Internal Management Structures of Selected Australian Mining Organizations

In ensuring better comparison of mining projects, it is necessary to explore the ways in which mining organizations differ or have similarities in their mining initiatives regarding community relations (Aguilar-Støen & Hirsch, 2015). This is deemed to encompass analyzing internal management structures of the selected Australian mining organizations. The objective of this paper is to analyze the selected mining projects of Australia from the companies such as BHP Billiton and Rio Tinto along with evaluating their project investment and market capitalization. The paper is also intended to analyze the major issues between the selected companies and their host communities in order to evaluate the ways in which these companies structure their community relations effort.

The mining project developed by BHP Billiton is “London mining network” that focused on carrying out mining operations in Escondida copper mines in the Atacama Desert of Northern Chile and make considerable developments in the community. The company has also planned to expand its desalination operations within the coast along with piping water within these mines. The size or market capitalization of BHP Billiton is observed to be 44.1 billion U.S. dollars for the year 2018 (Bhp Annual Reporting., 2018). The company is positioned as the largest Australian mining company listed in Australian Stock Exchange and its market capitalization is high in comparison to its competitors. Such strong position of the company is deemed to be suitable to support the mining project of the company along with its community development activities.

The mining project implemented by Rio Tinto is “Oyu Tolgoi Gold and Copper Mining” and the investment within the project is observed to be US $4.4 billion that has supported construction of more than 200 kms tunnels (Rio Tinto., 2017). Moreover, market capitalization or the size of Rio Tinto is 83.94B in the year 2018 attaining 32.2% of its size that is observed to support the investment within this mining project. The mining project of this company has contributed towards increased Mongolian development through carrying out ore mining from surface employing open pit mining. Moreover, this mining project was selected by Rio Tinto for the reason that Oyu Tolgoi serves among the most exciting developments in gold and copper mining over several years. This encompasses reserves along with resources which makes it among the world’s renowned copper and gold deposits (Conde, 2017). Moreover the shareholders of Oyu Tolgoi including Rio Tinto, Turquoise Hill Resources and the Mongolian government developed a plan for carrying out underground development of the community.

BHP Billiton Mining Project and Community Relations

The host community that is being served by BHP Billiton through its mining project is local community around the Atacama Desert of Northern Chile. This community served by the mining company is observed to survive within a region that faces a threat of survival settlements due to scarcity of water in the region (Conde & Le Billon, 2017). The community residing within this region is observed to be indigenous people from Atacama Desert and they remain in underdeveloped villages with lack of modern facilities and protect their villages with strong stone walls. To maintain their livelihood they rely on their developed ceramic crafts, copper work and gold work. They are also observed to be skilled at making best use of scarce water along with sparse terrain through employing their livestock and depend their lives mostly on agriculture (Fordham & Robinson, 2018).

Local community around Southern Gobi desert of Mongolia is the host community for Rio Tinto that is considered within the mining project of the company. The community of South Gobi is observed to be huge and sparsely populated region in which for more than several years residents have relied their lives on animal husbandry and nomadic herding (Keenan, Kemp & Ramsay, 2016). The mining developments are greatly needed in this region that can bring this community with an opportunity to support sustainable development, offering new growth opportunities along with offering strategies to diversify local economy. The region is observed to be one of the most water efficient mines that use 0.44 cubic meters of water per tone of processed ore and for this reason the biodiversity in these areas is observed to be very rich. Despite the harsh climate conditions in these areas, it is observed to support and sustain animals and people residing within the community (Lin, Li & Bu, 2015). The region has long history of human habituation focused on which it can be said that the community residing within the region needs increased development.

The analysis of relationship between BHP Billion and the community served by the company revealed that there have been certain issues faced by the community residing in Chile region. This is because of the reason that the mining project of the company decided to draw huge amount of groundwater from regions near the mine (Moffat & Zhang, 2014). This proposal was opposed and turned down by the local community as they felt endangered regarding their survival and farms settlement in case the scare water was diverted in the mines of BHP Billiton. Moreover, another issue that affected the relationship between the local community and the company is that people in Salta were concerned regarding their water diversion and opposed to such plan of the company. Moreover, the community did not support the mining project of the company as the community was drastically affected by the proximity of the mine resulting in collective relocation of community consent (Owen & Kemp, 2015).

Rio Tinto Mining Project and Community Relations

On the other hand, the relationship between Rio Tinto and the local communities serviced by the company is observed to deal with certain concerns in ensuring success of its mining project and community development programs. This is because of the reason that the community residing within the Southern Gobi desert of Mongolia has opposed the mining project of the company has it has been involved in two major uranium spills that has affected the natural habitat of the community (St-Laurent & Le Billon, 2015). Moreover, the community has also faced issues regarding increased work noise levels of Rio Tinto has caused hearing loss to people residing in the region and has also affected the employee community relationship in this mining project.

• The sustainable community LEAD project was developed by the company as a new agricultural development initiative that is deemed to benefit small benefit smallholder farmers in Chile region (Suopajärvi et al., 2016). The community got positively involve in this project of BHP Billiton as they attained the opportunity of improving their production ability through obtaining shared skills and knowledge in improving their livelihood.
• The dream field’s community development project of the company was committed to encourage and develop soccer playing skills among children of the region that was focused on inspiring positive changes along young individuals (Wirth, Kulczycka, Hausner & Ko?ski, 2016). This community development project also considered building schools that attained great participation from the community members. The people in the community have strong focus on promoting education f their children for enhancing their lifestyle.

• The company has developed “Royal flying doctor service” sustainable community development project for the community residing in Southern Gobi desert of Mongolia. This program has intended to offer flying intensive care unit that can offer emergency support to people in case of any medical emergency in the desert region. This initiative has attained increased support from the community with attaining non-government contribution of an$11 million in his community development plan implementation (Zhang & Moffat, 2015). Attaining emergency medical assistance at the time of serious injury is highly appreciated by the local people.
• “Rio Tinto Gove Operations Community investment” is focused on making a positive contribution within the community that has considered ensuring regional economic development approaches along with biodiversity conservation initiatives (Zhang & Moffat, 2015). The community supported such program of the company as they consider such initiative to promote their sustainability.

The figure below explains the level in which Rio Tinto structure all its community relations. It also explains the staff levels involved in its community development responsibilities along with the role of the community relations team. The company relations policy in maintaining community relations is observed to include “Communities and social performance standard (CSP)” that includes necessary standards in monitoring and dealing with its everyday impacts on community through managing social risks and entering into long term community development agreements. Moreover, the board of directors of the company has an increased role in ensuring sustainability development of the communities served by them (Wirth, Kulczycka, Hausner & Ko?ski, 2016). The board of directors ensure that the company’s community development initiatives re focused on economic developments in all its mining projects and allocates necessary finds for such development initiatives.

 

Figure 1: Community Development Management Structure of Rio Tinto

(Source: Walter & Urkidi, 2017)

The figure below explains the level in which BHP Billiton structures all its community relations. It also explains the staff levels involved in its community development responsibilities along with the role of the community relations team. The company relations policy in maintaining community relations is observed to include “Indigenous people policy statement” in which the company focuses on undertaking participatory social and environmental impact evaluations and maintaining physical, cultural and economic well-being of community served by BHP Billiton. Moreover, the board of directors of the company has an increased role in ensuring sustainability development of the communities served by them (Wirth, Kulczycka, Hausner & Ko?ski, 2016). The board of directors of the company supports its community development initiatives through appointing management levels for ensuring all community development responsibilities such as safety, health, human rights, environment protection and community relations.

Analysis of Relationship between the Companies and Host Communities

 

Figure 2: Community Development Management Structure of BHP Billiton

(Source: Wirth, Kulczycka, Hausner & Ko?ski, 2016)

The community relation activities of both the companies Rio Tinto and BHP Billiton is reported in their published sustainability report. The external advisory panel of Rio Tinto is observed to include “international development economist Keith Bezanson, primatologist and conservationist Alison Jolly, environmental economist and Director of Conservation International in Madagascar Léon Rajaobelina” (Wirth, Kulczycka, Hausner & Ko?ski, 2016). The external advisory panel of BHP Billiton is observed to include “Globe; Ethics Panel’ that acts as an advisory body with having internal and external membership and advises business leaders of the company on following guidelines to business conduct.

The sustainability report of BHP Billiton has sections of its community relation activities and development initiatives that are segmented into people, health and safety, communities, environment and climate change. The sustainability report of the company has elaborated on all their sustainable development contributions (Walter & Urkidi, 2017). The report also explains the ways in which its community relationship approaches are focused on better use of energy and decreasing climate change impacts towards developing a low-carbon future. In maintaining better community relations, the sustainability report of the company explains all its approaches towards local employment commitments that can be managed often through directly negotiated agreements. On the other hand, the sustainability report of Rio Tinto includes sections such as reporting on community relation activities matters, community relationships, environment protection, governance integrity, value chain, sustainability fundamentals, performance data and global reporting initiative index (Tarras-Wahlberg, 2014). The sustainability report of the company covers community relation development initiatives that can ensure community people to maintain social harmony and have better living standard that ensures human rights risks and legacy management.

Conclusion

The objective of this paper was to analyze the selected mining projects of Australia from the companies such as BHP Billiton and Rio Tinto along with evaluating their project investment and market capitalization. It was gathered from this assignment that the relationship between BHP Billion and the community served by the company revealed that there has been certain issues faced by the community residing in Chile region. Moreover, the community got positively involve in community development projects developed by BHP Billiton and Rio Tinto as they attained the opportunity of improving their production ability through obtaining shared skills and knowledge in improving their livelihood.

References

Aguilar-Støen, M., & Hirsch, C. (2015). Environmental Impact Assessments, local power and self-determination: The case of mining and hydropower development in Guatemala. The Extractive Industries and Society, 2(3), 472-479.

Bhp Annual Reporting. (2018). Retrieved from https://www.bhp.com/investor-centre/annual-reporting-2018.

Conde, M. (2017). Resistance to mining. A review. Ecological Economics, 132, 80-90.

Conde, M., & Le Billon, P. (2017). Why do some communities resist mining projects while others do not?. The extractive industries and society.

Fordham, A. E., & Robinson, G. M. (2018). Mechanisms of change: Stakeholder engagement in the Australian resource sector through CSR. Corporate Social Responsibility and Environmental Management, 25(4), 674-689.

Keenan, J. C., Kemp, D. L., & Ramsay, R. B. (2016). Company–community agreements, gender and development. Journal of Business Ethics, 135(4), 607-615.

Lin, P. T., Li, B., & Bu, D. (2015). The relationship between corporate governance and community engagement: Evidence from the Australian mining companies. Resources Policy, 43, 28-39.

Moffat, K., & Zhang, A. (2014). The paths to social licence to operate: An integrative model explaining community acceptance of mining. Resources Policy, 39, 61-70.

Owen, J. R., & Kemp, D. (2015). Mining-induced displacement and resettlement: A critical appraisal. Journal of Cleaner Production, 87, 478-488.

Rio Tinto. (2017). Retrieved from https://www.riotinto.com/documents/RT_2017_Annual_Report.pdf.

St-Laurent, G. P., & Le Billon, P. (2015). Staking claims and shaking hands: Impact and benefit agreements as a technology of government in the mining sector. The Extractive Industries and Society, 2(3), 590-602.

Suopajärvi, L., Poelzer, G. A., Ejdemo, T., Klyuchnikova, E., Korchak, E., & Nygaard, V. (2016). Social sustainability in northern mining communities: A study of the European North and Northwest Russia. Resources policy, 47, 61-68.

Tarras-Wahlberg, N. H. (2014). Social license to mine in Sweden: do companies go the extra mile to gain community acceptance?. Mineral Economics, 27(2-3), 143-147.

Walter, M., & Urkidi, L. (2017). Community mining consultations in Latin America (2002–2012): The contested emergence of a hybrid institution for participation. Geoforum, 84, 265-279.

Wirth, H., Kulczycka, J., Hausner, J., & Ko?ski, M. (2016). Corporate Social Responsibility: Communication about social and environmental disclosure by large and small copper mining companies. Resources Policy, 49, 53-60.

Zhang, A., & Moffat, K. (2015). A balancing act: The role of benefits, impacts and confidence in governance in predicting acceptance of mining in Australia. Resources Policy, 44, 25-34.