Should capital cities get into the business of trying to persuade multi-nationals to shift their headquarters to Australia?

That’s what City of Melbourne is doing tomorrow night as we debate a 10-page motion outlining the case for Rio Tinto to shift its 700-strong London head office to one of the major Australian capital cities.

The Australian Financial Review ran with the story on Saturday but we’re still yet to hear a peep out of the Herald Sun or The Age, even though the motion reveals Rio Tinto has almost completed slashed staff numbers at its Collins Street office in Melbourne from 300 to as little as 25.

The AFR was right to point out Rio Tinto retains 200 staff at an R&D facility at Latrobe University, but they were wrong in quoting an unnamed resources analyst saying the headquarters move was “highly unlikely given 80% of Rio Tinto”s investor base were also located in the UK”.

Rio Tinto is one of only a handful of so-called dual-listed companies which has separate share registers and listings in two jurisdictions, but common boards, dividends and financial results.

At the moment Rio Tinto Ltd, which trades on the ASX, has 435 million shares on issue or 23.4% of the 1.86 billion in total shares. The other 1.425 billion shares are indeed traded in the UK on the London Stock Exchange as Rio Tinto PLC. But, like with many global companies listed in the UK, there is not a single UK-based shareholder that is big enough to be classified as “substantial” and disclosed in the annual report.

This is how the largest shareholders of Rio Tinto’s UK stock line up from page 130 of the latest annual report:

  • Shining Prospect (Chinese government through Chalco): 12.7%
  • Capital Group (LA-based fund manager): 8.9% in total across two holdings
  • Blackrock Inc (New York-based fund manager): 8.38%
  • Axa SA (French insurance giant): 4.86%

These offshore shareholders don’t give a fig where Rio is based, as long as the returns are good. And if you then look at the number of retail shareholders in the annual report, there are only about 45,000 in the UK versus 220,000 in Australia.

The reason I’m confident this campaign will succeed is that the likes of Gina Rinehart, Peter Costello and some former Rio Tinto directors are all on board. Now is the time to strike after the recent appointment of former Transurban CEO Chris Lynch as Rio’s London-based CFO. Newly installed CEO Sam Walsh is also a Melbourne boy, so why aren’t these two running Rio Tinto from their home town? Or as Rinehart argues, why aren’t they running it from Perth given the Pilbara now delivers the vast majority of Rio’s revenue and profit?

The council motion pulls together all the key arguments, including an edited version of a transcript of the 2008 AGM where then-chairman Paul Skinner falsely claimed Rio Tinto is “as Australian as anybody in the corporate scene in this country”.

Five years later, Rio Tinto has as good as closed its Australian corporate office and is down to just one Australian-based director.

I never imagined joining up with Rinehart on this campaign, but she’s clearly keen. After emailing her office on Friday afternoon seeking documents for the motion, a reply came through within the hour, including this sentiment:

“You are authorised by Hancock Prospecting to table this document as required with the City of Melbourne. Please also note that Rio Tinto currently earn approximately 90% of their revenue from iron ore, and are selling their small Canadian iron ore operations. You may wish to consider including that other states and countries recognise that it is important to encourage headquarters where corporations do most of their business to be headquartered in the state or country where this occurs.”

The financial arguments for Australian shareholders to take action on this issue are very strong. For instance, buried in the fine print at the bottom of page 169 of the annual report is the disclosure that Rio Tinto Ltd has amassed a whopping $US18.04 billion in franking credits. These clearly should be distributed to the Australian-based shareholders who can use them, but with only one Australian-based director on the Rio board, AFL chairman Mike Fitzpatrick, the interests of local investors are clearly not being looked after.

Wouldn’t it be great if a couple of luminaries of the Australian mining or investment scene came along tomorrow night and publicly argued the case for Rio Tinto to move its head office? Anyone who wishes to make a written or oral submission ahead of the debate should register before noon tomorrow. Rinehart herself is most welcome to directly submit.

It’s the last item of eight items of business and we should get to it by about 6.30pm. After recent changes to Melbourne’s meeting procedures, the full audio of the meeting, including all public questions and public submissions, will be online by Thursday.

No doubt the various London-based directors will then be able to listen back to better understand just how restless things are getting in the former British colony of Victoria after their unannounced decision to decimate Rio Tinto’s Melbourne corporate office.

*Stephen Mayne is chair of the City of Melbourne Finance and Governance Committee and will be moving the motion — he was not paid for this item