Activist investor demands review of Rio Tinto's structure

Palliser Capital called for an independent review of Rio Tinto’s structure on Thursday, the latest salvo in the activist investor’s campaign to end the miner’s dual-listed status.

In a letter sent to the miner’s board, Palliser and a number of other shareholders demanded a resolution be included in the next annual general meeting that, if passed, would see Rio commit to an "independent, comprehensive and transparent review" of its structure.

Rio Tinto is currently dual-listed, with its primary listing in London and a secondary one in Australia. The UK hedge fund wants it to unify into a single Australian-domiciled holding, with its primary listing in Sydney and secondary listings in London and New York.

Palliser, which believes the current dual-listed company (DLC) structure is both outdated and value destructive, met with Rio on 4 December to press for change

However, Palliser said Rio’s management was "adamant" there was no value in unification "despite us demonstrating the overwhelming empirical evidence in favour".

Rio also claimed most shareholders were happy with the current structure, which Palliser disputed.

In the letter, Palliser said it had not decided to requisition the resolution "lightly or without a great deal of deliberation".

"We took this step because we believe that the market is long overdue the review we are requesting.

"The resolution we have co-filled provides an opportunity for shareholders of Rio Tinto to be head. It enables management to genuinely test whether shareholder support for unification is impossible, as they have asserted."

It concluded: "It is simply unsustainable for the board of the second-largest mining company in the world to keep working around the value-destructive constraints of its archaic structure while its DLC-free peers optimise value through their unrestricted access to the full suite of capital allocation."

Palliser, which holds a stake worth around $250m in Rio, first called on the miner to quit London in May.

Rio Tinto has yet to comment on Thursday’s letter.