Discuss about the Foundation of Accounting for Economics & Management Strategy.
The BHP Billiton dam collapse was not only an incident but a disaster that could really have been really prevented by the management if the company could have followed more responsible practices. The town of Bento Rodrigues was hit hard with over 600 by people losing their homes and at least 11 people were killed a till date 15 people are still missing. The red sludge that was muddy extended to over 440 km downstream across two states and affected various municipalities and left the thousands of people with interrupted water supply that polluted and left crucial implications for agriculture and health.
The major cause held responsible for the bursting of the dam is still unknown but it is viewed that that state mining regulations were insufficient and the mine owner’s including Samarco, Vale and BHP have miserably failed to stand according to the diligence responsibilities. According to the Szoke (2018), there is no as such accident but the mistake was discovered in the negligence and operational activities while monitoring. Australian mining companies must improve its due diligence as well as the oversight across all its operational activities. BHP Billiton main focus is to develop long-term shareholder value through acquisition, discovery as well as marketing and development of all the natural resources. The main strategy is to operate and own large, low-cost, expandable, long-life and expandable upstream assets are diversified through the commodity and market.
The chief executive officer Andrew Mackenzie has responsibility to support the local authorities and Samarco in the response effort. Major responsibility must be focused on the future and immediate needs for thousands of people that faces ongoing environmental devastation and immense uncertainty. The disaster made in the country highlights mining industry is not adequate to provide safety and security while conducting the business all around the world. The disaster was entirely man-made and could have been easily prevented with the help of inclusive monitoring and oversight. The main approach for all such activities is risk mitigation and the operational activities should meet the expectations of the people. The BHP Billiton’s assets include joint venture that has been owned as joint operation that is included in the substantiality report.
According to the reports, the CEO of the organization, Andrew Mackenzie, the organization is committed to work efficiently with Samarco; the Brazilian authorities are therefore committed to do the correct thing both in the recent times and also in the long-run. The organization is committed to plan and effectively deliver the social and economic development outcomes in all the countries in which they operates. During the financial year 2015-16, BHP Billiton has implemented strict measures to decrease the environmental footprint for all the operational activities (Szoke, 2018). These measures would help the communities and its people to be safe and healthy. This creates both environmental and social values in the long-run.
Samar co is a joint-venture that is non-operated business owned by the BHP Billiton Brazil and Vale. Both the organization has equal amount of shareholding. The operational activity mainly comprises of concentration and processing facilities and iron-ore mine. on 5th of November, 2015, one of the most important tailings dams of Samarco its Fundao dam failed miserably. The Samarco dam failure thereby resulted in releasing huge amount of mine tailings comprising of water and mine waste that were mud like in form. This therefore resulted in flooding the overall regions of Paracatau, Gesteria and Bento Rodrigues. In addition to this Rio Doce and several others downstream communities were also adversely affected.
This accident took the toll of 19 people overall, which included fourteen workers who were working on the dam and five community members. Moreover, the combined infrastructure of the dam downstream was hampered and communities were affected. Due to the tailing spill the natural environment of the region especially, Rio Doce were extensively damaged. After the failure of the dam more than 700 people were homeless. More than seven bridges were destroyed, the accessibility to the roads was damaged and around 100 km were severely impacted. More than 2000 hectares of agricultural land and vegetation were severely affected as tones of tailing were deposited along river banks and in the river beds.
Due to the depositing of tailing materials in the riverbeds various aquatic fauna were severely affected. The tailings material was earlier known to be very non-toxic in nature but after the dam failure huge amount of fishes were killed due to deoxygenated water and highly turbid sediments deposits. The sediments also led a negative impact on the town and communities alongside the river for short periods and the downstream of Candonga dam. The businesses of the region suffered severely and the sand miners besides the fisherman suffered more prolonged impacts.
Just after the dam failure of Samarco, the BHP Biliton Brasil extended their assistance and support as a respond. Their major concern was the welfare related to the Samarco workforce as well as the affected communities. The company initiated a new global inclusion and diversity council that made the organization a major priority to obtain an inclusive and diverse workforce. The workforce is now more diverse and productive in nature and staff turnover is very low and the employee engagement is higher. Samarco facilitated the affected communities with water, food aid and temporary accommodation. The BHP Biliton Brasil dispatched experts from all the fields like disaster relief, geotechnical and humanitarian response experts. Operations ongoing at the mines were immediately suspended and this also included various other staff support.
As per the reports, the CEO of BHP Billiton, Andrew Mackenzie immediately after the dam failure conducted a meeting with the Samarco, Vale, community members and local authorizes. The main motive behind this was to get a clear understanding for the reasons behind the dam failure and also know the scale of assistance needed by the local people. The members from Forum on Corporate Responsibility (FCR) of BHP Billiton include respectable civil society leaders. In 2016, the members visited the Mariana area to know the dam failure impacts (Szoke, 2018).
In the recent times, BHP Billiton has established its permanent existence in the Belo Horizonte to assist Samarco’s response and remediation work over a long time. Currently, a team of over senior management and 35 technical experts is involved in the ongoing effort on a full time basis. Thousands of employees were deployed from the area due to rebuilding, intense clean-up, restoration and rebuilding effort for the stabilization and monitoring of dam. After the unfortunate tragedy, sustainable measures were implemented to restore the lives of the people through extensive engagement and range of actions to maintain and reconstruct the impacted communities (Da Costa, 2017).
In the year 2016, a framework agreement was signed by Samarco, BHP Billiton Brasil, Vale and the Brazilian Authorities for restoration. The agreement was formed so that a framework should be provided for the inclusive set of compensation actions, programs, and remediation. The program includes around 22 socio economic and 17 environmental measures to compensate and restore the overall environment and communities that were affected because of the dam failure (Bhp.com., 2018). The framework agreement mandates the involvement of community in the programs development through formal Advisory Committee that includes direct representations from a social dialogue programs and the impacted communities. The framework also helped in establishing an ombudsman process that is at present designed by the inputs from affected communities and international experts.
Effective progress is made along the various socio-economic priority aspects that include community resettlement, compensation, community health and education. The community members are empowered so that they can make informed decisions that include the resettlement process. This resettlement plan includes acquisition and identification of lands besides careful planning and designing the urban plan. In addition to this, meetings with the affected community members are held weekly. Education services in the area were also drastically affected due to the dam failure and all the schools in both the regions of Paracatu and Bento Rodrigues were completed destroyed. Therefore restoration of the educational services was given the major priority after the dam failure. After two weeks of the incident, everything was back to normal in the Mariana city. Psycho and social support for the students that were affected by the tragedy is still ongoing and the resettlement program is still being implemented.
The community members that earn their livelihoods from the river, such as fisherman suffered huge financial impact. Such community people after the dam failure were recognized and provided with an emergency financial support. The Brazilian was providing 20 % more than there minimum wage rate trough debit card system. Till date, more than 7000 cards have been issued to the people. Moreover, an extensive negotiated program that includes adequate compensation for the individuals will commence from the financial year 2017. This program is made to ensure that all the people, who sustained loss can obtain equitable and fair compensation. In addition to this, health services in the impacted area have also been provided and both psycho and social support to the members are offered.
Various environmental remedial actions were implemented for effective management and sustainable land use. This also included management of tailings, recovery of water quality, biodiversity conservation. Major focus were given on recovery of water quality, water security, raising awareness as well as environmental and preservation safety. The dams and materials present within the river system were fully subsidized. Measures such as building of sediments dams were made to decrease the potential related to tailing of the sediments downstream. Tailing deposits are re-contoured and temporary vegetation cover are established with a rock armoring segments for the main river channel so that erosion can be significantly reduced (Loh, 2005).
BHP Billiton also initiated a widespread review of the non operated mineral joint ventures and significant dams. The main purpose of reviewing the dam was to assure the reliability of its similar other dam structure. The organization is committed to enhance the risk and safety management of the operational activities. The BHP Billiton furthermore created a centralized management function for the dam that brings along more additional expertise. The latest technology installed by the management would also help in assessing the technology options so that dam management can be enhanced across the portfolio.
The sustainability framework of the organization includes sustainable development, risk management and useful guides for its involvement in the host countries. BHP Billiton shares its local cultures, environment as well as economic development. BHP Billiton also holds major interests in joint ventures and organization in which it does not operates. Through technical exchanges and formal governance structures, the organization actively engaged with its joint ventures partners. The organization periodically evaluates the compliance with the operating and management standards procedures and controls that includes their security standards. The health, safety, environment and community (HSEC) is monitored by the Sustainability Committee. The performances related to HSEC are measured through balance scorecard.
Conclusion
BHP Billiton major priority for their sustainability framework is evaluated by managing and identifying the material risks. In the financial year 2016, the priorities related to the material safety issues were reviewed and properly assessed. The safety of the people and the communities in which it operates always comes first. More focused is given on the improving the managerial approach for occupational safety facilities and reaching its mission of zero fatalities at their operated assets annually.
With the help of Climate Change Portfolio Analysis, a crucial disclosure for addressing the climate changes and its impact in the operational activities has been ascertained. This helps in enhancing in transparency all the across the business. In the coming years, the organizations advance in the crucial area and they must focus on strategic sustainability goals. This includes Social Investment framework, indigenous people strategy and the commitment to safety. The success of the organization is obtained because the partners, people and host communities. The BHP Billiton has also designed effective standards to manage and reduce the material risks.
References
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Loh, B. (2005). Disaster Risk Management in Southeast Asia: A Developmental Approach. Asean Economic Bulletin, 22(2), 229-239. https://dx.doi.org/10.1355/ae22-2f
Szoke, H. (2018). Brazil mine disaster exposes BHP’s failures. The Age. Retrieved 27 April 2018, from https://www.theage.com.au/opinion/brazilian-dam-disaster-shows-bhp-falls-short-of-global-expectations-20151119-gl2i8c.html
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