BHP Billiton and Mozal (a)

2 Pages Posted: 10 Jun 2009

See all articles by Patricia H. Werhane

Patricia H. Werhane

University of Virginia - Darden School of Business

Jenny Mead

University of Virginia - Darden School of Business

Laura P. Hartman

DePaul University - College of Commerce

Abstract

BHP Billiton, the world's largest diversified resource company at the start of the 21st century, began a feasibility study in 1995 for building an aluminum smelter project in the Maputo province in southern Mozambique—one of the world's poorest countries that was hampered by fragile legal, financial, and health, safety, environmental, and community institutional structures and capacity. BHP Billiton was committed to sustainable development and believed that social and environmental performance were critical factors in business success. BHP Billiton believed firmly that sustainable development involved engaging and partnering with its community stakeholders to address the challenges associated with establishing resource projects and to share the benefits of success. Was this possible in Mozambique, given the nation's social and political challenges, the prevalence of malaria and HIV, and the weak infrastructure? Acknowledging that stakeholders had a role to play in achieving a successful and sustainable project, BHP Billiton adopted this slogan for the project: “Together we make a difference.” The company called the project “Mozal.” But would or could they be successful? And at what cost?

Excerpt

UVA-E-0316

BHP BILLITON AND MOZAL (A)

BHP Billiton, the world's largest diversified resource company at the start of the 21st century, did business in the fields of aluminum, energy coal and metallurgical coal, copper, manganese, iron ore, uranium, nickel, silver and titanium minerals, with interests in oil, gas, liquefied natural gas, and diamonds. In 1995, it began a feasibility study for building an aluminum smelter project in the Maputo province in southern Mozambique.

Mozambique was one of the world's poorest countries, emerging from 17 years of civil war in 1994 and making the difficult transition to a market-oriented economy. The country was hampered by fragile legal, financial, and health, safety, environmental, and community HSEC institutional structures and capacity. A limited number of people had the training and skills required for the project's construction and operational phases. Malaria was widespread and debilitating to the communities from which the plant would draw most of its work force; the disease was also a threat to attracting expatriate managers and skilled workers. HIV/AIDS was prevalent in the area, and infection rates were exacerbated by the influx of construction workers from neighboring South Africa.

Public services were bureaucratic, poorly equipped, and had limited capacity. Functions such as customs, immigration, public works, public health, port operations, and police would face challenges in coping with the magnitude of the project. Infrastructure such as roads, water supply, sewerage, and waste disposal was poorly developed and poorly maintained. Access to appropriate, affordable housing was limited. Most suitable development sites were occupied by concentrations of medium to large informally structured communities. High prices and poor quality of goods and services plagued local commerce and industry. In short, the area was limited in its capacity to satisfy the needs of a major project such as the proposed smelter.

BHP Billiton

. . .

Keywords: business ethics, stakeholder management, environmental, corporate social responsibility, diversity, Africa, best practices, foreign, global investment, community development

Suggested Citation

Werhane, Patricia H. and Mead, Jenny and Hartman, Laura Pincus, BHP Billiton and Mozal (a). Darden Case No. UVA-E-0316, Available at SSRN: https://ssrn.com/abstract=1417186 or http://dx.doi.org/10.2139/ssrn.1417186

Patricia H. Werhane (Contact Author)

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States
434-924-4840 (Phone)

HOME PAGE: http://www.darden.virginia.edu/faculty/werhane.htm

Jenny Mead

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States

Laura Pincus Hartman

DePaul University - College of Commerce ( email )

Chicago, IL 60604
United States

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