Established in 1873, Rio Tinto is a growing multinational in the metals and mining industry with its influence spanning well over 100 years (Rio Tinto, 2010). As a multinational, it is comprised of a British corporation, Rio Tinto Plc and an Australian company, Rio Tinto Limited (Beisinghoff, 2009). Its objective is to discover, excavate and refine the mineral resources for the maximisation shareholder profit (Rio Tinto, 2014). It was originally founded through the investment and purchase from the Spanish government of Rio Tinto mines in Spain which had been in operation from 720BC. From the initial discovery or copper ore in Spain, through the Roman era to date (Salkleid, 2012), a plethora of mergers and acquisitions have seen the company grow into the global giant it is today. By 2016 the organisation had established operations in nine countries around the world, however, the majority of its activities are concentrated in Australia and Canada (Rio Tinto, 2017).
As previously mentioned Rio Tinto has established itself as a giant in the metals and mining industry; it has a diverse portfolio majoring in iron, copper, aluminium, gold, diamond, coal and uranium among others (Rio Tinto, 2017). However, its major product groups are Iron Ore, Aluminium, Copper & Diamonds and Energy & Minerals. With regards to iron ore, Rio Tinto prides itself as the second-largest producer of the metal in the world with most of its production arising in Australia (Rio Tinto, 2014). It has also been recognised as one of the leading producers in diamonds; being the largest producer of precious stones in natural colour. In addition to this, Rio Tinto Alcan, operating in Australia since the 1950s, is one of the largest producers of bauxite, aluminium and alumina in the world. The company’s energy group produces coal and uranium which it exports to customers across the globe. The company relies on Rio Tinto Marine services, its ocean freight service, to transport its products (Rio Tinto, 2014).
By 2016 the Rio Tinto Group had a record of well over 50,000 staff the world over (Statista, 2016); that is spread out across 35 countries. Of these, 28,000 were situated in Australasia, 13,000 in North America, 6000 in Africa and roughly 2000 each in Europe, Central and South America (Rio Tinto, 2016). In Australia specifically, there was an average of 17,000 employees with 1467 of these being full-time indigenous Australian workers. The company strives to establish itself as a leading employer and is committed to attaining a balanced, fair and diverse workforce which is motivated to achieving its end goals (Rio Tinto, 2016).
Rio Tinto’s global headquarters are set up in London, UK where it is known and listed as Rio Tinto Plc on the London Stock Exchange (Rio Tinto, 2017). In Australia the head office is located in Melbourne; the company, however, has other offices in Perth and Brisbane. With Australia as its main revenue generator, there have been calls by various investors for the company to move its headquarters from London to Australia (White, 2013).
In Australia, multinational companies are subject to the observation of various regulatory frameworks; laws in competition, consumer protection, taxation, energy and environment, employment as well as privacy should be considered (Austrade, 2017). The following are but a few of the domestic laws affecting Rio Tinto’s operations in Australia. The Competition and Consumer Act 2010 (Cth) and the Australian Consumer Law 2010, guide businesses and individuals in fair trade laws, contractual terms and conditions, consumer rights and safety among others. The Australian Competition and Consumer Commission (ACCC) is tasked with administering and enforcing this framework. In 2010, Rio Tinto found itself before the Australian Competition Tribunal in a matter regarding the use of one of its railway lines as a competitor, Fortescue Metals Group Ltd wanted the lines declared under access regime so it could use them. In its arguments, the company argues that this declaration would promote competition in the Australian iron ore market, most specifically in Pilbara where it was located. The court found that, as Rio Tinto did not operate on scheduled timelines but rather ran their trains when ready and therefore required some flexibility in the use of these lines (In the Matter of Fortescue Metals Group Limited, 2010). This case serves to illustrate how Consumer and Competition Laws affect Rio Tinto in Australia.
Tax regulation laws in Australian also affect the operations of the multination in Australia. Like any other Australian company, the multinational is obligated to pay corporate tax at a 30 percent rate on its assessable income (PWC, 2014). Recently the company has been the subject of media attention over task arrears amounting to $447 million after assessment by the Australian Tax Office for the calendar years 2010 to 2013 (McCarthy, 2017). The company aims to challenge the assessment by the ATO stating that the amendments were not attempts at tax avoidance but rather that the issue is with transfer pricing arising from various transactions with its other entities around the globe. Australia adopts the arm’s length principle in its transfer pricing legislation so as to curb tax avoidance by multinationals seeking to transfer their profits to jurisdictions that enjoy lower tax rates. As such the ATO is given the mandate of reviewing dealings by corporations with international affiliates whose transactions may raise pricing issues (ATO, 2016).
Multinational corporations are also affected by domestic laws on energy and environment. The Australian Constitution empowers the Commonwealth with the discretion in regulation these matters. In this regard, the National Greenhouse and Energy Reporting Act 2007 makes it mandatory to report greenhouse emissions and energy produced and consumed by businesses that affect these areas. Additionally, large energy users are required to make reports under the Energy Efficiency Opportunities Act 2006. As an energy user and producer, Rio Tinto is bound by the provisions of this Acts while conducting operations in Australia. Additionally, Australian laws, in line with the global initiative towards conservation, require that companies are conscious and responsible of their environmental impact. Such laws have had a massive effect on the operations of Rio Tinto in Australia. In 2002, a case was brought before a US court on the damaging environmental impact of the company’s operations in Papua New Guinea. The operations in the Bougainville region saw huge tonnes of toxic waste dumped into a major water resource killing aquatic life and drastically endangering the lives of residents to date (Sarei v Rio Tinto PlC, 2002). This case has since influenced the operations of the organisation in Australia as it strives to recognise, appreciate and comply with the domestic laws of energy and environmental conservation.
The company’s operations in Australia are also influenced by privacy laws which regulate how companies collect and handle the personal information of individuals. The Privacy Act 1988 outlines various principles which set out the rights and obligations of businesses and individuals in handling sensitive information. The Office of the Australian Information Commissioner (OAIC) is tasked with ensuring the privacy regulatory frameworks are enforced. Recently, it was revealed that Rio Tinto was looking to incorporate smart infrastructure in its operations. In these revelations, it was mentioned that the company might incorporate drones to monitor workers in the mines. This has caused an uproar among many as such a move opens up loopholes for breach of the aforementioned privacy laws (Opray, 2016). Additionally, guided by the principles incorporated in these privacy laws, Rio Tinto has developed a privacy policy to reflect the same (Rio Tinto, 2017).
The UN Declaration of Human Rights 1948 is one of the key treaties affecting the operations of Rio Tinto in Australia. This Declaration, as well as the International Labour Organisation (ILO) Conventions, greatly influence labour laws in Australia and as such the operations of Rio Tinto as a multinational on the country. Guided by the UN Declaration of Human Rights, which has been incorporated into Australian domestic law by various statutes; only treaties incorporated by legislature have enforceability (Samootin v Shea, 2012), the company cannot subject any of its workers to discrimination on grounds of race, sex, disability and age. The Australian Human Rights Commission ensures these provisions are upheld. With this in mind, the company has incorporated strategies to ensure diversity and gender equality in its organisation (WGEA, 2013). Additionally, in its policies, the company has expressly recognised and supported the provisions of the UN Declaration of Human Rights and undertaken to ensure it avoids any harm to these rights. In 2015, a labour union claimed that Rio Tinto had made attempts to change Australian labour law and that these attempts amounted to breach of ILO conventions with regard to the right of workers to organise, freedom of association as well as collective bargaining (Gilio-Whitaker, 2015).
Australia has entered into various tax treaties with other countries so as to ease cooperation among tax authorities in various jurisdictions. Among these is the Australia –Singapore double tax treaty; a bilateral treaty entered into by both countries to avoided double taxation among tax residents in both countries. Rio Tinto has been using a trading hub in Singapore for the purchase and sale of some commodities; iron ore, which is included among these, is its main source of revenue. The ATO saw this as an attempt at tax avoidance and issued the organisation with a $360 million tax bill. The company, however, wishes to rely on the double taxation treaty between Singapore and Australia to challenge the assessment and defend its operations (Hume, 2017).
The United Nations Convention for the International Sale of Goods (CISG) 1980 has been adopted and incorporated into Australian law (Jacobs & Cutbush-Sabine, 2002). This convention guides international contracts for sale of goods by outlining the rights and obligations of each party. The Trade Practices Act 1974 (Cth) incorporates the obligations of these laws into Australian domestic law so as to give them force. Where Rio Tinto enters into contracts for the supply of minerals with countries, which like Australia is a contracting state ten it will be bound by the provisions of this treaty and will have to exercise its obligation to the contract in the prescribed manner. In addition to this, the International Convention for the Unification of Certain Rules of Law Relating to Bills of Lading 1924 also applies to Rio Tinto. This treaty governs the transportation of goods by ships over sea or oceans. Rio Tinto has highlighted that it has its own marine service to ensure smooth transportation of some of its product by sea; as such in these scenarios, the company y will be guided by this treaty.
Additionally, the General Agreement on Tariffs and Trade 1994 sets out rules to guide member states in the negotiations on customs tariffs among other hindrances to international trade. This law has given rise to various Free Trade Area Agreements on which Rio Tinto relies on for its operations. Recently, Australia entered into a free trade agreement with China, ChAFTA, which it believed would increase business opportunities for Australia and boost its economic growth (Austrade, 2016). The agreement saw zero-tariffs imposed on exports of iron ore, gold and other natural resources a move that would greatly benefit Rio Tinto’s industry. Rio Tinto already had successful relations with China spanning close so half a century; the trade agreement would see these ties strengthened and trade increased (Xinhua, 2017). As such, the General Agreement on Tariffs and Trade influence the operations of Rio Tinto and other multinational organisations through the adoption of Free Trade Agreements (FTA).
It is important to note however that in Australia, these treaties are only effective in so far as courts or legislature recognises them to be. This is because Australia has adopted a dualist approach to the interpretation and adoption of treaties (Prest & Anleu, 2004). In a dualist system, international law and domestic law are two separate concepts; characteristically distinct and independent of each other (Crawford, 2012).
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