The its geographic instability and rainfall levels
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.
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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 was an incomprehensible amount of toxic mud which was building up on the river banks and which continued to pile up over the years. This environmental disaster significantly impacted the livelihood and lives of nearby villagers.
There was a responsibility by not only BHP but also by the PNG government in taking action to address the environmental hazards. An example of a situation with similar responsibilities would be of the Stava Tailings Dam failure in Italy where there were 2 dams that were not used and neither the public administration nor the mining company took responsibility in the years the dams were not used.In 1994 there was a 4 billion dollar case against BHP. The culture of BHP was forced to become publically available as external pressure groups such as Community Aid Abroad forced the company to take liability for the environmental situation that it had created. There was lobbying to stop further mining until these issues had been addressed. The response from the PNG government was to “handle this in our own country under our own laws”? BHP as an organisation had contributed too many positive initiatives that would funnel back into the region which included jobs, infrastructure, exports and a large trust fund.
This in light can be seen in the Mackay coal mining boom in recent times contributing to many socio and regional benefits for the community. In an effort to portray a strong culture within the company BHP went on to saying that it is “committed to carrying out all aspects of its operations in a responsible manner and adopts the same high standards in all countries and communities in which it operates”. ? There was a 400 million out of court settlement which occurred which was segmented for all aspects of compensation.
This also included 10% of the company going to the PNG government. ? Cameron Forbes and Matthew Stevens, “BHP considers PNG mining solutions”, The Australian, 24 May 1994. ? Ibid. p 1 From this rises a larger issue in regards to managerial ethics. The major issue that arises here in regards to this is the decisions which drive profitability at the expense of the environment. Has the standards of conduct and moral judgements used in the behaviour of BHP aligned with environmental standards and global consistency?How do these judgments in turn affect not only the local environment but also the socio cultural environments? To focus on these ethical issues it is important to look at the regulations that govern corporate behaviours, the nature of the relationship that BHP as an organisation has with its social environment and the connection that economic growth has at the cost of ethics.
Firstly we must look at mining as a whole in which other major mining companies have followed a global standard of practices in protecting the environment.Governments play a key role in setting these environmental standards for organisations to meet them. There are a series of guidelines “that are targeted at managers to provide the practical techniques and guidance they need to manage the environmental risks and impacts of their own operations” ? In Australia this interaction between an organisation and its environment is summed up (World Commission on Environment and Development, 1987), i. e. “development that meets the needs of the present without compromising the ability of future generations to meet their own needs” ?It is important to address that in the aspiration of sustainable development as BHP has done in creating jobs, schools infrastructure and healthcare; they failed to address a key ethical factor. This being the importance of the natural environment and how this directly influences and contributes to future social and economic progression of a region. The other ethical issue to consider is the direct effect that this environmental issue has had on the livelihood of the nearby villagers.
It is evident that no ethical decision was made in regards to the compounding effects that direct environmental influence would have on the way of life for the people living in and around the region. The key element to look at here is BHP’s intention to ethically evaluate the history and culture of the people in that region and how they as an organisation will be impacting on this way of life. When directly looking at the particular stakeholders, it is difficult to maintain a singular view of ethics that was taken by BHP.It is evident that certain stakeholders and their needs were not met, rather a view that the greater number would benefit from the injection into the PNG economy.
It is evident through the legal proceedings that followed that neither and integrated social view or any individual and impartial ethical stance was taken. The view to provide the largest benefits to the greater population seemed to be the best way to steer clear of the environmental impact that followed. Overview of best practice environmental management in mining p3 This view to focus on the majority benefit was summed up in many BHP press releases where management focused that the aspirations of a small number was not really the in the best interest of PNG in a social or economic perspective. A key ethical issue that arises in this case is how much influence an organisation should have over government policies and regulations which will directly influence profits and organisational progress.There is an overbearingly obvious ethical issue in regards to the influential ties that BHP has had with the PNG government.
As mentioned before governments play a significant role in setting ethical standards of practice which meet the needs of current and future diverse environments. All the way through to the filing of class actions, which needed legislative approval by the PNG government saw lawyers from BHP involved. In essence ethical conduct is in question with BHP meeting the needs of its stakeholders in a developing country but in the same token compromising on the core element in the ecision making process of the government.
The agenda here saw profits increase the economic standing of PNG at the expense of environmental standards directly affecting its communities in the nearby region. From this arises the ethical obligation of addressing the concerns of local communities. The core value of justice is essential to address as these communities were directly affected from the lack of environmental regard due to the high expense or outlay to adhere to social responsibility.Because there has been no real structure or standards of practice in place it has meant that these ethical decisions are lacking any accountability in regards to senior management. A key managerial ethical dilemma is at stake when, the costs are too high to continue with the building of the dam which in turn leads to not addressing the local community on environmental and social hazards to livelihood. This fundamental moral dilemma is a decision which in turn relies on BHP management to look beyond their ethical code of conduct in the pursuit of meeting there organisational goals.