Accounting for Rio Tinto's Mining Operations
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This assignment requires a detailed analysis of Rio Tinto's financial reporting, focusing on its application of generally accepted accounting principles (GAAP) within the complex environment of the global mining industry. Students will examine Rio Tinto's public disclosures, considering relevant accounting standards for revenue recognition, resource valuation, and impairment, as well as the challenges posed by fluctuating commodity prices, environmental regulations, and geopolitical risks.
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Running Head: FINANCIAL REPORTING
Financial reporting
Financial reporting
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Financial Reporting 1
Part A
Rio Tinto is a British multinational company and a leading metal and mining corporation in
United Kingdom. It deals with the production of copper, diamond, coal, aluminium, iron ore
and uranium. For the purpose of increasing its operating efficiency, the company is
reorganizing its business. The trial balance for Rio Tinto at 31 March 2017 was as follows:
Rio Tinto (metals)
Unadjusted Trial Balance at 31 March 2017
Account Debit Credit
£'000 £'000
Cash 248,000.00
Accounts Receivable 20,000.00
Bad debts 4,000.00
Inventory 46,000.00
Investment 100,000.00
Equipment 46,000.00
Vehicles 30,000.00
Prepaid Insurance 17,000.00
Accounts Payable 10,000.00
Retained Earnings 10,000.00
Common Stock 40,000.00
Sales 550,000.00
Gain on sale 50,000.00
Loans and borrowings
Cost of goods sold 69,000.00
Factory Labour 20,000.00
Administrative cost 18,000.00
Salaries 40,000.00
Other expenses 2,000.00
Total 660,000.00 660,000.00
Additional information:
1. Salaries amounted to £20,000 were unpaid at the end of March 2017.
2. A portion of insurance premium paid in advance, worth £7000 is related to 2019.
3. Equipment are to be depreciated at the rate of 20% on straight line method. The
depreciation on the vehicles is to be at the rate of 25% on written down value method.
4. There are further bad debts of £500. Provision of 5% is to be made at debtors.
5. The investments were initially recorded at historical prices. Now they are need to be
reported at realisable value of £116,675.
Part A
Rio Tinto is a British multinational company and a leading metal and mining corporation in
United Kingdom. It deals with the production of copper, diamond, coal, aluminium, iron ore
and uranium. For the purpose of increasing its operating efficiency, the company is
reorganizing its business. The trial balance for Rio Tinto at 31 March 2017 was as follows:
Rio Tinto (metals)
Unadjusted Trial Balance at 31 March 2017
Account Debit Credit
£'000 £'000
Cash 248,000.00
Accounts Receivable 20,000.00
Bad debts 4,000.00
Inventory 46,000.00
Investment 100,000.00
Equipment 46,000.00
Vehicles 30,000.00
Prepaid Insurance 17,000.00
Accounts Payable 10,000.00
Retained Earnings 10,000.00
Common Stock 40,000.00
Sales 550,000.00
Gain on sale 50,000.00
Loans and borrowings
Cost of goods sold 69,000.00
Factory Labour 20,000.00
Administrative cost 18,000.00
Salaries 40,000.00
Other expenses 2,000.00
Total 660,000.00 660,000.00
Additional information:
1. Salaries amounted to £20,000 were unpaid at the end of March 2017.
2. A portion of insurance premium paid in advance, worth £7000 is related to 2019.
3. Equipment are to be depreciated at the rate of 20% on straight line method. The
depreciation on the vehicles is to be at the rate of 25% on written down value method.
4. There are further bad debts of £500. Provision of 5% is to be made at debtors.
5. The investments were initially recorded at historical prices. Now they are need to be
reported at realisable value of £116,675.
Financial Reporting 2
6. Previously the closing stock was valued by LIFO method and now the valuation
method has been changed to FIFO.
Rio Tinto (metals)
Adjusted Trial Balance at 31 March 2017
Account Debit Credit
£'000 £'000
Cash 241,000.00
Accounts Receivable 19,500.00
Bad debts 4,500.00
Inventory 47,000.00
Investment 116,675.00
Equipment 46,000.00
Vehicles 30,000.00
Prepaid Insurance 24,000.00
Accounts Payable 10,000.00
Retained Earnings 10,000.00
Common Stock 40,000.00
Dividends 9,000.00 -
Sales 550,000.00
Gain on sale 50,000.00
Cost of goods sold 60,000.00
Factory Labour 20,000.00
Administrative cost 18,000.00
Salaries 60,000.00
Outstanding salaries 20,000.00
Other expenses 2,000.00
Accumulated Depreciation 16,700.00
Provision for doubtful
debts 975.00
Total 697,675.00 697,675.00
Adjustments made:
There was an outstanding salary of £20,000 which is shown on the credit side of trial
balance as outstanding salary (Maheshwari, 2012). The same amount has been added
to the salaries expenses account on the debit side of trial balance (Van Mourik &
Walton, 2013).
6. Previously the closing stock was valued by LIFO method and now the valuation
method has been changed to FIFO.
Rio Tinto (metals)
Adjusted Trial Balance at 31 March 2017
Account Debit Credit
£'000 £'000
Cash 241,000.00
Accounts Receivable 19,500.00
Bad debts 4,500.00
Inventory 47,000.00
Investment 116,675.00
Equipment 46,000.00
Vehicles 30,000.00
Prepaid Insurance 24,000.00
Accounts Payable 10,000.00
Retained Earnings 10,000.00
Common Stock 40,000.00
Dividends 9,000.00 -
Sales 550,000.00
Gain on sale 50,000.00
Cost of goods sold 60,000.00
Factory Labour 20,000.00
Administrative cost 18,000.00
Salaries 60,000.00
Outstanding salaries 20,000.00
Other expenses 2,000.00
Accumulated Depreciation 16,700.00
Provision for doubtful
debts 975.00
Total 697,675.00 697,675.00
Adjustments made:
There was an outstanding salary of £20,000 which is shown on the credit side of trial
balance as outstanding salary (Maheshwari, 2012). The same amount has been added
to the salaries expenses account on the debit side of trial balance (Van Mourik &
Walton, 2013).
Financial Reporting 3
The amount of £7,000 has been added to the prepaid insurance account in trail
balance and same has been deducted from the cash account (Weygandt, Kimmel &
Kieso, 2015, Porter & Norton, 2012).
Depreciation amount on both the equipment is shown as an accumulated depreciation
account on credit side of trial balance, the treatment of which is done in the balance
sheet later on (American Water Works Association. 2012, Nikolai, Bazley & Jones,
2009).
The balance of the bad debt has been increased by £500 and accounts receivables are
decreased by the same value (Epstein, Nach & Bragg, 2009). A provision of doubtful
debt is created at 5% of net debtor’s value, shown in adjusted trial balance on credit
side. The bad debts are then shown in profit and loss account of the company (Heintz
& Parry, 2012).
The value of investment is recognized at their market value (Dagwell, Wines &
Lambert, 2015, Coucom, 2012).
Closing stock is been increased when recorded at FIFO method (Sofat, 2010,
Maheshwari, Maheshwari & Maheswari, 2013).
The unadjusted trial balance shown above is the list of the balances of general ledger
accounts that are prepared at the end of the financial year. This trial balance is prepared
before making any adjustment entries for the purpose of making financial statements
(Warren, Reeve & Duchac, 2011).
The adjusted trial balance prepared is a listing of all account balances after doing the
treatment of additional adjusting entries. The adjustment of these journal entries is also done
in the income statement and balance sheet appropriately. The treatment of adjusting entries
made in trial balance mainly includes accruals, prepayments, adjustment related to the closing
stock, bad debts and non-current assets. An adjustment of depreciation method is also passed
if it is given outside the trial balance. All these transactions are not included in unadjusted
trial balance and therefore it becomes necessary to prepare an adjusted one in order to get the
correct figures of debit and credit balances (Warren, Reeve & Duchac, 2011).
Part B
The changes made in the trial balance are highlighted. On the basis of above adjusted trial
balance, financial accounts like statement of profit and loss and statement of financial
position for Rio Tinto are prepared. The income statement will record all the expenses
The amount of £7,000 has been added to the prepaid insurance account in trail
balance and same has been deducted from the cash account (Weygandt, Kimmel &
Kieso, 2015, Porter & Norton, 2012).
Depreciation amount on both the equipment is shown as an accumulated depreciation
account on credit side of trial balance, the treatment of which is done in the balance
sheet later on (American Water Works Association. 2012, Nikolai, Bazley & Jones,
2009).
The balance of the bad debt has been increased by £500 and accounts receivables are
decreased by the same value (Epstein, Nach & Bragg, 2009). A provision of doubtful
debt is created at 5% of net debtor’s value, shown in adjusted trial balance on credit
side. The bad debts are then shown in profit and loss account of the company (Heintz
& Parry, 2012).
The value of investment is recognized at their market value (Dagwell, Wines &
Lambert, 2015, Coucom, 2012).
Closing stock is been increased when recorded at FIFO method (Sofat, 2010,
Maheshwari, Maheshwari & Maheswari, 2013).
The unadjusted trial balance shown above is the list of the balances of general ledger
accounts that are prepared at the end of the financial year. This trial balance is prepared
before making any adjustment entries for the purpose of making financial statements
(Warren, Reeve & Duchac, 2011).
The adjusted trial balance prepared is a listing of all account balances after doing the
treatment of additional adjusting entries. The adjustment of these journal entries is also done
in the income statement and balance sheet appropriately. The treatment of adjusting entries
made in trial balance mainly includes accruals, prepayments, adjustment related to the closing
stock, bad debts and non-current assets. An adjustment of depreciation method is also passed
if it is given outside the trial balance. All these transactions are not included in unadjusted
trial balance and therefore it becomes necessary to prepare an adjusted one in order to get the
correct figures of debit and credit balances (Warren, Reeve & Duchac, 2011).
Part B
The changes made in the trial balance are highlighted. On the basis of above adjusted trial
balance, financial accounts like statement of profit and loss and statement of financial
position for Rio Tinto are prepared. The income statement will record all the expenses
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Financial Reporting 4
incurred during the year and sales made. It also include the treatment of adjusting entries. The
balance sheet of Rio Tinto shows all the assets and liabilities of the company reported at the
end of the year. It shows the actual financial position of the company (Hoyle, Schaefer &
Doupnik, 2015).
Income statement for the year ending March 2017
Rio Tinto Income Statement for March 2017
March-17
Revenues £
Sales 550,000.00
Gain on sale 50,000.00
Total 600,000.00
Less: Cost of goods sold 69,000.00
Gross profit (A) 531,000.00
Less: Expenses (B)
Salary expense 60,000.00
Factory Labour 20,000.00
Administrative cost 18,000.00
Other Expenses 2,000.00
Bad debts 4,500.00
Profit/ (Loss) (A-B) 426,500.00
Balance sheet as on date 31st March 2017
Rio Tinto Balance Sheet- March 2017
March-17
Assets £
Current assets
Cash 241,000.00
Accounts Receivable less provision 18,525.00
Inventory 47,000.00
Prepaid Insurance 24,000.00
Total 330,525.00
Non-current assets
Investments 116,675.00
Equipment 46,000.00
Vehicle 30,000.00
Less: Accumulated depreciation - 16,700.00
Total 175,975.00
Total assets 506,500.00
Current Liabilities
Accounts Payable 10,000.00
Accrued Salaries 20,000.00
Total Liabilities 30,000.00
Equity
incurred during the year and sales made. It also include the treatment of adjusting entries. The
balance sheet of Rio Tinto shows all the assets and liabilities of the company reported at the
end of the year. It shows the actual financial position of the company (Hoyle, Schaefer &
Doupnik, 2015).
Income statement for the year ending March 2017
Rio Tinto Income Statement for March 2017
March-17
Revenues £
Sales 550,000.00
Gain on sale 50,000.00
Total 600,000.00
Less: Cost of goods sold 69,000.00
Gross profit (A) 531,000.00
Less: Expenses (B)
Salary expense 60,000.00
Factory Labour 20,000.00
Administrative cost 18,000.00
Other Expenses 2,000.00
Bad debts 4,500.00
Profit/ (Loss) (A-B) 426,500.00
Balance sheet as on date 31st March 2017
Rio Tinto Balance Sheet- March 2017
March-17
Assets £
Current assets
Cash 241,000.00
Accounts Receivable less provision 18,525.00
Inventory 47,000.00
Prepaid Insurance 24,000.00
Total 330,525.00
Non-current assets
Investments 116,675.00
Equipment 46,000.00
Vehicle 30,000.00
Less: Accumulated depreciation - 16,700.00
Total 175,975.00
Total assets 506,500.00
Current Liabilities
Accounts Payable 10,000.00
Accrued Salaries 20,000.00
Total Liabilities 30,000.00
Equity
Financial Reporting 5
Common stock 40,000.00
Retained earnings 10,000.00
Net profit 426,500.00
Total 476,500.00
Total liabilities and equity 506,500.00
Part C
Rio Tinto is an Australia-British based multinational company and one of the leading
producer of metals. It was found in 1873, named after a river in Spain (Riotinto.com. 2018).
Through many mergers and acquisitions, a long growth has been achieved by the company,
making it the world’s largest producer of commodities like iron ore, copper, aluminium, coal,
uranium and diamonds. The industry sector in which it operates is metals and mining.
Mining in United Kingdom
The country is known for having a rich history of mining, especially of copper and tin. In
2200-850 BC, Copper was mined at Wales. Later, the Romans came to Britain and develop
iron tools in order to mine galena, an important Lead ore mineral which is used to refined tin,
silver and lead. Romans used local slaves and workers for the purpose of mining. Galena ore
was extracted from the mines situated in Scotland and Wales (Copper.org. 2017).
Along with the mining of copper and lead, UK was also famous for having large availability
of coal and iron. In the late 18th and 19th centuries, these are the key factors in Europe’s
Industrial Revolution. Now days, less mining of coal and iron ore is done in United Kingdom
but there was a time in history, when they were mined in huge quantities and used for the
production of steel and energy. The production of coal and metals has reduced in 20th century
because of the foreign competition and the extraction of crude oil has increased. Million
tonnes of coal was produced in UK in year 2013, employing large number of workers across
30 locations. Most of the coal produced in England is extracted from the deep mines located
in Scotland. UK coal is considered as a largest coal mining company of United Kingdom,
who had once produced 287 million tonnes of coal and now the production is continuingly
decreasing due to loss of heavy industry (The Guardian, 2015).
Talking about the metal production, despite of having variety of metal ores, the production of
metal has been reduced in the country because of globalization. People find it cheaper to
extract the same thing in another country. Though United Kingdom has large reserves of
Common stock 40,000.00
Retained earnings 10,000.00
Net profit 426,500.00
Total 476,500.00
Total liabilities and equity 506,500.00
Part C
Rio Tinto is an Australia-British based multinational company and one of the leading
producer of metals. It was found in 1873, named after a river in Spain (Riotinto.com. 2018).
Through many mergers and acquisitions, a long growth has been achieved by the company,
making it the world’s largest producer of commodities like iron ore, copper, aluminium, coal,
uranium and diamonds. The industry sector in which it operates is metals and mining.
Mining in United Kingdom
The country is known for having a rich history of mining, especially of copper and tin. In
2200-850 BC, Copper was mined at Wales. Later, the Romans came to Britain and develop
iron tools in order to mine galena, an important Lead ore mineral which is used to refined tin,
silver and lead. Romans used local slaves and workers for the purpose of mining. Galena ore
was extracted from the mines situated in Scotland and Wales (Copper.org. 2017).
Along with the mining of copper and lead, UK was also famous for having large availability
of coal and iron. In the late 18th and 19th centuries, these are the key factors in Europe’s
Industrial Revolution. Now days, less mining of coal and iron ore is done in United Kingdom
but there was a time in history, when they were mined in huge quantities and used for the
production of steel and energy. The production of coal and metals has reduced in 20th century
because of the foreign competition and the extraction of crude oil has increased. Million
tonnes of coal was produced in UK in year 2013, employing large number of workers across
30 locations. Most of the coal produced in England is extracted from the deep mines located
in Scotland. UK coal is considered as a largest coal mining company of United Kingdom,
who had once produced 287 million tonnes of coal and now the production is continuingly
decreasing due to loss of heavy industry (The Guardian, 2015).
Talking about the metal production, despite of having variety of metal ores, the production of
metal has been reduced in the country because of globalization. People find it cheaper to
extract the same thing in another country. Though United Kingdom has large reserves of
Financial Reporting 6
copper and iron ore, but these are now imported on a large scale from countries like Chile and
North America, China, Brazil and Australia which gives high quality metal at lower cost.
Current situation of the sector
Extracting out the raw materials from the ground is not an easy task, especially when there is
an environment of transformation and disruption. In the past years, global economic and
political trend has changed the mining industry fundamentally. In United Kingdom, the
companies operating in metal and mining sector are been pressurised to improve and
differentiate their portfolio from competitors due to low cost production offshore. According
to an article given by Deloitte UK, the changes in technology and new innovation has
impacted the mining sector to a great extent. Despite of having ample of resources, the
country’s sector still lack behind because of the changes occurring globally. When there is a
strong demand of commodity, prices get a hike which as a result forces the mining companies
to increase their production (Deloitte UK. 2018). Along with that, in year 2016 Brexit vote
had also impacted UK mining sector. The decision of the country to exit European Union had
significant effect on its mineral resource sector. The coal industry in UK has been declining
due to the country’ electricity sector depending more upon renewable energy resources than
on the electricity which is produced from coal fired plants. This has impacted the
employment in the coal industry (Mining Weekly, 2017). According to government
statistics, number of people employed in coal mining industry has been reduced over the past
years. Shifting attitudes towards alternative sources of energy like solar and wind has reduced
the role of UK’s coal industry. Moreover, the prices has also fallen because of the less
consumption and production of coal.
As per the article published by KPMG UK, fall in the prices of commodities, increases the
demand of mining companies from investors. The miners has also faced one of the most
difficult environment for operating. Changes in the regulations and increased tax pressures
along with issues and disturbances related to geopolitics and resource nationalism are some
of the challenges faced by miners in UK in recent years. This has result in the degradation of
mining and metal sector of the country. Companies and organisations need to strengthen their
portfolios in order to function in such uncertain market. Further, the assessment of mining
sector is not only done on the basis of its financial performance but also on their compliance
with social and political issues. KMPG suggested that to survive in such environment,
companies need to be flexible enough to adapt the changing market conditions. They should
copper and iron ore, but these are now imported on a large scale from countries like Chile and
North America, China, Brazil and Australia which gives high quality metal at lower cost.
Current situation of the sector
Extracting out the raw materials from the ground is not an easy task, especially when there is
an environment of transformation and disruption. In the past years, global economic and
political trend has changed the mining industry fundamentally. In United Kingdom, the
companies operating in metal and mining sector are been pressurised to improve and
differentiate their portfolio from competitors due to low cost production offshore. According
to an article given by Deloitte UK, the changes in technology and new innovation has
impacted the mining sector to a great extent. Despite of having ample of resources, the
country’s sector still lack behind because of the changes occurring globally. When there is a
strong demand of commodity, prices get a hike which as a result forces the mining companies
to increase their production (Deloitte UK. 2018). Along with that, in year 2016 Brexit vote
had also impacted UK mining sector. The decision of the country to exit European Union had
significant effect on its mineral resource sector. The coal industry in UK has been declining
due to the country’ electricity sector depending more upon renewable energy resources than
on the electricity which is produced from coal fired plants. This has impacted the
employment in the coal industry (Mining Weekly, 2017). According to government
statistics, number of people employed in coal mining industry has been reduced over the past
years. Shifting attitudes towards alternative sources of energy like solar and wind has reduced
the role of UK’s coal industry. Moreover, the prices has also fallen because of the less
consumption and production of coal.
As per the article published by KPMG UK, fall in the prices of commodities, increases the
demand of mining companies from investors. The miners has also faced one of the most
difficult environment for operating. Changes in the regulations and increased tax pressures
along with issues and disturbances related to geopolitics and resource nationalism are some
of the challenges faced by miners in UK in recent years. This has result in the degradation of
mining and metal sector of the country. Companies and organisations need to strengthen their
portfolios in order to function in such uncertain market. Further, the assessment of mining
sector is not only done on the basis of its financial performance but also on their compliance
with social and political issues. KMPG suggested that to survive in such environment,
companies need to be flexible enough to adapt the changing market conditions. They should
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Financial Reporting 7
be focussed on areas like geographical diversification, capital allocation, and reduction of
cost and should have enough knowledge about the local laws, customs and the rules and
regulations formed by the government (KPMG).
The financial statements provided above are of Rio Tinto, which is a multinational mining
corporation. The primary focus of the company is to extract minerals but now it has also
engaged in refining, particularly the refining of bauxite and iron ore. Apart from United
Kingdom, the company operates mainly in Australia and Canada. The Rio Tinto group is a
dual listed corporation traded on both London stock exchange and Australian Securities
Exchange. In its financial statements provided above, the balance sheet of the company
shows that the value of investments under heading current assets is the highest. As the
company has grown through many mergers and acquisitions, it has made many investments,
the value of which is high as shown in the balance sheet. Its expenses mainly include salary
paid to employee amount to £60,000 and the wages paid to the factory workers worth
£20,000 recorded as factory labour. As Rio is a mining company that deals in production,
extraction and refining of resources, its most of the expenses are related to its workers and
employees. The extraction of minerals requires a huge labour which comes with the cost of
paying them. Similarly for the work of refining, Rio has employed a large number of
employees that operates within and are been paid for their work.
Looking at the balance sheet, it can be said that a company has enough cash to pay its debts
and a small portion of non-current assets. Generally, the mining industry sector has high
value of non- current assets which comprises of plant and machinery and other equipment
because their economic life is high. Having a high economic life means that the asset is likely
to give benefits in the long run. However, the statement of financial position of Rio Tinto say
that it has low portion of Non-current assets comprises in form of equipment and vehicle.
This has eliminated the need of non-current liabilities as the company has not taken any loan
for acquiring any fixed asset neither it has any lease payments as its liabilities. The debt part
only shows the creditors and outstanding salaries under the head current liabilities. Reason
for having low value of equipment is may be the company is focused more on labour
intensive technique rather than capital intensive techniques. It requires more workers and
labour to conduct the operation of extraction and refinery with the use of machineries and
equipment.
be focussed on areas like geographical diversification, capital allocation, and reduction of
cost and should have enough knowledge about the local laws, customs and the rules and
regulations formed by the government (KPMG).
The financial statements provided above are of Rio Tinto, which is a multinational mining
corporation. The primary focus of the company is to extract minerals but now it has also
engaged in refining, particularly the refining of bauxite and iron ore. Apart from United
Kingdom, the company operates mainly in Australia and Canada. The Rio Tinto group is a
dual listed corporation traded on both London stock exchange and Australian Securities
Exchange. In its financial statements provided above, the balance sheet of the company
shows that the value of investments under heading current assets is the highest. As the
company has grown through many mergers and acquisitions, it has made many investments,
the value of which is high as shown in the balance sheet. Its expenses mainly include salary
paid to employee amount to £60,000 and the wages paid to the factory workers worth
£20,000 recorded as factory labour. As Rio is a mining company that deals in production,
extraction and refining of resources, its most of the expenses are related to its workers and
employees. The extraction of minerals requires a huge labour which comes with the cost of
paying them. Similarly for the work of refining, Rio has employed a large number of
employees that operates within and are been paid for their work.
Looking at the balance sheet, it can be said that a company has enough cash to pay its debts
and a small portion of non-current assets. Generally, the mining industry sector has high
value of non- current assets which comprises of plant and machinery and other equipment
because their economic life is high. Having a high economic life means that the asset is likely
to give benefits in the long run. However, the statement of financial position of Rio Tinto say
that it has low portion of Non-current assets comprises in form of equipment and vehicle.
This has eliminated the need of non-current liabilities as the company has not taken any loan
for acquiring any fixed asset neither it has any lease payments as its liabilities. The debt part
only shows the creditors and outstanding salaries under the head current liabilities. Reason
for having low value of equipment is may be the company is focused more on labour
intensive technique rather than capital intensive techniques. It requires more workers and
labour to conduct the operation of extraction and refinery with the use of machineries and
equipment.
Financial Reporting 8
The company’s talented workforce uses the mining process and technology in an efficient
manner which reduces the cost and enhances the functioning of the organization. Rio is
world’s leading producer of copper and diamond, the two resources which plays an important
role in everyone’s life. The production of aluminium is also done at a large scale in the
company. It has bauxite mines and alumina refineries of high quality along with the world’s
most competitive and modern portfolio of aluminium smelters. Rio also get majority of its
sales by producing iron ore. It derives benefits from the continuing and increasing demand of
iron ore assets across China and other developing countries in the world (Iron Ore. 2018). So
overall, the company is performing well in recent times which results in the improvement in
the situation of metals and mining sector in UK, as and when compare to the history of this
sector.
Future trends in mining sector
A speech was given by the British ambassador on the role of United Kingdom in
development of Kazakhstan’s mining sector at yearly Mining and Exploration Forum. In his
speech, he addressed the factors on which the future development of mining industry sector
in UK will depend. He said that several factors like prices of mineral commodity and policies
made by the government will affect the growth of industry. Talking about Kazakhstan’s
mining sector, he addressed that mining through it, can result in the great contribution to
regional development and can also be considered as an essential contribution in overall social
and economic development. In order to transform the mining sector of Kazakhstan into a
world class industry that stimulate economic growth, the government of United Kingdom has
formed a UK Mining Sub group which includes more than 70 firms of both the nations. UK’s
expertise, technologies and finance are been used in Kazakhstan’s projects. All this will
ultimately result in overall growth of mining sector in UK. He also said that foreign
investment, legislative security, fiscal stability and the introduction of new technology such
as availability of Geodata and technical data can help in the development of the sector
(GOV.UK. 2015).
After facing so many difficulties in past, the British Coal mining industries are all set for a
comeback by following a strong strategy and a coking coal project of £200million. Planning
to extract thermal coal of high value is done by West Cumbria Mining (WCM). This coal is
to be sued for the purpose of steel making rather than for using it in power stations. The
mining will start operating in 2019 and its chief executive officer believes that this project
The company’s talented workforce uses the mining process and technology in an efficient
manner which reduces the cost and enhances the functioning of the organization. Rio is
world’s leading producer of copper and diamond, the two resources which plays an important
role in everyone’s life. The production of aluminium is also done at a large scale in the
company. It has bauxite mines and alumina refineries of high quality along with the world’s
most competitive and modern portfolio of aluminium smelters. Rio also get majority of its
sales by producing iron ore. It derives benefits from the continuing and increasing demand of
iron ore assets across China and other developing countries in the world (Iron Ore. 2018). So
overall, the company is performing well in recent times which results in the improvement in
the situation of metals and mining sector in UK, as and when compare to the history of this
sector.
Future trends in mining sector
A speech was given by the British ambassador on the role of United Kingdom in
development of Kazakhstan’s mining sector at yearly Mining and Exploration Forum. In his
speech, he addressed the factors on which the future development of mining industry sector
in UK will depend. He said that several factors like prices of mineral commodity and policies
made by the government will affect the growth of industry. Talking about Kazakhstan’s
mining sector, he addressed that mining through it, can result in the great contribution to
regional development and can also be considered as an essential contribution in overall social
and economic development. In order to transform the mining sector of Kazakhstan into a
world class industry that stimulate economic growth, the government of United Kingdom has
formed a UK Mining Sub group which includes more than 70 firms of both the nations. UK’s
expertise, technologies and finance are been used in Kazakhstan’s projects. All this will
ultimately result in overall growth of mining sector in UK. He also said that foreign
investment, legislative security, fiscal stability and the introduction of new technology such
as availability of Geodata and technical data can help in the development of the sector
(GOV.UK. 2015).
After facing so many difficulties in past, the British Coal mining industries are all set for a
comeback by following a strong strategy and a coking coal project of £200million. Planning
to extract thermal coal of high value is done by West Cumbria Mining (WCM). This coal is
to be sued for the purpose of steel making rather than for using it in power stations. The
mining will start operating in 2019 and its chief executive officer believes that this project
Financial Reporting 9
will make the coal industry to grow in the next 12 months (Benton, 2017). In 2016, it has
been noticed that Metallurgical coal was the commodity which has performed best and also
Europe has no source of this particular type of coal. The coking coal project planned by
WCM will produce such coal and provide it to the European steelmakers. WCM has already
made commitments from them to take 500,000 tonnes every year. The project is considered
as a future of coal industry (Benton, 2017).
Companies which are engaged in the mining of iron ore or thermal coal will have to face
different challenges than those who deals with the production of precious metals. The miners
which are involved in mining of diversified resources have to face challenges different from
those who are focused on niche commodity, in near future. In order to deal with them they
have to keep in mind the environment situation prevailing in the market, the geopolitical
factors, availability of new technology, legacy laws and the rules, regulations and taxes
formed by the government.
The future of metals and mining industry sector highly depends upon the conditions of
environment, legacy impacts and human resources. The enhanced evaluation of
environmental conditions and ecosystem in order to ensure the health and life quality of
public has forced the mining industry to improve its performance in future as compare to its
past situation. It can also be seen in near future that all the companies operating in mining
industry have introduced automation in all its phases, from drilling and extracting the
resources to chemically processing them. This will cut down the labour cost and eliminates
the need of miners and workers. The negative impact will be that the job opportunities will be
reduced which will affect the employment rate of the country. The people will be jobless
because of the lack of opportunities. But looking its overall impact, it will led to the
economic development of both country and sector. Ability to adopt the changes in the market
conditions instantly will help the mining sector to grow and to contribute more to the Gross
Domestic Product of the country. The future of United Kingdom’s mining and sector will be
better than its situation in past years.
will make the coal industry to grow in the next 12 months (Benton, 2017). In 2016, it has
been noticed that Metallurgical coal was the commodity which has performed best and also
Europe has no source of this particular type of coal. The coking coal project planned by
WCM will produce such coal and provide it to the European steelmakers. WCM has already
made commitments from them to take 500,000 tonnes every year. The project is considered
as a future of coal industry (Benton, 2017).
Companies which are engaged in the mining of iron ore or thermal coal will have to face
different challenges than those who deals with the production of precious metals. The miners
which are involved in mining of diversified resources have to face challenges different from
those who are focused on niche commodity, in near future. In order to deal with them they
have to keep in mind the environment situation prevailing in the market, the geopolitical
factors, availability of new technology, legacy laws and the rules, regulations and taxes
formed by the government.
The future of metals and mining industry sector highly depends upon the conditions of
environment, legacy impacts and human resources. The enhanced evaluation of
environmental conditions and ecosystem in order to ensure the health and life quality of
public has forced the mining industry to improve its performance in future as compare to its
past situation. It can also be seen in near future that all the companies operating in mining
industry have introduced automation in all its phases, from drilling and extracting the
resources to chemically processing them. This will cut down the labour cost and eliminates
the need of miners and workers. The negative impact will be that the job opportunities will be
reduced which will affect the employment rate of the country. The people will be jobless
because of the lack of opportunities. But looking its overall impact, it will led to the
economic development of both country and sector. Ability to adopt the changes in the market
conditions instantly will help the mining sector to grow and to contribute more to the Gross
Domestic Product of the country. The future of United Kingdom’s mining and sector will be
better than its situation in past years.
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Financial Reporting 10
References
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References
60 Centuries of Copper: Early Copper Mining in Britain. (2017). Copper.org. Retrieved 31
January 2018, from
https://www.copper.org/education/history/60centuries/raw_material/earlycopper.html
A brief history of British coal mining – in pictures. (2015). the Guardian. Retrieved 31
January 2018, from
https://www.theguardian.com/environment/gallery/2015/dec/18/coal-mining-britain-
brief-history-in-pictures
American Water Works Association. (2012). Financial Management for Water Utilities:
Principles of Finance, Accounting, and Management Controls. American Water
Works Association.
Benton, D. (2017). A future for coal in the UK: £200m coal mine edges closer to
production. Miningglobal.com. Retrieved 31 January 2018, from
http://www.miningglobal.com/mining-sites/future-coal-uk-ps200m-coal-mine-edges-
closer-production
Coucom, C. (2012). Cambridge O level Principles of Accounts. Cambridge University Press.
Dagwell, R., Wines, G., & Lambert, C. (2015). Corporate accounting in Australia. Pearson
Higher Education AU.
Epstein, B. J., Nach, R., & Bragg, S. M. (2009). Wiley GAAP 2010: Interpretation and
application of generally accepted accounting principles. John Wiley & Sons.
Global home. (2018). Riotinto.com. Retrieved 31 January 2018, from
http://www.riotinto.com/default.aspx
Heintz, J., & Parry, R. (2012). College Accounting, Chapters 1-27. Nelson Education.
Hoyle, J. B., Schaefer, T., & Doupnik, T. (2015). Advanced accounting. McGraw Hill.
Iron Ore. (2018). Riotinto.com. Retrieved 31 January 2018, from
http://www.riotinto.com/iron-ore-158.aspx#australia
Key issues facing the mining sector | Deloitte UK. Deloitte United Kingdom. Retrieved 31
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Financial Reporting 11
https://www2.deloitte.com/uk/en/pages/energy-and-resources/articles/key-issues-
facing-mining-sector.html
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Weygandt, J. J., Kimmel, P. D., & Kieso, D. E. (2015). Financial & managerial accounting.
John Wiley & Sons.
https://www2.deloitte.com/uk/en/pages/energy-and-resources/articles/key-issues-
facing-mining-sector.html
Maheshwari, S. N. (2012). A Textbook of Accounting for Management, 3rd Editionn. Vikas
Publishing House.
Maheshwari, S. N., Maheshwari, S. K., & Maheswari, S. K. (2013). An Introduction to
Accountancy. Vikas Publishing House.
Mining Weekly - Brexit to impact on UK mining sector, R&D to bear the brunt.
(2017). Miningweekly.com. Retrieved 31 January 2018, from
http://www.miningweekly.com/print-version/brexit-poses-challenges-for-uk-mining-
sector-rd-to-suffer-the-most-2017-02-03
Mining. KPMG. Retrieved 31 January 2018, from
https://home.kpmg.com/uk/en/home/industries/energy/mining.html
Nikolai, L. A., Bazley, J. D., & Jones, J. P. (2009). Intermediate Accounting (Book Only).
Cengage Learning.
Porter, G. A., & Norton, C. L. (2012). Financial accounting: the impact on decision makers.
Cengage Learning.
Sofat, R. (2010). Basic accounting. PHI Learning Pvt. Ltd.
The UK role in the development of Kazakhstan’s mining sector - GOV.UK. (2015). Gov.uk.
Retrieved 31 January 2018, from https://www.gov.uk/government/speeches/the-uk-
role-in-the-development-of-kazakhstans-mining-sector
Warren, C. S., Reeve, J. M., & Duchac, J. (2011). Accounting. Nelson Education.
Van Mourik, C., & Walton, P. (Eds.). (2013). The Routledge Companion to Accounting,
Reporting and Regulation. Routledge.
Weygandt, J. J., Kimmel, P. D., & Kieso, D. E. (2015). Financial & managerial accounting.
John Wiley & Sons.
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