Bhp External and Internal Environments

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The BHP OK Tedi Mine in Papua New Guinea (PNG) has raised many environmental, ethical and social responsibility issues regarding organisational management on many fronts. There have been many approaches in an attempt to confront and address the varying factors which encompass both past and present business practices. The mine was an open pit gold and copper mine located in the western province of PNG the operation of which resulted in collateral damage, affecting up to 50,000 people in the nearby villages. During the 1970’s, early drilling began and was overseen by Kenneth Copper Corporation. BHP then won the lease in 1984. The initial stages of the mining saw utilisation of the cyanide extraction procedure, however, a large copper region was then found seeing the partnership of BHP with both a Canadian company and the PNG government to form OK Tedi Mining Limited. Many environmental issues from environmental uncertainties and complexities have arisen in relation to the operation of the mine, which has seen BHP, as the major stakeholder; make vital organisational and managerial decisions. A number of key components needed to be addressed not only at the earliest stage of operations, but also components that needed to be addressed as the dynamic nature of these revealed itself. The extent of knowledge of the environmental complexity by BHP management was clearly limited. It is evident that the decisions were made on a complex/stable analysis, while the changing environmental conditions failed to be taken into account. Most significantly, the actual environment itself, its geographic instability and rainfall levels were overlooked in the decision-making process. High rainfall levels result in a larger than usual runoff into the OK Tedi River. An environmental impact statement was compiled which would bring about the organisational decision to construct a dam in the early 80s, preventing the flow of millions of tons of toxic waste and tailings into the river system, and costing the company 70 million dollars. Another major component when beginning the mining process was a need to overcome the native titles which were held by traditional land owners. In regards to this socio cultural environment the Organisational decision to partner with the PNG government saw the authority of the government to use land resources combine with negotiated infrastructure for title owners. The exchange of money, schools, and health services was inclusive in progressing mining activities. During the course of the building process of the dam there was an earthquake which resulted in the half completed dam being destroyed. The BHP decision was to go ahead with mining without the reconstruction of the dam as the cost of this environmental management would be too expensive. A clear example of malfeasance here was the decision to progress with the mining process and allow the flow of toxic chemicals and tailings to flow into the OK Tedi River. The result was catastrophic environmental effects which resulted in widespread damage to the environment and traditional land owners who resided downstream. The premise of the agreement and why the PNG government gave permission for the mining to begin would be on the basis that BHP would continue to come to some resolution for a dam and to protect the environment.

The government established strict guidelines limiting the levels of waste production. There was a team assigned by BHP which would report to the PNG government to then be analysed by independent scientists. This was to directly combat the external political and legal conditions that BHP had to overcome in order to progress with mining. The result despite all these measures was still disastrous and the environmental situation that followed was summed up by BHP as “not compatible with our environmental values”. Millions of tons of toxic waste and tailings flowed downstream causing the death of fish, fish which was eaten by nearby villagers. There...
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