ACCT20080: Ethics and Governance Capstone Project - OZ Minerals

This project analyzes the corporate governance framework of OZ Minerals Ltd, a mining company operating in Australia. The assessment explores the company's ethical outlook and governance practices, focusing on the board of directors' composition, responsibilities, and decision-making processes. It examines how OZ Minerals manages its corporate governance structure, including the establishment of committees like the audit, remuneration, and sustainability committees, to ensure effective control and compliance. The project also applies legitimacy theory to evaluate the company's dedication to governance practices. Furthermore, the project provides an overview of OZ Minerals' business operations, including its mining activities, financial performance, and commitment to sustainability. The analysis includes a review of the company's annual reports, remuneration policies, and board orientation to assess how it aligns with corporate governance principles and meets stakeholder expectations. The project concludes with an assessment of the company's ethical outlook.

Running head: ETHICS AND GOVERNANCE
Ethics and Governance
Name of the Student:
Name of the University:
Author’s Note

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Executive Summary
The focus of the assessment is to formulate an appropriate strategy which can be used by a
business to manage the Corporate Governance framework in a business. The company which is
selected for analysis is Oz Minerals so that it can estimated whether the business has efficient
corporate governance framework for supporting the activities of the business. The management
of OZ Minerals is dedicated towards maintaining sustainability practices in the business. The
discussion would be covering composition of the board of directors of the business. The
discussion would also showing application of legitimacy theory in the case of OZ minerals ltd.
Table of Contents

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Introduction......................................................................................................................................3
Discussion........................................................................................................................................5
Corporate Governance of OZ Minerals.......................................................................................5
Board Orientation........................................................................................................................8
Application of Legitimacy Theory............................................................................................11
Conclusion.....................................................................................................................................12
Reference.......................................................................................................................................13

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Introduction
The main purpose of the assessment is to analyse the case of Oz Minerals ltd which is
engaged in the business of supplying materials and mining in Australia. The focus of the
assessment is on the relevant activities which are undertaken by the business for the purpose of
generation of revenue and also meeting the compliance requirement in the industry. The
discussion would then be proceeding with the framework of governance which is adhered by the
senior managers of Oz Minerals ltd in order to ensure that there is control in managing the
activities of the business (Tricker & Tricker, 2015). The discussion would also be applying
appropriate theory in order to show the dedication of the business towards appropriate
governance practices in the business.
Corporate Governance refers to a set of guidelines which are established by the
management in order to ensure that work process is efficiently conducted and the business is able
to meet all the statutory requirements in the business. The corporate governance practices of a
business are considered to be important as the same keeps the employees in line and directs them
to contribute to the goals and objectives of the business. The application of legitimacy theory is
shown in the discussion with respect to the organization. The role of the board of directors in
maintaining governance in the business are appropriately shown in the discussion which is
shown below.
Background of the Company
OZ Minerals is a company which is engaged in Mining Sector operating in Australia and
the company is also listed under Australian Stock Exchange. The company is known for its
mining services and was originally formed due a merger agreement between Oxiana Ltd and
Zinifex in the year 2008. The company has extensive operations in significant location such as

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Prominent Hill Mine and the Sensitive Military area of the region (Annual Reports | OZ
Minerals., 2019). The company is engaged in extraction of minerals through open pit operations
and also underground operations. The business focuses on copper mining products and uses
modern mining techniques for the purpose of extraction of minerals. The company is also known
to be one of the largest copper- gold resource company which operates in Australia. The
company also has its resources in Brazil and can operate on offshore basis as well. The company
is known for its innovative approach towards extraction of minerals and this is the reason the
company is the third largest copper producer in the country.
The company has started expanding the operations in Prominent Hill operation and the
same would be including underground mining operations for the purpose of extracting key
minerals from the surface of the earth. The company has its headquarter established in Adelaide
from where the operations of the business are effectively carried out. The company had
expanded the operations of the business in previous year for the purpose of achieving growth in
the operation. The corporate governance of the business is also appropriate and strong emphasis
is put on sustainability in the operations of the business.

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Figure 1: (Mining Companies in Australia in terms of Market Capitalization)
Source: (Statista. 2019).
Discussion
Corporate Governance of OZ Minerals
The framework of governance of the company is based on the decisions which are taken
by the directors of the company. The corporate entity has also established different committees
for the purpose of ensuring that the governance structure is effectively followed in the business
(Khan, Muttakin & Siddiqui, 2013). The board of directors of the corporate entity are made up of
more non-executive directors who are independent. The emphasis of the business is on
enhancing long term value from the operational process of the business. The total directors of OZ
minerals comprises of 6 directors out of which 4 directors are independent.
The chairman of the business is Rebecca McGrath who is one of the independent director
for the company and heads the board of directors of the business considering the major decisions
relating to the business (McCahery, Sautner & Starks, 2016). The important decisions which are
taken by the management of the company are based on the term goals and sustainability
requirements of the business. In addition to this, the composition of the board also shows the
management team of OZ minerals ltd which looks after the operational process of the business
and involves key executives such as Chief financial officer and Chief Executive offer of the
business. In addition to this, it is recognised from the annual report of the business that the
management of OZ Minerals ltd follows lean business processes for the purpose of ensuring that
there is accountability and further room for innovation in the business process of the company. In
addition to this, the company has its own code of conduct established which allows the business

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to guide its employees and managers regarding the work processes and execution of duties
(Armstrong et al., 2015).
The above table shows meeting attendance of the directors of the business in important
meetings of different committees which are established in the organization along with
involvement of independent directors of the business.
The letter from the chairman and CEO of the business shows that the executives of the
company has reorganised business structure for the purpose of supporting the activities of the
business and thereby further refined strategies and strengthen the governance process of the
business (Jizi et al., 2014). The company has focused on enhancing the growth of the business
and thereby focused more on refining the strategies of the business for the purpose of achieving
the objectives of the business. The priorities of the company in 2019 is to look for expansion and
growth in the operations of the business and focus on innovations for achieving the desired
results and also establish a proper mining culture. The company also aims to acquire new

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footholds for starting their mining projects and or starting new pipeline which can meet their
future growth requirements.
The remuneration policies which is set out by the business is to ensure that the welfare of
the employees is considered and on the basis of the same appropriate steps are taken for
compensating the key personnel of the business (Chan, Watson & Woodliff, 2014). The top tier
employees of the business get their remuneration by cash payments, short-term incentives, long
term incentives and superannuation fund contribution so that the business is able to keep such
employees satisfied and also is able to retain such employees.
The above chart is an extract taken from the annual reports of the company for the year
2018 which represents the total compensation which is received by management personnel who
are responsible for managing the day to day operations of the business (Larcker & Tayan, 2015).
The remuneration report which is formulated by the remuneration committee clearly states that
the salary of the personnel has been increased from last year’s percentage and judging from the

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strong performance of the business during the period against the KPIs which are established. The
salary of the staff members has also increased. In addition to this, it is also to be noted that the
management of the company follows certain principles for the purpose of meeting the
remuneration objectives of the business and the same is shown below in details:
Board Orientation
The directors of the business are accountable for taking major decisions relating to the
business and also for ensuring that the governance principles in the business are appropriately
followed by those charged with governance. The framework for governance in the business
requires the board of the directors take the steps for managing the operations of the business and
also follow the guidelines which are established in the board charter. It is further the
responsibility of the board of directors to set company’s goals and responsibilities thereby
reviewing material risks and internal control compliance of the business (Sapra, Subramanian, &
Subramanian, 2014). The board delegates some of the responsibilities and powers to the
executive committees for proper management of the operations of the business. The process is
appropriately followed by the board of directors of the business so that long term value is created
for the shareholders of the business.

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The board of directors of Oz Minerals ltd at present comprises of 6 directors who are
made up of executive and non-executive directors. The board follows a unitary structure and all
the executive directors of the business including the chairmen of the business are independent.
The management team of the company comprises of CEO and CFO who handles day to day
operations of the business and also have exclusive powers to take major decisions on behalf of
the company. Further the structure of the corporate governance for the business of OZ minerals
ltd shows that the management follows the principles which are laid out by the ASX Corporate
Governance’s Council as the reports relating to governance is formed accordingly.
The management of the company for the purpose of properly managing the operations
and affairs of the business has established executive committees for handling specific areas of
performance relating to the business. In addition to this, the management has also delegate power
and responsibility to such committees so that they can execute their functions in an effective
manner. There are three standing committees which are established by the business which are
audit committee, people and remuneration committee and sustainability committee. The roles
and responsibilities of such committees are discussed below in details:
 Audit committee is given the responsibility of managing the framework for reporting
which is adopted by the business in terms of providing disclosures and showing financial
information in the annual report of the business. In addition to this, the audit committee
also ensures whether the external audit function of the business is being effectively
carried out by the management of the company or not.
 The remuneration committee is given the responsibility of computing the payments
which is due to the directors, chief executives and employees of the business. The
remuneration committee also looks out for diversity and inclusion practices formation

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and supervision in the business. The remuneration committee is provided appropriate
power for discharging their responsibilities in an effective manner.
 Sustainability committee looks after the sustainability practices in the business and also
looks after the safety and activities of the business. The sustainability committee advises
the board regarding whether the activities of the business have any severe impact on the
environment or the well being of the employees of the business.
The managing team of OZ minerals looks after the policies and effectiveness of the practices
of the business so that the internal and externa functions of the business are effectively carried
out by the business. The company is also dedicated to incorporating continuous improvement in
the functions of the business. In order to make continuous improvement in the business process,
the management of the company has devised a training a competency program for the benefits of
the employees of the business. The business model which is developed for the company is based
on innovation, transformation and developing the skills of the employees of the business.
The management of the company has also established a risk management framework for
ensuring that the risks are properly adhered to in taking major decisions of the business and
further the business follows an ethical framework for executing proper functions related to the
entity. Further the focus of the management is on continuous disclosures and maintaining health
and safety policies of the business. The business also aims to conduct regular internal audits so
that it can be confirmed that the business processes of the business are ethical and the same is
compliant with the regulations which is relevant to the business. The management of the
company has also established a code of conduct process which specifically states the issues of
conflict of interests, actions which needs to be taken against bribery, fraud and corruptions. The

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framework which is formulated by the management is done keeping in the mind the nature of
operations and the risks which the business can face in its day to day operations.
Application of Legitimacy Theory
The legitimacy theory provides that it is the responsibility of the management of a
company to report regarding the social and environmental activities which is undertaken by the
business. The legitimacy theory makes it clear that every business is bound by a social contract
to make contribution towards the social and environmental cause of the business. The theory
requires businesses to provide appropriate disclosures in the annual report of the business
regarding the contribution which is made by the business towards its social responsibility during
the period.
In the case of Oz Minerals ltd, the management of the company has provided appropriate
disclosures relating to environmental and sustainability practices which is followed by the
management of the company. The disclosures regarding the environmental and sustainability
issues are covered in the financial statements as well as the sustainability report which is
formulated by the business regarding the operations of the business. The legitimacy theory of the
business makes it clear that the management of the company needs to follow appropriate
reporting framework for the purpose of ensuring that the approach which is taken by the
business. OZ Minerals on a regular basis oversees its agreement with permits and licenses which
is done through environmental audits along with the audits which are conducted for regulatory
purposes. In an overall estimate, it can be said that the management of the company is compliant
with the regulations which re relating to environmental and social contributions of the business.