Comparative Analysis of Mining Companies and Host Community Relations

This case study presents a comparative analysis of the community relations approaches of two prominent mining companies: Fortescue Metals Group and Rio Tinto. The analysis examines the Solomon Hub project of Fortescue and various Rio Tinto mining projects, focusing on their interactions with host communities. The paper explores the nature of these relationships, including instances of conflict and community projects implemented by each company. It delves into the internal management structures for community relations, including the roles of executive staff, community relations teams, and advisory panels. The study highlights the differences in their approaches, such as Fortescue's focus on community partnerships and Rio Tinto's emphasis on economic empowerment. The analysis also considers the companies' community development plans, financial support, and efforts to address community issues and promote sustainable development. The study concludes with a discussion of the key differences between the two companies' strategies and their impact on host communities.

RUNNING HEAD: COMPARITIVE ANALYSIS OF THE WORK OF TWO
MINING COMPANIES WITH HOST COMMUNITIES
Comparative analysis of the work of two mining companies with host communities
Name of the Student:
Name of the University:
Author note:

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COMPARIVE ANALYSIS OF THE WORK OF TWO MINING COMPANIES WITH
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Community relation activities of two mining companies which are Fortescue Metals
Group and Rio Tinto this paper will be compared in this paper. The community relation
approach of Solomon Hub mining project of the Fortescue Metal Group and mining projects
of Rio Tinto will be compared to identify the internal management structure of these two
companies regarding community relation approach.
Overview of mining projects:
Fortescue Metals Group, an Australian company, established in 2003. This company
produces iron ore. More than 87000 square area under this company in the Pilbara region of
Western Australia. Products of this mining company are iron ore, lithium, copper, steel, and
gold (Fmgl.com.au., 2019). In the Pilbara region of the western part of Australia, Solomon
hub is controlled by this group. The location of Solomon hub is situated in the middle of
Fortescue’ Pilbara area. One of the major mining projects of Fortescue Metal Group is
Solomon hub. The first production from this hub was achieved in December 2013 by this
group (Fmgl.com.au., 2019). In 2012, 129 km Solomon railway was developed by this
mining company to connect with the mainline of Fortescue to the company’ port operations
(Fmgl.com.au., 2019). Fortescue mining group has a target, which is achieving more than 5
billion tons of iron ore from Solomon hub. The market capitalisation of this company is 27.54
billion dollars (Fmgl.com.au., 2019).
In 1873, an Anglo Australian international mining company, named Rio Tinto, was
established (Riotinto.com., 2019). Iron ore, aluminium, gold, diamonds, uranium, bauxite,
alumina, coal, copper, titanium dioxide, and borates are produced by Rio Tinto Company.
(Riotinto.com., 2019). Sixteen iron ore mine projects and 1700 km rail networks are
controlled by the Rio Tinto Company in Pilbara region. With the support of proper

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infrastructure, this company is interested in ensuring employee safety, improving public
health and the environment (Lee, 2017).
Discussion about the host communities:
The Solomon Hub is an iron ore mine, which is located near about 60 km north of
Tom Price in the western part of Australia. The workers of Solomon Hub are accommodated
at a village where more than 1500 workers live with their families (Fmgl.com.au., 2019).
Fortescue mining group bought several houses for the employees of Solomon Hub in Tom
Price.
The nearest population centre of the mining project is Tom Price town in Pilbara,
which is operated by the Rio Tinto Mining authority. Most of the people from this area work
for Rio Tinto organisation. In this community, near about 3005 people live (Riotinto.com.,
2019). The community of this area is the young family cantered community. This town is
mainly iron ore mining town (Ellem, 2015).
Nature of the relationship between the host communities and the company:
Fortescue Metals Group work together with all stakeholders, including people from
the host community, to achieve the common goal and promote sustainable development.
There was a legal conflict between Fortescue Metals Group and the East Guruma people
(Wells, 2013). The people from East Guruma tried appealing to the Indigenous protection
committee of the state, and even in Supreme Court to protect the Spear hill in the Pilbara
area, which is located near Karijini National Park. This hill is the issue of Dreamtime creation
story about the significance of people gathering and sharing resources (Young, 2019).
However, Fortescue Metal Group has to re-route the train network. The people from East
Guruma were not against the Fortescue group or their project. These people were interested

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in protecting their sacred site. After this incident, this group is interested in promoting
sustainable development in the host community area.
Improving the lifestyle of the people from the host community is the principal goal of
Rio Tinto. However, this mining company faced a legal problem. There is a complaint
against this company which states that this company is responsible for a leak of nineteen
thousand gallons of oil into the ground. The Department of Resources complained to the
Northern Territory (Riotinto.com., 2019). The main issue of the complaint was that this
company did not conduct a proper investigation and interested to close the issue. This types
of activity are developing a negative impact on the company. Company reputation is essential
for every company. Rio Tinto is interested in maintaining its impressive reputation by helping
the host community to improve their lifestyle.
Implemented community project:
Economic opportunities are provided to the locals by making them a part of the
Fortescue Metal Group and also by using that are available locally. The organisation tends
to create an energetic and ever-growing community, which will be attracted to grow for the
organisation as well as provide future workers. For Port Hedland and Karratha, almost 500
employees are working for Fortescue, who is based in Pilbara Efforts are also taken by the
company to combat any problem faced by the communities (Fmgl.com.au., 2019). In order to
ensure the same, regular feedbacks are gathered from their residential workers as well as
from the local government of the region. As a part of their local procurement venture, the
organisation willingly takes up the local content, which they can gather from a particular area
(Cleary, 2014). Again, the local businesses are supported by the organisation so that they can
build a relationship that will benefit both the parties and at the same time bring in economic
growth. The procurement level of this organisation is maintained because of their attitude

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towards local employment and their treatment of residential workers (Hunter, 2018).
Fortescue is a part and contributes to the Chamber of Commerce and Industry that is based in
Pilbara. The goal of Fortescue is to empower the communities by creating a partnership with
the locals and coming up with such strategies and excellent outputs that will help the
community grow. It has been eleven years since the organisation’s Community Grant
Program was first started. Under this program, this organisation continues to provide eligible
groups with funding up to $5000 so that they can further support communities in Pilbara
(Fmgl.com.au., 2019). The main aims of the projects that Fortescue seeks to achieve are
education and training, health and wellness, economic development, art, and culture. The
company is focused on building relationship and initiatives with the local Pilbara
communities afresh so that it can result in energetic and lasting communities.
In the case of Rio Tinto Company, the business is long-termed. A single business
can go on for several years. They aim to be good neighbours to the community stakeholders
for as long as they work for that community. By building a strong bond with the communities
that they work with, this company tries to secure its business for a considerable amount of
time (Riotinto.com., 2019). This company is capable of producing results that can be
cherished by its partner communities. The company is benefited hugely from the resources
that they use of the host country and also from the support that the locals tend to provide
towards the operation at hand and teams. Thus it is only legit that the company shares its
success and profit with those that enable that success. In order to do so, they provide
beneficial work to the locals of the region. Investing in locals is essential as that will ensure
their license to work in a respective area or within a community (Riotinto.com., 2019). It is
not possible to operate a successful business without the support of the local community.
However, it is necessary to see that the success gained from such a venture flows deep into
the community. This kind of relationship will help to bring prosperity for all people involved.

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However, an assurance is demanded both by the communities and the government concerned.
This situation can be served by sharing the wealth that the company gathers.
The framework of the Community relation effort:
Solomon Hub, controlled by the Fortescue Metal Group, follow the community
relation policy created by the company. The community development plan, created by the
authority, establish better community relationships with the people from the host community.
The community relation policy includes training and assured employment for young people
from the host community. The Community relations effort of Fortescue Metal Group (FMG)
is implemented through a procedure. FMG has the vision to create development for all
stakeholder, including the people from the community (Fmgl.com.au., 2019). The community
management team identify the issues important for the community and evaluate the issues
with higher authority. After analysing the community issues with higher authority, the
community management team prepare a community policy through which the community
issue can be resolved (Andrews, 2017). This mining company continues its financial support
to the host community as a part of community relation effort of the company. The community
management team will follow the code and conduct of FMG while preparing the community
policy.
Rio Tinto Organisation has the Community Policy, which is beneficial for the host
community. The community relation activities of Rio Tinto is managed by the community
management team of this mining company. This company communicate with the people from
the host community and try to detect social issues through a variety of form. The
sustainability committee of Rio Tinto reviews every complaint related to the host community.
Through proper investigation, this committee tries to find the justification of the complaint.
(Riotinto.com., 2019).

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The advisory panel for community relation effort:
Fortescue Metal group has a panel to manage the community-related issues. In this
company, the Board of Directors manages the interest of every stakeholder. The executive
team of FMG manages community relation activities. At present Tim Langmead is the head
of the community, environment, and government department of FMG (Fmgl.com.au., 2019).
Tim Langmead guides the team to resolve community-oriented issues and develop
community relation actions of the company. The community relation effort of this company
is published annually in the annual company report.
Rio Tinto had an independent international advisory panel to manage the community-
related issues. This panel was formed in 1999 to manage the social, host community,
environmental, economic, and mining project-related issues (Riotinto.com., 2019). In 2015,
this panel ended its work with a completed document. The document is the way of guidance
for the company to resolve the community-related issues. Now the community-oriented issue
is managed by a team of Rio Tinto, headed by Joanne Farrell. The team evaluates the
environment, community development program, health, and safety issues of this company.
This team help the company to improve its community relation approach and efforts
(O'Faircheallaigh, 2013).
Difference between the community relation approaches of two companies:
Fortescue Metal group works together with a valuable community partner. In FY19,
the community management team of Fortescue Metal Group provides support the host
community to fundraising. This mining company promotes smaller community grants to
people from the host community. Ronald McDonald House and Royal Flying Doctor Service,
Pilbara Community Hockey Program are supported by the company to upgrade the health
situation of the people. This mining company is focused on working with the community and

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the partners to promote sustainable development. The approach of this company towards the
community of Solomon Hub is turning the cultural diversity in to an asset for the company.
Working with the community and all other stakeholder is significant for the company.
On the other hand, the Rio Tinto mining company is focused on empowering the
host communities in the Pilbara region. The approach of the company is to develop a great
relationship with all stakeholders of the company, including the host community. This
business organisation enhances stimulating economic growth to promote a positive impact on
the host community area (McKenzie & Hoath, 2014). Recruiting the local people, and
creating a partnership with others to improve the development skill of the people from
community areas, where the business organisation operates its project (Owen & Kemp,
2014). Sharing the wealth in the community areas to enhance the community development
program is the positive approach of this company. Host communities are getting benefits
from this company. Partnering with several countries, investors, contractors, and supplier
help the company to share prosperity towards the host community. This company provides an
ample amount of wade to the workers. The talent building program in the Rio Tinto company
helps the youth to develop the necessary skill to join the company. This mining company
fulfils its responsibility to follow every right of human being, stakeholders, and community.
The supreme authority of this company believes that creating strong relationships with the
host community and promoting sustainable development make the people of the community
and business stronger. Through this approach, the company will create a positive reputation
and become more flexible than ever before.
The approach toward the community and community development program are more
or less the same. Both of these mining companies are enthusiastic about sustainable
development. Enhancing the lifestyle, health, and education of the people from host
communities are prioritises by these two companies.

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