappling with another African misadventure.
U.S. authorities filed fraud charges against London-based Rio, former CEO Tom Albanese and ex-CFO Guy Elliott, claiming they inflated the value of the coal assets acquired in 2011. The unit was sold for $50 million in 2014 following impairments of about $2.9 billion in 2013 and $470 million a year later.
Rio raised $5.5 billion from U.S. debt investors, including $3 billion after May 2012, when executives had told Albanese and Elliott that the Mozambique unit was likely worth negative $680 million, according to a Securities and Exchange Commission complaint filed in federal court in New York.
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