By James Regan
SYDNEY (Reuters) - Rio Tinto (AX:RIO) gave its chief executive an open-ended job contract on Thursday, in a move seen likely to strengthen the mining group's defences just weeks after it disclosed a rebuffed takeover approach from rival Glencore Plc (L:GLEN).
Veteran Sam Walsh, the long-standing head of the mining group's iron ore division, took over as CEO in early 2013 after his predecessor was fired due to a series of bad investments that cost Rio $22 billion in writedowns in two years.
Walsh's initial contract was due to end on Dec. 31, 2015.
The 64-year-old CEO's strategy at the helm has been a conservative one, focused on internal growth projects in profitable businesses such as iron ore and copper, with an eye on greater dividends, rather than ambitious acquisitions.
Rio's extension of Walsh's contract ends speculation over his replacement and, analysts said, also makes a Glencore bid approach a tougher proposition. Walsh, an Australian who joined Rio after 20 years in the auto industry, is perceived by the market as unwilling to sell out.
"Certainly Sam Walsh does present a formidable barrier to a potential takeover," Investec analyst Hunter Hillcoat said.
Glencore said last month that it made an informal enquiry by telephone to Rio Tinto in July, trying to gauge interest in a tie-up. Rio Tinto turned Glencore down.
The two sides have said they are no longer in talks and Glencore says it is no longer actively considering a deal. Under British takeover rules, that statement leave the commodities trader and miner unable to make a move for Rio for six months.
Analysts are mixed, though, on whether Glencore, eyeing a weak iron ore price, could eventually come back.
"I think Sam Walsh staying on does make it less likely that a takeover might happen," Macquarie analyst Jeff Largey said.
"Sam has a very simple and straightforward strategy...A (takeover) certainly moves Rio and the management team away from what is a pretty simple and straightforward strategy, at the end of the day."
Walsh, along with chief financial officer Chris Lynch, will transfer to open-ended contracts in 2015. Lynch's initial contract was due to end on Feb. 28, 2017.
Both executives will move to a rolling contract with no end date and a 12-month notice period, according to Rio Tinto. Their pay is unchanged.
Walsh, previously an executive with General Motors (N:GM) and Nissan Motor Corp (T:7201) before switching to mining in 1991, was head of Rio's iron ore unit before taking the top job.
Under Walsh, iron ore rose to account for more than 80 percent of Rio Tinto's net earnings.
(Additional reporting by Silvia Antonioli in LONDON; Editing by Ryan Woo and Clara Ferreira Marques)