COMPANY PROFILE -Rio Tinto Group
Business Sector :Metals and Mining
Operating Geography :Europe, Australia, United Kingdom, Global
About Rio Tinto Group :Rio Tinto Group is a British-Australian MNC in the field of metals and mining with primary focus on extraction though they also own refining subsidiaries. Established in 1873, the company is headquartered in London, UK. Half of the global assets of the company are housed in the Australian continent with headquarters in Melbourne and offices in Perth and Brisbane. It specializes in production of iron ore, bauxite, coal, alumina, aluminium, uranium, diamonds and salt in Australia.
Rio Tinto Group Revenue :US$ 33.78 bn (FY ending Dec 31st 2016)
Competitive Analysis of Rio Tinto Group
|1. Third largest miner in the world with world class and efficient technology|
2. Highly diversified company with economies of scale
3. Strong capital discipline and consistent shareholder returns
4. Workforce diversity and strong safety culture
|1. Poor mining practices and human rights’ record of Rio Tinto leading to criticism
2. Commodity wise revenue generation not uniform
|1. Aluminum’s demand is slated to rise in future as a substitute to other metals|
2. Mine of the Future program with big data analytics to drive productivity
3. Increase in Infrastructure spending can lead to higher demands and opportunities for expansion
|1. Weakening demands for iron ore and coal
2. The perception that mining industry is incompatible with sustainable practices.
3. ACF’s proposal to implement a statutory Corporate Code of Conduct in Australia
USD 12.53 Great quality, Affordable pricing.
Detailed SWOT Analysis of Rio Tinto Group
1. Poor mining practices and human rights’ record of Rio Tinto leading to criticism: Poor Mining practices often led to cultural damage, drug and alcohol abuse, HIV/AIDS, forced resettlement, violence etc which broke the traditional bonds within the indigenous communities. In Mozambique in 2010, Rio Tinto faced protests by the people who were resettled due to Rio Tinto’s mining activities. The allegations were that the company did not fulfill the promises it had made to the displaced population. In other places such as Boron in California, Bougainville in Papua New Guinea, and several other places, Rio Tinto is facing accusations of violating promises made to local settlers. Further, the HR practices of Rio Tinto group are not very employee-friendly. For example, the policy of signing individual workers in coal mines takes away their power of collective bargaining and leads to union members joining hands with NGOs to protest against the functioning of the company.
2. Commodity wise revenue generation not uniform: Rio Tinto group depends a lot on the iron ore division for almost one-third of its revenues. As a result it has increased shipments basing the Pilbara expansion. The Pilbara operations when successfully established will generate a production to the tune of 350 million tonnes a year. However, if there is a substantial correction in iron ore prices, the company’s revenues will be affected.
1. Aluminum’s demand is slated to rise in future as a substitute to other metals: Aluminum is lightweight and hence can be used in cars to reduce weight and emissions; durable and hence finds it’s used in construction sector; malleable and ductile and hence its demand in the packaging industry. Forecasted increase in shipments from the current 4.12 million tonnes to 4.69 million tonnes in 2021.
2. Mine of the Future program with big data analytics to drive productivity: Rio Tinto’s ‘Mine of the Future’ program has focused on automation across its operations over the last decade which has resulted in significant efficiency and increase in productivity. As of today, each of the company’s haul trucks, processing plants, trains, loaders, and ships are fitted with sensors numbering from hundreds to thousands, and these generate thousands of terabytes of data daily. Rio Tinto has the opportunity to leverage the huge amount of data which can help in leverage further productivity and provide competitive advantage to the company. The insights from the data can help in predictive asset health management, integrated real time digital monitoring systems and other areas which will help in efficiency and cost reduction. To make further progress in ‘Mine of the Future’ program, Rio Tinto launched Analytics Excellence Centre in 2015 in partnership with IGATE which is dedicated to extract analytical insights from the data collected from its operations.
3. Increase in infrastructure spending can lead to higher demands and opportunities for expansion: In developed economies, infrastructure spending is one of the few levers left to support growth at a time when it is stagnant with high unemployment and low borrowing costs. Similarly, in developing and emerging economies, the poor infrastructure acts as a bottleneck in the economic cycle. Thus, this is the right time for increased infrastructure spending.
1. Rio Tinto Strategic Report 2016: http://www.riotinto.com/documents/RT_2016_Strategic_report.pdf
2. Rio Tinto Annual Report 2016: http://www.riotinto.com/documents/RT_2016_Annual_report.pdf
3. Rio Tinto 2016 full year results: http://www.riotinto.com/documents/170208_Rio_Tinto_2016_full_year_results_presentation.pdf
4. Ten companies directly responsible for third of Australia's greenhouse gas pollution, Australian Conservation Foundation report finds: http://www.abc.net.au/news/2015-03-18/ten-companies-responsible-for-third-of-greenhouse-gas-pollution/6330562
USD 12.53 Great quality, Affordable pricing.