Impact Of Regulatory Frameworks And Treaties On Newcrest Mining Ltd In Australia

1. Identify a multinational company operating in Australia. Provide a brief description of the company including the following 
The industry the company operates in 
 Number of staff in Australia
 Number of staff globally 
 Location of global headquarters

2. Identify any regulatory framework/s affecting the multinational company you have identified operating in Australia and discuss why and how it affects the company. For example, multinational corporations, like local companies, are subject to 30 per cent corporate tax

3. Identify any treaties, conventions or agreements that have impacted on the products or services that multinational company provides in Australia. How does it impact the goods/services?

Company Overview

Newcrest Mining Limited is considered as the largest gold producer that is listed on the Australian Stock Exchange (ASX) and is the one of the leading gold producer in the world. The roots of the multinational company can be traced back to 1966 when Newmont Mining Limited established a subsidiary in Australia as Newmont Holdings Limited that changed its name into Newmont Australia Limited with an objective to develop and find gold prospects in Australia. In 1990, Newmont Australia Limited acquired the Australmin Holdings Limited and merged with BHP Gold Limited and such amalgamation led the company to change its name to Newcrest Mining Limited (Andrews 2017).

Newcrest Mining Ltd explores mines and sells copper and gold concentrates in Australia. It operates and owns a portfolio of predominantly low cost, a strong pipeline of Brownfield and long life mines of Brownfield and Greenfield exploration projects. The gold reserves of the company represent production more than 25 years at the present rates. The mines are situated in Australia, Papua New Guinea (PNG), and Cote d’Ivoire. The present operations of the corporate giant include Telfer (Western Australia), Cadia Valley Operations (new South Wales, Australia), Lihir (New Ireland province, PNG) and Boniko (Cote d’Ivoire). 

The principal objective of the company is to extend its exploration activities for securing provinces or large mineral districts. This is to establish long-term operations and accentuate the potential for undertaking further discoveries (Basu et al. 2015). Headquarter of the company is located in Melbourne, Australia. The corporate giant has made its position among the top 50 companies that are listed on the Australian Securities Exchange in Australia. The company is also listed on the Ports Moresby Stock Exchange. The other offices of the company are located at major sites where mining activities are carried out as it facilitates convenient communication between the head office and the miners.

The company deals with the diversified Metals & Mining Industry headed by Sandip Biswas as the Chief Executive Officer. The company has about 1,544 employees who assist the company to achieve its goals, which is to deliver high returns from the operating, developing and finding of copper/gold mines. The company also ensures that their business activities are operated in a manner that is responsible, safe, profitable as well as efficient.

The discovery of gold has been a significant contribution to the infrastructure and the economy of Australia. Gold Mining has enhanced communication, transportation, rail, road and exportation of raw material across the colonies. From the perspective of corporation, there has been significant growth in the Australian mining industry, which made the large national sector into a leading industry in the world. The industry is making major investments in overseas mining industry and processing alliances and forging international marketing with respect to the several metals and minerals (Andrews 2017). The investment, however, has also flowed to another direction where significant investments are made in the county for expanding or developing or exploring the processing and mining facilities. 

Newcrest is an ASX listed company that deals with mining of and exploration for gold. One of his projects in Australia, Telfer located in Western Australia, is believed to be one of the largest gold mines in Australia. The primary legislative regimes that govern mining in Australia include Mining Act 1978 and Offshore Minerals Act 2003. In addition to the legislations pertaining to the extraction and exploration of minerals within the territorial boundaries the mining industry faces several issues related to environmental laws, health and safety laws, access, real property and employment (Roeder 2015). The Commonwealth exercises constitutional powers over majority of the above-mentioned law and such power of the Commonwealth usually supersedes any inconsistency that is associated with the state legislations.

Regulatory Frameworks affecting Newcrest Mining Ltd

The most common issues that the corporate giant Newcrest usually faces while operating in Australia are the issues pertaining to Native Title issues that exist in every State and Territory. Although the Newcrest accepts and agrees the Aboriginal, cultural heritage must be preserved and that the mining industry has a significant role to play in safeguarding and indentifying such heritage (Mayes, McDonald and Pini 2014). The law and its regulations safeguarding the cultural heritage sites are applicable to mining and exploration companies, in particular. However, the same laws are not applicable to the rural producers and the other users of land in the manner it is applicable to the mining industry. Moreover, heritage surveys are required for cases where the impact of the exploration activity is low. It would be convenient if the surveys are carried out when the impact of the exploration activity is high resulting in high ground disturbance.

Sometimes the aboriginals require complete surveys before they agree to approve the exploration licenses. There have been instances where two different claimant groups claimed two different surveys, which resulted in an increase in expenses and wastage of time. Further, majority of the claimants require that cultural heritage clearance work is conducted separately which also involves enhanced expenses as the claimants will have to be brought back along with the individual archaeologists for each claimant instead of providing a clearance of the area for once and for all.

The uncertainty and inconvenience that arises from the native title issues acts as a significant hindrance for the multinational company, Newcrest Mining Ltd to carry on with its exploration activities in Australia. Although this company along with other companies dealing with the mining activities has attempted to build up good relationship with the claimant groups of the Native Title, there are certain significant issues that impede the effort made by the company in establishing a good relationship (Andrews 2017).

Firstly, the exploration licenses are covered by overlapping native titles claims that require the explorer or the mining company to negotiate with two or more claimant groups. This result in increase in costs, time and negotiation session of the company and at times, the claimant groups do not agree with variety of issues that causes delay in the accessibility of lands or license approvals. Hence, Newcrest Mining Ltd requires that additional assistance is provided to the Land Councils to enable the resolve such overlapping claims (Roeder 2015).

Secondly, the main reason for uncertainty and delay is the enactment of several legislations that not only difficult to interpret but are also inconsistent with the Federal/State legislations. In Western Australia, two taskforces have been established to deal with issues arising from Native Titles and mineral activities. The recommendations made by these taskforces have not been finalized resulting in an adverse impact on the accessibility of land by the Western Australian miners and explorers. Hence, under such circumstances, it would be convenient if the recommendations should be made to prevent States from adopting legislations that are identical in dealing with the issues associated with the Native Titles and affecting the accessibility of the land for the mining explorers (Andrews 2017).

Treaties and Agreements Impacting Newcrest Mining Ltd in Australia

The Corporate giant makes significant contributions to the regional development as well. The exploration activities carried out by Newcrest Mining Ltd facilitates purchasing of products and services such as food, fuel, vehicles, accommodation, hiring of buildings, etc. It also makes payment to the Aboriginal Elders and the persons who monitor the cultural heritage for them to carry out clearances of such cultural heritage (Northey, Haque and Mudd 2013). According to the general rule, 10 percent of the exploration campaign budget is expended in the region where the work is being carried out. Although exploration persists to be a significant factor in the sustainability and development of Australia’s resource industry, there may be a downfall in such industry unless the factors attributing to such decline are reduced, enabling effective operation of the exploration activities. 

Newcrest Mining Ltd Company believes that the relationship with the indigenous or the aboriginal group of people is significantly influenced by the approaches adopted by the staffs of the company who are hired to make contacts with the respective people of the indigenous group. Newcrest owns the Telfer gold-copper mines in the East Pilbara region of Western Australia. The mine environment around Telfar provides advanced and improved exploration targets that have the potential to deliver to enhance new growth for Teller. The application of the new model of exploration activities has identified various numbers of targets (Eklund 2015).

In December 2015, the company had entered into an agreement known as the Indigenous land Use Agreement with the Martu People that are known to be the traditional owners of the land surrounding the Telfar region in the Pilbara, Western Australia. According to the agreement, the Martu group shall benefit about $18 million over the five years that is followed by a revenue based payment from such mining agreement. The agreement provides practical support to bring improvements in the quality of life of the Martu group.  The gold royalty hike of McGowan Government will jeopardize the $18 million program to improve the quality of life of the aboriginal group of people (Gold 2016). About 400 people of the Martu tribe have taken part in the training programs sponsored by the Newcrest Company and this move of the government shall have an adverse impact on the land around the Pilbara region that is owned by the Martu group of people.

The hike in the gold royalty would affect the durability of the mine, which would further affect the community programs of the aboriginals that are associated with the mine. As discussed earlier that as it is that the Native Title issues give rise to disagreement amongst the aboriginals and the company with respect to the grant of accessibility to the lands. Moreover, the different claims made by the different communities to carry out the cultural heritage clearance work as per the separate work program results in additional expenses and wastage of time as well (Mason et al. 2014).

In addition, the company hires staffs particularly to deal with the people of the aboriginal group for obtaining clearances to carry on its exploration activities. Furthermore, the adverse impacts on the mining activities will adversely the aboriginals or the Martu group in the Pilbara region. This is because it would hinder the attempt of the company to manage the community expectations from such exploration programs (Lin, Li and Bu 2015). The governmental policy had put the operation of the company at risk because of the hike in the gold royalty which resulted in production of $8 million only before tax in the 2017 financial year which could have been wiped out by the hike in royalty. Thus, the engagement of the company with the traditional owners was significantly threatened while responding to such governmental policy.

Reference list

Andrews, M., 2017. Boots to stay on ground. Australia's Paydirt, 1(255), p.6.

Basu, P.K., Hicks, J., Krivokapic-Skoko, B. and Sherley, C., 2015. Mining operations and corporate social responsibility: A case study of a large gold mine in regional Australia. The Extractive Industries and Society, 2(3), pp.531-539.

Eklund, E., 2015. Mining in Australia: An historical survey of industry–community relationships. The Extractive Industries and Society, 2(1), pp.177-188.

Gold, B., 2016. Australian gold hitches high price.

https://www.newcrest.com.au/

Lin, P.T., Li, B. and Bu, D., 2015. The relationship between corporate governance and community engagement: Evidence from the Australian mining companies. Resources Policy, 43, pp.28-39.

Mason, C.M., Paxton, G., Parsons, R., Parr, J.M. and Moffat, K., 2014. “For the benefit of Australians”: Exploring national expectations of the mining industry. Resources Policy, 41, pp.1-8.

Mayes, R., McDonald, P. and Pini, B., 2014. ‘Our’community: corporate social responsibility, neoliberalisation, and mining industry community engagement in rural Australia. Environment and Planning A, 46(2), pp.398-413.

Mining Act 1978

Northey, S., Haque, N. and Mudd, G., 2013. Using sustainability reporting to assess the environmental footprint of copper mining. Journal of Cleaner Production, 40, pp.118-128.

Offshore Minerals Act 2003

Roeder, R.W., 2015. Australia’s Resource Management System in the Light of UNGA Resolution 1803. In Permanent Sovereignty over Natural Resources (pp. 79-96). Springer International Publishing.