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Assignment Questions on Strategic Management of Resource Companies
- Number of Words: 4000
SECTION 1: Market Strategy (Questions 1-5)
1. Hydrogen is considered a major market opportunity for future clean energy.
Who are the potential ‘natural owners’ of the hydrogen market in 2030 from a corporate perspective in Australia? What role, if any, should Governments play in seeking to advance growth in the hydrogen market in Australia and elsewhere? Do you consider the future hydrogen market structure, whatever you foresee that to be, as an ‘attractive’ market or otherwise? Why?
2. There are several mid-tier (~$1-2 billion market capitalisation) gold companies listed on the ASX (e.g., SBM, WGX, RMS, WAF, GOR, SLR, RRL).
Do any of these companies own non-gold assets (including exploration potential)? If so, what should the companies ‘do’ with such non-gold assets?
3. BHP is seeking to grow its market exposure to potash, nickel, and copper. How should BHP’s strategy differ between these three markets in procuring future growth?
4. You have been engaged to advise the Northern Territory (NT) Government to assess the potential for new downstream minerals and petroleum processing and value-adding opportunities in the NT through to 2030. The potential markets of interest to the NT include LNG, hydrogen, cobalt, copper, vanadium, lithium, manganese, zinc, phosphate, rare earths, tungsten, uranium, and potash, amongst others.
In which of these (or other) minerals and energy markets do you consider that the NT might plausibly attract and develop new investment into downstream processing industries within the decade ahead? Why?
5. The current northern hemisphere winter has seen a major gas price spike in Europe, and especially the UK, due to a global shortage of natural gas.
What are the short-term (seasonal, cyclical) and long-term (structural) origins of the price spike? Is this natural gas shortage a potential opportunity for Australian LNG companies?
SECTION 2: Corporate and Business Strategy (Questions 6-10)
6. Last year, Woodside acquired BHP’s petroleum assets in an all-share deal.
Which party got the ‘better deal’ or was the deal mutually beneficial? Consider the financial, strategic, and wider merits of the deal.
7. Nickel-copper-lithium company IGO recently announced the acquisition of Western Areas (WSA), an established nickel producer in Western Australia.
Outline the strategic rationale for this transaction in the context of IGO’s corporate strategy. What alternative pathways could IGO have considered to gain greater exposure to the nickel market?
8. From 2024, Wesfarmers will join the ranks of lithium producers, via the company’s interest in Covalent Lithium (with JV partner SQM), and the development of the Mount Holland lithium project in Western Australia.
Will the value of the Mount Holland project be maximised under the current Wesfarmers-SQM ownership as Covalent Lithium, or should an alternative corporate structure be considered, such as an ASX- listed, lithium-focused corporate entity holding the asset? Explain your reasoning.
9. Deterra Limited (DRR) is an ASX-listed mineral royalties’ company that demerged from Iluka Resources in 2020. The company’s principal asset is an iron ore royalty over the BHP Mining Area C ‘MAC’ project in the Pilbara.
Assume that you have recently accepted a role as a non-executive board member at DRR. What are your initial thoughts on formulating and executing a growth strategy for the company?
10. As a guest on a business podcast, geopolitical expert Ian Bremmer outlined a typology of how major technology corporations respond to the geopolitical challenges of globalisation, taking either a ‘national champion’ (e.g., Huawei, Microsoft), [minimalist] ‘globalist’ (e.g., Apple, Google, TSMC), or ‘techno-utopian’ [or ‘libertarian globalist’] (e.g., Facebook, Uber) approach.
Convert this typology into EITHER the petroleum or mining sector. Suggest which companies may fall into each of these globalisation typologies. What are the advantages and disadvantages of each approach to globalisation? Cite practical examples of these approaches where possible.
SECTION 3: Strategic Leadership and Culture (Questions 11-15)
11. In his “2022 Letter to CEO’s” Larry Fink of Blackrock comments that “No relationship has been changed more by the pandemic than the one between employers and employees”.
Drawing upon your own experiences in EITHER the mining or petroleum sector, and those of your network, how has the employer-employee relationship changed? What, in your view, will be the ‘new normal’ in terms of employer-employee relationship in the sector in a post-pandemic world?
12. A previous MBA on this course who works in the petroleum industry commented that the industry would ‘see him through his career, but that he would not recommend new graduates should enter the industry’. Similar sentiments exist for the coal industry.
What are the implications for corporate culture of working in a ‘sunset’ industry? What is the role of leadership in such industries? If you were mentoring a graduate student entering the petroleum or coal industry, what would your advice be?
13. In 2021, junior resources company Venturex Resources (VXR), changed its name to Develop Global Limited (DVP) to reflect the appointment of former Northern Star Resources Limited (NST) executive Bill Beament and the adoption of a new corporate strategy.
What is the new DVP strategy? How does it differ from the VXR strategy prior to the appointment of Bill Beament (and other new execs)? What does success ‘look like’ for DVP by 2025? And finally, in your opinion, will the new strategy succeed?
14. Business author Martin Lindstrom, in his book ‘The Ministry of Common Sense’ criticised an oil company for making visitors to their corporate headquarters read the company’s H&S standards and undertake a short questionnaire to ensure they understood them. Lindstrom believed that such activities were redundant in the office environment and showed a lack of corporate ‘common sense’.
Is Lindstrom correct in his analysis? What impact do such rigorous health and safety practices in the office environment have on overall safety culture? In turn, what impact do they have on overall corporate culture, strategy, and performance?
15. In their paper ‘Your Strategy Needs a Strategy’, Martin Reeves and his co-authors outline four different strategy formulation ‘types’ – classical, adaptive, shaping, and visionary. The authors cite the petroleum industry (and other ‘mature’ industries, such as mining) as a major user of ‘classical’ strategy. The thesis of Reeves et al., paper, however, is that all companies are too reliant on classical strategy – assumedly including the petroleum and mining companies.
Using EITHER the petroleum or mining sector as an example, answer whether the sector is over-reliant on classical strategy techniques, or not? Then discuss, what examples of adaptive, shaping, and visionary strategy you see in the sector? What are the advantages and disadvantages of each approach to strategy? Cite practical examples where possible.
SECTION 4: Ethical and Sustainable Strategy (Questions 16-20)
16. In January, ExxonMobil announced a ‘net zero greenhouse gas emissions by 2050’ strategy, making it one of the last major international oil companies to do so.
Evaluate the strategy in terms of its global environmental impact, financial impact to ExxonMobil, and its overall strategic logic for ExxonMobil. How does it compare to rival oil majors? Is the strategy bold enough and is it viable?
17. The destruction of Juukan Gorge in 2020 and subsequent inquiry has renewed focus on the relationship between Indigenous communities and resources companies in Australia and suggests a ‘reset’ in the relationship is required.
Using the findings of the Juukan Gorge inquiry and other sources, how should the new relationship between mining companies and Indigenous communities differ from the existing relationship? In practical terms, how should mining companies change the ways in which they go about exploration, development, operations, and closure on traditional lands?
18. Several companies are now trying to develop so-called ‘green’ steel, aluminium, or LNG.
Can fossil fuel, chemicals, and metals products be branded to command a ‘green premium’ in terms of realised price, when such commodities are produced with minimal environmental footprint and using a ‘clean’, ethically sourced supply chain? Refer to examples where possible.
19. In January, the European Union (EU) announced that it would include ‘certain’ nuclear and gas power activities as ‘sustainable’ under its ‘sustainable finance taxonomy’ that seeks to guide private-sector energy investment in Europe, with the aim of achieving carbon neutrality by 2050. The EU states that both natural gas and nuclear have a role as ‘transition’ or ‘bridge’ fuels.
What are the implications of this announcement for the EITHER uranium miners and explorers, or natural gas companies?
20. Artisanal and small-scale mining (ASM) is a major source of minerals production globally, and especially in developing world settings in Africa, Asia, and South America, however, it is associated with poor health and safety, and environmental protections. As such various authorities, such as the OECD, provide guidelines for stakeholders to help formalise the sector, with the aim of making it safer, cleaner, and more productive.
As a ‘stakeholder’ what should the relationship between formal (often foreign) mining companies and artisanal miners on the company’s land be? Again, as a stakeholder what should the relationship between formal mining companies and artisanal miners in the local area (but not on the mining company’s land) be? Should the formal mining sector be more involved with the formalisation of ASM at a global-level, beyond the places in which they specifically operate?
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