Donning a miner's hat

Canadian businessman Dominic Barton has forged a hugely successful career spanning the globe and roles in academia, diplomacy and the world’s biggest companies.

But there’s one failure that still rankles and which is indelibly associated with New Zealand of all places. “I’ve tried to climb Aoraki/Mt Cook twice,” says Barton, the 60-year- old chair of minerals giant Rio Tinto and equity investor Leapfrog Investments, who also served as Canada’s ambassador to China from 2019-2021 and ran McKinsey & Company’s global operations during the final third of his 32-year career at the leading management consultancy.

“The weather didn’t work. Even if it had, I’m not sure I’d have made it,” admits Barton, who might make it third time lucky on Aoraki/Mt Cook in May when he visits New Zealand for the first time in nearly a decade. Barton will present the keynote address at the Institute of Directors’ 2023 Leadership Conference (4-5 May) in Auckland.

He has accumulated many high-profile Kiwi friends in his travels around the world, including Sir John Hood, the former vice-chancellor of the University of Oxford, and New Zealand’s former ambassador in Beijing, Clare Fearnley, who Barton valued as a “mentor figure” during his own stint as a diplomat.

A visit to Rio Tinto’s iconic aluminium smelter at Tiwai Pt will also be on the cards, coming just as the world’s second-largest metals and mining company makes its long-awaited big call about the plant’s long-term future. So Barton is no dispassionate observer of New Zealand business and politics. His interest stretches all the way to the deep south.

Having watched New Zealand’s reputation grow as he worked as an executive and board director in China, South Korea and Singapore, Barton borrows one of our own cliches to describe New Zealand’s place in the world.

“It punches mightily above its weight,” he says. “I’m not just talking about commodities, but about the New Zealand brand for high-quality, nutritious, safe, healthy food.” The “silver fern badge”, he says, has become synonymous with quality. “If you made electric vehicles I’d presume they’d be good.”

Barton’s tenure as ambassador to China came at a time of deteriorating relations between Beijing and Ottawa. He was instrumental in negotiating the release of the “two Michaels” – Canadians Michael Spavor and Michael Kovrig, who China detained in 2018 on suspicion of espionage.

Earlier that year, Meng Wanzhou, the chief financial officer and rotating chair of Chinese telecommunications equipment giant Huawei and daughter of founder Ren Zhengfei, was arrested at the request of US authorities for alleged business dealings with Iran in violation of trade sanctions.

The ‘swap’ of Meng for the two Michaels ended a diplomatic row, but the government of Prime Minister Justin Trudeau has taken an increasingly hawkish approach in its relations with China.

Despite the growing tensions, Barton sees countries like Canada and New Zealand, who are allies in the Five Eyes security intelligence pact, increasing their business with the world’s second-largest economy.

“I think this idea of decoupling is just ridiculous,” he says. “The US and China, in spite of where the relationship is, had record trade last year. Canada, I think, was similar.”

Barton has been impressed by New Zealand’s diplomatic stance on China. Huawei was effectively banned from building 5G mobile networks but New Zealand has avoided the type of punishing trade tariffs that have seen the collapse of Australian wine exports to China.

“What New Zealand is doing seems to be working very well,” Barton says. “We have to be able to walk and chew gum. We can trade, we can compete and not like certain things that countries are doing. We sort of have to be ambidextrous.”

The ‘deglobalisation’ some geopolitical experts predict as US-China tensions worsen is unthinkable, says Barton. “The impact on the global economy would just be phenomenal. Rhodium Group put out an analysis of a potential blockade of Taiwan by China. It would cost [the global economy] US$2 trillion.”

He, nevertheless, considers that scenario “low probability, high impact”, making it one that governments and businesses still need to prepare for. He sees trade in critical technologies, such as the semiconductors the world relies onTaiwan to produce, decreasing as the US and other countries build their own factories to shore up their supply chains.

‘Don't blame share’

Rio Tinto’s board and management faced a crisis of a very different kind in January when a tiny radioactive capsule, usually contained in a gauge for measuring the density of iron ore feed in a Western Australian mine, fell off the back of a truck.

Barton was on a flight from Madagascar to Toronto when we heard about the missing capsule. He credits Simon Trott, who heads up Rio Tinto’s iron ore business, for leading the company’s response, which began with a decision to quickly go public. “We just got it out there and said, ‘we are sorry, we are doing everything to find it’,” says Barton.

While the loss of the stainless steel capsule, measuring six millimetres by eight millimetres, was the fault of a contractor, which Rio Tinto is required by law to use to transport it, the mining giant took full responsibility. “Don’t blame-share it, just take it. Then communicate it,” Barton advises.

The search began with an emergency taskforce using radiation-detecting technology to sweep the isolated road the Perth-bound truck had taken – a mammoth task given the trip covered 1,400 kilometres.

“Thank God they found it,” says Barton. “That road is like going from the top of Great Britain to the bottom. It could easily have fit into the tread of another truck going in a different direction.”

The size of the capsule and the remote location where it was found – on the side of the Great Northern Highway near the town of Newman, 1,100km north of Perth – meant the risk to public safety was very low. But it made headlines around the world.

The procedures for transporting the capsules have been overhauled and Rio Tinto is looking deeper across its complex mining and metals business for other obscure risks. “I never even knew we had a Caesium capsule to test iron ore throughput in a mine,” says Barton. “It made us think, what other risks are there that we don’t know about?”

New broom 

Barton began serving as chair in May, 2022, to assist with a cultural reset at the mining company that had delivered record profits in previous years, but also become mired in controversy.

Rio Tinto sparked international outrage in 2020 when it blew up ancient and archaeologically significant caves in the Pilbara region of Western Australia that were inhabited by Aboriginals up to 46,000 years ago, to clear the way for the expansion of its Brockman 4 iron ore mine. A parliamentary inquiry recommended law changes to prevent the future destruction of similarly important cultural sites.

The new chief executive, Jakob Stausholm, also had to deal with the fallout from another independent report, which identified systemic bullying, sexual harassment and racism at Rio Tinto.

Stausholm and Barton certainly represent a new broom. Barton says there were three things that were crucial to forming a successful working CEO-chair relationship between himself and Stausholm.

“[First] We said we had to be totally honest with each other,” Barton remembers. “If I’m doing something that irritates him, we’ll just talk about it. Nothing accumulates. He’s very open to feedback.”

Number two is regular communication between the pair and that is integral to maintaining that openness.

“It doesn’t mean it’s every day, but it’s several times a week and we have a good chunk of time just to talk and reflect on what’s happening,” Barton says. “Jakob was in Davos [at the World Economic Forum]. He called me after day one just to tell me about the people he was meeting and what he found interesting.”

Finally, Barton makes sure to foster an approach where the chair and directors try to help the management team fulfil its ambitions for the company. “We’re not just sort of watching and ticking boxes,” he says.

“I like Jakob, I like what he stands for. He has totally embraced the whole purpose of this company, which is to provide the minerals for the energy transition.” 

ESG advocate 

For one of the biggest mining companies in the world, decarbonisation ought to be a dirty word. But Barton is well known for his advocacy of ESG (environmental, social and governance) initiatives, which he believes have come a long way in the last decade.

Crucial to that, says Barton, has been major investment companies such as BlackRock and Vanguard, which manage around US$17 trillion in assets between them, requiring more action on ESG by companies they invest in.

The next evolution, he adds, requires better standardisation of auditing processes to prevent companies from greenwashing their activities.

“When we declare our targets on decarbonisation, there are people actually evaluating that and saying they actually did it, or they didn’t do it,” Barton says.

“At Rio Tinto, we think in 20-30 year timeframes. I’m 100 per cent convinced there is going to be some version of carbon pricing.”

Which makes Tiwai Point, a producer of some of the world’s highest quality aluminium and 85 per cent powered by clean hydropower, one of the jewels in Rio Tinto’s crown.

“Green energy-fired metal” is the only sustainable future for Rio Tinto, Barton says. “Consumers want that, Apple will want that in their phones. We think it’s really important for our business, but we also have to recognise there are competing alternatives for the use of that energy.”

That’s one of the key reasons Barton is eagerly anticipating his New Zealand visit as negotiations between Rio Tinto and employees, power generators and government agencies, reach a critical final phase.

“I want to be in New Zealand, to see it and to understand more about it,” he says. “We are biased, but we think this is a very good use of that energy. It can create a lot of value for the country, but we have to make sure we demonstrate that.”

It’s about that catchphrase increasingly heard in boardrooms around the world – social licence.

“We have to make sure if we’re users of that scarce energy that it’s creating a lot of value and jobs, and at the same time we are protecting the environment. I think at times we’ve just been sort of working on the land and not recognising that broader responsibility.”