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Iron ore is rocks and minerals from which the iron can be extracted. This industry is divided into multiple sectors which include iron ore mining, logistics, manufacturing of different grades of iron, manufacturing of capital and consumer goods from these different grades of iron, and exports of iron ore and these finished products. Iron in the world; is the most commonly used metal and the main product of steel of which iron is the key material that represents around 94 % of the usage of iron ore around the world (Belitza, 2012). The increased usage of steel in various industries and household products has increased the demand for iron ore in the whole world because of the unique qualities of steel which makes it durable for a longer time and multipurpose usage. Australia is the highest producer of iron ore in the world with 816 million metric tonnes in the year 2015, with Brazil being the second on the list with 400 million metric tonnes. The total production of the world stood at 2280 million metric tonnes in 2015 (Bhaskar et al., 2020).
The iron ore industry is a highly exporting industry and it has recorded substantial growth over the last 10 years in Australia both from domestic and international demands (Australia, 2007). China is expected to increase its iron ore demand from Australia which is already the highest importer of iron ore from the country. The market size of the iron ore industry in Australia stood at $ 129 Billion in 2021. The market for iron ore has significantly increased after 2015 and is expected to grow at the rate of 14 % in the coming 5 years. On the contrary, the market size of iron ore in Australia has grown with a handsome average rate of 16 % per year since 2015 and the market size of iron ore is increasing at a faster rate than the economy of Australia and is considered an important part of the Australian economy (Massot, 2020). The primary factors which are affecting the strong growth are the domestic prices of iron and steel in the country and the high competition. The balance between the supply and the demand in the world market also influences the market size and production in Australia which is measured in USD. When the iron ore prices in the world market increase, the revenue, and production both increase in Australia, and in times of stagnant market or lower demand, the country has depreciated its currency to boost exports in the long run for a long time. Since the country is diversifying its economy in Australia, the high dependence and the previous subsidies and help that the industry got from the government are expected to be lowered in the coming period, as Australia wants to reduce its dependence on mineral exports and diversify its economy in manufacturing, innovation, services and opening up other untapped sectors.
Ibis world (2021)
The above chart clearly shows that the iron ore industry demand has significantly risen since 2016 which has secured an increase of 13% since then. Even the world market is encouraging the demand for timber and iron ore as steel usage is expected to increase in the coming time. The market size in 2012 was around 70 billion which has increased significantly in 2021 to 128 billion (Huang et al., 2020).
For many decades, Australian iron ore producers operated in a highly competitive market where revenue generation was difficult. After the year 2000, iron ore production found a new market dynamic, higher production with higher prices (Yellishetty et al., 2010). From 2000 to 2014, Australia's iron ore production per year increased from 170 million tonnes to around 650 million tonnes. Thus a significant rate of growth can be seen on average (10%) in all these years, and the main reason for this growth was the increase in prices that the producers got. Over the same period prices, started to increase to 190 dollars per tonne in 2011, it declined in mid-2015 to $ 54, and the prices in this period have an average of $ 75, which is more than double what was before 2000 (Mohajeri et al., 2020). Thus there is an increased incentive to the producers which has increased the production supply as well. This has created a new supply and demand equilibrium, as in the international market, especially in China and India, the iron ore demand has been very high, even today china is a significant buyer of Australian iron ore needed for its manufacturing sector which is a huge contributor to the economy of China. The true scale of the iron ore industry can be seen only through the scope of say today's works and operations and the investment which the sector is receiving.
The above figure shows that the increase in the prices in the iron ore industry has increased it's simply as well. Here the pushing factor for the new equilibrium in the market of iron was the price. As the ultimate demand was always high in the international market, due to low prices the production was not adequate when the prices came under market forces and increased, this has encouraged the producers to increase supply more and thus the industry reached near-optimal in the recent years.
Demand and supply of iron ore and prospects
The iron ore mining of Rio Tinto generally is exported as it is a highly exported material and the company has recorded strong revenue growth over the past 5 years as an increase in prices (currently $200/tonne), the Chinese industries, the world prices of iron, domestic iron ore output and the rate of the Australian dollar are all responsible more or less for the export of iron ore and its production (Mohajeri et al., 2020). The largest downstream markets for steels are vehicles, shipbuilding, household products, manufacturing, equipment, etc. Fluctuations in these markets also affect the global market size of steel and thus iron ore. The global supply of iron ore is dependent on these factors which mostly depend on the machinery and products. The world is expected to produce more steel soon as the underdeveloped and the developing countries are far behind the developed ones in per capita steel production. The company can adopt technological innovations into the mining procedure to cater to the increased sustainability needs of the countries as they will be held liable by the international institutions for their carbon footprint (Australia, 2007). The developing countries are in the race to be ahead and be the powerhouses of the future and thus the race for manufacturing can be seen in the next decades and even in the short term 5 years as this competitive process could be seen since a decade when a sustained growth in iron ore demand and supply has been seen in the industry. China, India, Brazil, South Africa, Nigeria, Bangladesh, and Indonesia are some of the developing countries (Holmes & Lu, 2015). This recent increase n the iron ore demand has been predominantly from China and India as well. Thus it is clear for the company that it needs to increase its precaution to meet the growing needs of iron ore from the world market until some other company from a country may start to mine sustainably and find a place in the market.
Rio Tinto must invest to advance its operation technologically which are more feasible, efficient, and economic thus increasing the productivity of the company as the future calls for more efficient and productive methods. In addition to this, the company must cautiously select sites and avoid any such disputed socially, environmentally, or culturally important sites as in the recent past an allegation of the devastation of Juukan gorge cave has created immense international pressure on the company and dismantled the image of the company. The brand and the image are very important assets of the company and thus Rio Tinto must work following these social and ethical norms. The prospects of the company for the future are very promising as the world demand for iron ore is expected to increase at least for the next five years.
The company must now search for new markets which are emerging ones and have the capacity of high iconic growth per capita per year. As part of the infrastructural development, iron and iron ore will be required by these new and emerging countries like Nigeria, Bangladesh, China, Pakistan, southeast Asian countries, etc.
Lobbying for iron ore- the company must lobby in emerging countries where iron ore is required in heavy amounts. The company must also on international platforms come up with new technologies or investments in these new technologies which are effective in iron ore mining while being more sustainable and environmentally friendly. With this, the company must also work hard and effort for making the international prices of iron more stable and inelastic which will ensure the creation of new markets which will be the buyers of iron ore for a longer period.
The company has faced heavy criticism regarding the climate change and pollution of the natural environment after the Jukkaan gorge incident when the company has blown up the 46,000 years old Jukaan gorge caves with explosives in search of iron ore.. this was the last remaining evidence of the oldest human site of human occupation in the Australian continent and probably in the world. A similar incident can also be mentioned for Puutu Kunti Kurama and Pinikura tribes of the local area.
The core and fundamental policy changes must be done to the objectives and goals of the company-
Sustainable, green, and socially responsible practices
Socially responsible practices refer to those activities related to the benefits relating to the individuals, community, and sustainable business environment. It includes corporate volunteering, sponsorships, and donation; the goals of the business strategy should be such as to-
The community works into the new markets.
During the past decade, many multinationals have come up short trying to make a profit by solving the pressing needs of low-income communities. Preoccupied with their social missions, companies have optimistically taken on challenging projects, only to be surprised when weak consumer demand and obstacles such as bad roads keep revenues low and costs high. The company must focus on community work and create social values after careful investigation of the area. It requires the company to focus on business fundamentals and start its ventures with a rigorous understanding of two key challenges in low-income markets: changing consumers’ behavior and changing the way products are made and delivered. Companies that underestimate these hurdles miscalculate the resources, innovation capabilities, and time involved, and project teams end up poorly equipped to accomplish the task. As these countries are new markets for the company, it cannot avoid them and the best way to penetrate the market is through community services.
New environmental and sustainability tools installation
The company must also come up with carbon eradicating infrastructures like the air absorbing carbon dioxide tools and machines which are the latest and most promising environmental cleanliness human-invented machines. These CO2 sucking machines also generate the highest ever tradable carbon credits of around 2 USD per ton.
Rio Tinto's board considers its international and local employees as the key to its productivity and success and keeps the expatriates with high compensation and perks. The company believes in and confirms the expatriate HRM policy based on humanitarian and economic sides. It retains the highest talent in the form of expatriates and gives them the best possible and secure working environment as well as monitory compensation. The company not only has a large workforce of expatriates but also ranks highest among international employees in terms of popularity. The company believes that employees are not only the most important part of the company but are also more than just the growth engine.
When a new employee in the company, he provides similar feedback and behavior to the already culture he has seen in the company. Thus changing the culture is also not easy but very fruitful. As a social being, the employee will grab the same traits which are prevalent in most employees automatically. The culture of the company is such that employees can freely express themselves, can ask for help, and are ready to help, the new employee will gain confidence and can become the most productive of all (Asutosh et al., 2016).
Multicultural policy
It is a necessity now to have a diversity and multicultural policy in an organization that solely depends on the working g and planning of the HR department. Companies like Coca-Cola, Nike, Microsoft, and Google have proved that these are not the options but the new challenges which are to be handled anyhow if the organization needs s to be sustained (Richman, 2015). Companies for a considerable period have been keen on finding out and recognizing the talent of their workforce discipline and their productivity and that no irregular and bicultural policy and practice can hamper the productivity and progress of the work culture in the office place.
Cross-cultural collaboration and diversity introduction
Cross-cultural collaboration and diverse workforce policy are two very important and powerful tools for the employees to learn and develop their overall perspectives. Workplace culture is very important to retain an employee as an innovative, cooperative, and advanced workplace culture not only binds the employee but also makes him feel fundamentally satisfied with his future and career perspective (Asutosh et al., 2016). Diversity and inclusion are more than policies, programs, and other events. An equitable employer can win in the competition simply by respecting the unique needs, perspectives, and potential of their employees. This not only makes their employees more productive for their company but also satisfies them to the maximum so that they stay attached to the company (Prange, 2018).
Rewards and recognition
Rewards and recognition are not only the motivation which is given by the employers but also the acknowledgment for the good work of the employees. Employees do not simply want wages for their work but the culture of an organization is such that it acknowledges the hard and smart work done by the employees to fulfill their needs of self-confidence, praise, and appraisal. This award system is to be structured to acknowledge both the intrinsic and extrinsic ways of work. This system includes all kinds of rewards and recognition which recognize the employees from every aspect (Lakshman, 2014). Rewards and recognition have evolved in the last few years and a bunch of new trends in the rewards is bound to change the shape of its future. It must be recognized as what is the intent of the running of such a reward program, what cultural and behavioral problems the company wants to solve r the values which are being promoted through these rewards and recognition (Margison, 2003). While setting targets and KPIs, rewarding while achieving them is also equally important.
Rio Tinto is the world's second-largest mining and metals corporation which is involved in producing iron ore, copper, diamonds, gold, and uranium in Australia. The company was founded in 1873. Though primarily the company is focused on mineral extraction, it has also significant stakes and operations in refining. The company secured total revenue of 45 billion in 2020 with a net income of 10.4 billion. The company has a manpower of 45,000.
Recently the company has decided to include advanced technology to lower its carbon footprint and other ethical concerns and its $ 2.6 billion Gudai- Darri iron ore project is the most technologically advanced iron ore mine of the company. The mine has more than 70 design innovations in scope and it has been decided that technological changes and experimentation will be done to find out new technological adaptations which can be done in the mining sector. Out of a total of 820 million tonnes of production in Australia, riot contributed 330 million tonnes, thus a substantial amount of iron ore is produced alone by the company (Ma & Zhen, 2020).
Future pricing prospects
For many decades, Australian iron ore producers operated in a highly competitive market where revenue generation was difficult. After the year 2000, iron ore production found a new market dynamic, higher production with higher prices (Yellishetty et al., 2010). From 2000 to 2014, Australia's iron ore production per year increased from 170 million tonnes to around 650 million tonnes. Thus a significant rate of growth can be seen on average (10%) in all these years, and the main reason for this growth was the increase in prices that the producers got. Over the same period prices, started to increase to 190 dollars per tonne in 2011, it declined in mid-2015 to $ 54, and the prices in this period have an average of $ 75, which is more than double what was before 2000 (Mohajeri et al., 2020). Thus there is an increased incentive to the producers which has increased the production supply as well. This has created a new supply and demand equilibrium, as in the international market, especially in China and India, the iron ore demand has been very high, even today china is a significant buyer of Australian iron ore needed for its manufacturing sector which is a huge contributor to the economy of China. The true scale of the iron ore industry can be seen only through the scope of say today's works and operations and the investment which the sector is receiving.
Selected programs for rewarding the employee are –
These policies and systems will satisfy the employees and encourage them to work with high productivity and efficiency; however, this reward and recognition program must be customized as far as possible because different employees have different needs and aspirations that they want to fulfill. For example, some employees are more encouraged by monetary rewards while others are encouraged by promotion or public appreciation. The role of HR in this manner increases, as HR has to carefully evaluate and make a separate reward and recognition program for different individuals, the grip of the individual or a department.
The above figure shows that the increase in the prices in the iron ore industry has increased it's simply as well. Here the pushing factor for the new equilibrium in the market of iron was the price. As the ultimate demand was always high in the international market, due to low prices the production was not adequate when the prices came under market forces and increased, this has encouraged the producers to increase supply more and thus the industry reached near-optimal in the recent years.
The policies and procedures for individuals to safely report the breaches of socially responsible and green activities is that the report will be made confidential and the name of the reporting person shall not be disclosed. The accused person will be asked to give a report and will be given a chance to explain and justify his actions. In the case of resolution of his breach of social responsibility, both the reporting person and the accused will be rewarded.
Ashutosh. M., Verma, S.& Datta, S. (2016). high-performance work system in India: examining the role of employee engagement. Journal of Asia-Pacific Business 17(2) 130-150.
Australia, G. (2007). Australia's Identified Mineral Resources 2017.
Bhaskar, A., Assadi, M., & Nikpey Somehsaraei, H. N. (2020). Decarbonization of the iron and steel industry with direct reduction of iron ore with green hydrogen. Energies, 13(3), 758.
Bielitza, M. P. (2012). Prospects for the 2020 Iron Ore Market. Quantitative analysis of market dynamics and risk mitigation strategies. Books.
Holmes, R. J., & Lu, L. (2015). Introduction: an overview of the global iron ore industry. Iron Ore, 1-42.
Huang, J., Liu, J., Zhang, H., & Guo, Y. (2020). Sustainable risk analysis of China's overseas investment in iron ore. Resources Policy, 68, 101771.
Ibis world (2021). Global Iron Ore Mining Industry - Market Research Report. Retrieved from https://www.ibisworld.com/global/market-research-reports/global-iron-ore-mining-industry/
Kramar, R. (2013). Beyond strategic human resource management: is sustainable human resource management the next approach? The International Journal of Human Resource Management, 25(8),1069-1089.
Lakshman, C. (2014). Leveraging human capital through performance management process: the role of leadership in the USA, France, and India. The International Journal of Human Resource Management 25(10).1351-1372.
Ma, Y., & Zhen, W. (2020). Market Fundamentals and Iron Ore Spot Prices. Economic Record.
Margison, T. (2003). A new approach for implementing systems and managing change. Handbook of Business Strategy, 4(1).152-158.
Massot, P. (2020). Market power and marketization: Japan and China's impact on the iron ore market, 50 years apart. New Political Economy, 25(4), 511-534.
Mohajeri, M. J., van den Bos, M. J., van Rhee, C., & Schott, D. L. (2020). Bulk properties variability and interdependency determination for cohesive iron ore. Powder Technology, 367, 539-557.
Prange, L. (2018). Strategic HRM theories & models. Retrieved from http://www.electrified.ca/media/415c078faaf749b7ffff8006ffffe905.pdf
Richman, N. (2015). Human resource management and human resource development: evolution and contributions. Creighton Journal of Interdisciplinary Leadership 1(2): 120-129.
Yellishetty, M., Ranjith, P. G., & Tharumarajah, A. (2010). Iron ore and steel production trends and material flow in the world: Is this really sustainable?. Resources, conservation and recycling, 54(12), 1084-1094.
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