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Analytical Case Study of Rio Tinto Mining Industry
The Rio Tinto Group is an Anglo-Australian international organization that is the worlds fastest-growing metal and mining firm, and it produces iron ore, copper, precious metals, gold, and plutonium. It is second only to BHP in terms of production volume. In 1873, an international business association purchased the Rio Tinto mine site from Spanish experts in Valencia, Spain, and Portugal (Shrivastava & Vidhi, 2020). This event marked the beginning of the development of the area. Since then, the company has become a global leader in producing various materials, including alumina, iron ore, copper, uranium, and gemstones.
Rio Tinto utilizes a centralized mineral extraction system and possesses some of the most effective processes, particularly for bauxite and iron ore. It has facilities and operations in 36 countries, employing more than 46,000 people worldwide (Shrivastava & Vidhi, 2020). Rio Tinto has headquarters in both the United Kingdom and Melbourne, Australia. It provides stakeholders of both countries where the company operates with the same financial benefit.
In order to ensure the long-term viability of a company, it is necessary to coordinate the environmental, social, and financial risks and opportunities. It involves making a profit for the companys shareholders while also considering the impact that the company has on the community and environment in its immediate vicinity (Knoblauch et al., 2022). The idea behind sustainable development goals is to ensure that the current generations requirements are met without jeopardizing the capacity of future generations to do the same. In some ways, sustainability is relevant to the events in the Rio Tinto case. To begin, the act of exploding caves by humans affects the ecosystem in which those humans live because it has the potential to lead to unintended outcomes such as climate change (Lee et al., 2020). The decisions made by the mining company to extract the minerals were made without taking into account the effects that they would have on the environment of the communities that were located nearby.
Since Rio Tintos mining business involves drilling in harsh environments, achieving sustainability is essential to the companys operations. Rio Tinto has incorporated sustainable and ethical business practices into its overall strategy to enhance the long-term viability of its goods, operations, and supply chain. Failure to do so may harm the companys bottom line.
Critical Evaluation of Rio Tinto Companys Current Policies and Management Strategies in Relation to Sustainability with Reference to Relevant Research Literature
Sustainable management requires considering environmental concerns when making decisions and formulating strategies. It generally means focusing on an organizations legacy rather than its short-term profits when deciding its direction. Regulations and licenses generally depend on the companies sustainability practices, forcing the companies to concentrate on their effects on the environment and the welfare of their communities (Anaf et al., 2019). The mining industry has traditionally been linked to unsafe working practices. Worlanyo & Jiangfeng, (2021) argues that the sector recent decades have witnessed performance improvements and a heightened focus on doing what is ethically and ecologically responsible for society and the environment. The mining companies ability to maintain a sustainable business model is an essential precondition for the continuation of their operations.
Safety is the top priority for mining companies, and Rio Tinto has developed stringent practices and standards to ensure safety across its entire organization. It emphasizes the health and well-being of its employees and works toward ensuring that no employee, customer, or other entity related to the company is subjected to a violation of their human rights (Frederiksen, 2018). It asserts that it places such a high priority on maintaining ethical and safe working conditions because it cares about its employees. However, it is important to note that Rio Tintos ability to continue operations is contingent on the companys ability to provide its employees with safe working conditions, ethical treatment, and protection of human rights (Grayson, 2019). Therefore, even though it understands the significance of maintaining a profitable business to carry on its operations, it is obligated to follow these principles of sustainability in order to remain in operation.
Rio Tinto is committed to achieving the Sustainable Development Goals set by the United Nations by working closely with regional governments and economic development organizations. Rio Tinto launched the Regional Economic Development (RED) initiative in 2019, and it takes a more comprehensive approach by partnering with local, regional, national, and international institutions (Millington et al., 2021). By forming these partnerships, they can improve the employment opportunities available to the community, the quality of the workers they hire, and the skills they possess (Gackowiec et al., 2020). It acknowledges that investing in community development not only makes it simpler for them to obtain licenses and permits but also improves the skills and engagement of employees, which in turn improves performance and reduces costs. In other words, investing in community development makes it easier for them to obtain licenses and permits. In addition, it works with other businesses to standardize its approaches to environmental preservation.
Rio Tinto strongly emphasizes research and development in all aspects of the companys material production processes. Producing materials vital to human advancement is the mission of Rio Tinto. It is making efforts to address its mining and refining processes to lower its emissions and overall impact on climate change (Ivic et al., 2021). It has begun carrying out life cycle analysis (LCA) on its mining facilities, which is a process that can provide some useful data for determining the mining operations fundamental social and environmental impact (Roy Chowdhury & Lahiri-Dutt, 2021). Additionally, the company has now integrated closure into the facility level LCA to plan for how they will leave a community and a mining facility after they have ceased operations.
Since Rio Tintos entire operation depends on having access to the land and the resources beneath it, the land is one of the essential resources for the company. Rio Tinto has been increasing the amount of land it rehabilitates over the past few years, particularly in regions that had native population displacements in the past (Rudy, 2021). In addition, some of its locations have a culture that views waste as a product with economic value, and they engage stakeholders, a network of suppliers, and customers to identify potential opportunities to recycle or reuse waste. Instead of merely tracking the total amount of waste sent to landfills, the company should begin tracking the different types of waste sent to landfills to improve waste management.
Rio Tinto Companys Policies, Strategies and Recommendations to Minimize Business Impacts and to Foster Sustainable Outcomes
Companies should prioritize defining and communicating their purpose to employees to align their workforce with sustainability objectives. Rio Tinto is committed to achieving its mission, which is to provide essential materials for the advancement of humanity. Their board of directors is actively involved in developing their sustainability strategy by establishing a Sustainability Committee to ensure compliance and governance (Shrivastava & Vidhi, 2020). Companies should prioritize serving their shareholders, involving stakeholders at every level, and ensuring their goals are met. Rio Tinto emphasizes its employees and surrounding communities health and safety. Companies should develop their strategies for sustainability and supply chain management in a way that allows them to deal with the complexities of the location, including its politics. Rio Tintos extensive global value chain necessitates that the company defines its environmental, social, and economic responsibilities in collaboration with the local community.
Tracking and reporting key sustainability metrics is necessary to promote an organizations sustainability mindset. Rio Tinto has engaged in extensive reporting on sustainability, climate change, human rights, modern slavery, and human trafficking over the past few years; as a result, the majority of these metrics have improved due to the companys efforts (Ulrich et al., 2022). Even though Rio Tinto has exemplary framework for stakeholder engagement, it must still involve all of the stakeholders whose decisions will be affected at each location. It includes the locations Rio Tinto closed before implementing its sustainability strategy. It would serve to strengthen their leadership position in the field of sustainability.
Rio Tinto should consider putting more efforts in these circumstances and assist the communities in which it no longer operates but which are currently experiencing hardship due to its former operations. Rio Tinto has set a 2050 deadline for decarbonizing its operations entirely. They have established intermediate objectives to reduce total emissions by 15 percent by 2030 and to reduce carbon intensity by 30 percent (Knoblauch et al., 2022). In order to maintain transparency throughout this journey, they must develop a detailed plan of action and establish intermediate objectives that are more specific. Rio Tintos efforts at growth and innovation are limited to the companys current products and processes.
The public and private sectors require codes of conduct to prevent unethical business practices and fraudulent acts by corporations. Due to lobbying by governments and regulatory agencies and relationships with universities, actual and prospective conflicts of interest developed in Namibia and South Africa, two countries where Rio Tinto has business (Knoblauch et al., 2022). Several international organizations, including the United Nations Convention Against Corruption (UNCAC), have created guidelines and protocols to facilitate standardizing definitions and adopting prevention and enforcement mechanisms (Knoblauch et al., 2022). Governments should implement clear policies, guidelines, and legal frameworks for preventing, detecting, and managing conflicts of interest to ensure that the causes and effects of conflicts of interest are appropriately addressed.
In addition, businesses are responsible for managing local complaints, mitigating the effects of noise and dust, establishing appropriate grievance resolution mechanisms, promoting local procurement, and prioritizing diversity and inclusion within the local population. It includes conducting ones work per the United Nations Universal Declaration of Human Rights (Frederiksen, 2018). The inability of Rio Tinto to accurately forecast the demand for its products is the companys primary flaw. The company cannot capitalize on many opportunities due to inaccurate demand forecasting.
How Developments could be Relevant to Assist the Industry Sector in which the Company Operates to Move to more Sustainable Futures
Since the association recognized the specific needs that initiated the transformation and continued to promote the appropriate alteration of managements approach to delivering change, the entire Rio Tinto organization went through a change cycle. The improvements and developments will enable mining industries address weak areas that has been a source complaint. Because of how the organization roams the unfamiliar business environment, emerges from bondage, and wanders to new domains, this presents a great deal of complexity and can lead to uncertainty, both of which can be lethal when perhaps not so appropriate (Worlanyo & Jiangfeng, 2021). A key component of Rio Tintos plan for change is the separation of its strategic business units in Australia,
Rio Tinto has long recognized that failing to improve the sustainability of its products, processes, and supply chain could have a negative impact on its business. It is true not only for regulatory compliance but also due to the impact climate change can have on the viability of their business, which heavily relies on high-risk regions. Consequently, Rio Tinto has incorporated sustainable and ethical business practices into its strategy for a considerable time. For example, they obtain minerals from the sub-arctic regions, and as the average global temperature rises, the usability of the ice roads is likely to decrease significantly.
Rio Tinto invests in product marketing and provide reliable metals and mineral products to benefit the industry. The Research and Development Unit is another part of the organization that has room for advancement. Its growth rate is significantly slower than that of the industrys fastest-growing companies hence advancement in its major departments helps the industry move to a sustainable future. Another area that Rio Tinto improves is its ability to integrate the company with other businesses with distinct workplace approaches hence increasing overall production of the industry. Rio Tinto has not been able to successfully merge with companies with distinct work cultures, despite its integration of smaller firms. One way to improve transparency and reduce the risk of conflicts of interest in the extractive industries would be to make it a requirement that annual reports include a section on the health and welfare of the workers and communities close to work sites.
Conclusion
The impacts of exposure to industrial pollution are felt by members of the society in which mining operations are conducted. There is a possibility that the emissions will cause health issues in the neighboring community. Therefore, mining-related enterprises must adhere to measures to offset these effects by positively impacting the local community. Even though Rio Tinto is a private firm, the government must still monitor its activities to ensure that no one is exploited.
Reference List
Anaf, J., Baum, F., Fisher, M. and London, L., 2019. The health impacts of extractive industry transnational corporations: a study of Rio Tinto in Australia and Southern Africa. Globalization and health, 15(1), pp.1-20.
Frederiksen, T., 2018. Corporate Social Responsibility, risk and development in the mining industry. Resources Policy, 59, pp.495505.
Gackowiec, P. et al., 2020. Review of Key Performance Indicators for process monitoring in the mining industry. Energies, 13(19), p.5169.
Grayson, R.L., 2019. Safety and productivity in coal miningHow to make both the top priority. In Advances in Productive, Safe, and Responsible Coal Mining (pp. 11-30). Woodhead Publishing.
Ivic, A., Saviolidis, N.M. and Johannsdottir, L., 2021. Drivers of sustainability practices and contributions to sustainable development evident in sustainability reports of European mining companies. Discover Sustainability, 2(1), pp.1-20.
Knoblauch, A. & Dargusch, P., 2022. Achieving net zero through a multi-dimensional approach to carbon management in mining and Metals Processinga case study of Rio Tinto. Advances in Environmental and Engineering Research, 3(2), pp.11.
Lee, J. et al., 2020. IOPscience. Environmental Research Letters.
Millington, R. et al., 2021. Sport for sustainability? the extractives industry, Sport, and Sustainable Development. Journal of Sport and Social Issues, 46(3), pp.293317.
Roy Chowdhury, A. & Lahiri-Dutt, K., 2021. Extractive Capital and multi-scalar environmental politics: Interpreting the exit of Rio Tinto from the Diamond Fields of Central India. Third World Quarterly, 42(8), pp.17701787.
Rudy, R., 2021. Influence of it on productivity in mining industry (case study: Rio tinto). Proceedings of the First International Conference of Economics, Business & Entrepreneurship, ICEBE 2020, 1st October 2020, Tangerang, Indonesia.
Shrivastava, P. & Vidhi, R., 2020. Pathway to sustainability in the mining industry: A case study of alcoa and Rio Tinto. Resources, 9(6), p.70.
Ulrich, S., Trench, A. & Hagemann, S., 2022. Gold mining greenhouse gas emissions, abatement measures, and the impact of a carbon price. Journal of Cleaner Production, 340, p.130851.
Worlanyo, A.S. & Jiangfeng, L., 2021. Evaluating the environmental and economic impact of mining for post-mined land restoration and land-use: A Review. Journal of Environmental Management, 279, p.111623.
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