UPDATE 1-Rio Tinto picks ex-BHP executive as new CFO

Thu Feb 28, 2013 7:03am GMT

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* Chris Lynch takes over as CFO in April

* Lynch was CFO at BHP until 2007, Alcoa veteran

* Elliott retires after over 32 years at the company

By Sonali Paul

MELBOURNE, Feb 28 (Reuters) - Rio Tinto rounded out its management team under new chief executive Sam Walsh, naming former BHP Billiton finance head, Chris Lynch, as its chief financial officer as it looks to slash costs in the face of weaker commodity prices.

The appointment is the latest in a round of changes at the world's mega miners in the wake of a mining boom that bred overpriced acquisitions and cost blowouts, and ended in multi-billion dollar writedowns and a new era of austerity.

Lynch, 59, will replace the well-respected Guy Elliott, who flagged his retirement last year after more than 32 years at the world's No. 3 miner.

Lynch left BHP after being overlooked for the top job in 2007 and was chief executive of Australian toll road operator Transurban Group from 2008 to 2012, during which time he joined the board of Rio Tinto.

He led BHP's carbon steel materials division before becoming CFO at the top global miner and was at aluminium giant Alcoa before that, key background for Rio Tinto which is still suffering the consequences of its ill-timed $38 billion takeover of Alcoa's rival, Alcan, in 2007.

"It's a good appointment. He certainly has some experience that will be of use," said Tim Barker, a portfolio manager at BT Investment Management, which owns shares in BHP.

Lynch, who will take over in April, comes into the finance role as Rio focuses on cutting $5 billion in costs and reining in mega projects to improve shareholder returns.

"Chris Lynch is an extremely high-calibre addition to our executive team with a strong pedigree of board, mining and financial experience," Walsh, said in a statement.

Elliott, who has been Rio's CFO since 2002, managed to retire gracefully in stark contrast to former chief executive Tom Albanese, who was sacked last month for two misjudged acquisitions that resulted in massive writedowns.

Rio has written down more than $20 billion on its $38 billion top-of-the-market takeover of Alcan in 2007, just before the global financial crisis, and written down three-quarters of its $4.2 billion acquisition of Riversdale Mining in 2012.

Elliott, who is also a non-executive director at Royal Dutch Shell, gave up his bonus last year due to the Alcan writedowns.

Media reports have suggested that Elliott escaped relatively unscathed as he had not been in favour of the debt-funded Alcan deal and also opposed Rio's controversial plan to shore up its balance sheet in 2009 through an $18.5 billion deal that would have given Chinese state-owned Chinalco stakes in key assets.

That deal was scrapped in favour of a tie-up with BHP Billiton's iron ore business, which also never went ahead.

Rio shares rose 1.6 percent to A$67.05 before the announcement, slightly ahead of the broader market.