Rio Tinto Executive Summary

Corporate governance defined as the system of rules, practices and processes by which a company is directed and controlled. Balancing the interests of the stakeholders is essential involves in a company, which include its shareholders, management, customers, suppliers, financiers, government and community. There are five major elements of corporate governance, which are, board commitment, good board practices, functional and effective control environment, transparent disclosure, and well defined shareholder rights. To prevent corporate scandals, fraud and the criminal liability of the organization, good executed corporate governance is important and must apply and respect in the organization. There have a relationship between corporate governance and internal control, for example, the more in corporate governance, the more of internal control in the organization and the less of fraud occur. One of the tasks and goals of the corporate governance is to ensure there have adequate internal control within organization to protect the organization from any conflicts for the benefits of

Corporate governance in itself has no single definition but common principles which it should follow. For example in 1994 the most agreed term for corporate governance was “the process of supervision and control intended to ensure that the company’s management acts in accordance with the interest of shareholders” (Parkinson, 1994)1. Corporate governance code is not a direct set of rules but a self-regulated framework which businesses choose to follow. This code has continued to change in the past 20 years in accordance with what is happening in the business world. For example the Enron scandal caused reform in corporate governance with the Higgs Report which corrected the issues which were necessary. Although it does not quickly fix problems, it gives a better framework to

3. Has the board established a nomination committee which consists of a majority of independent directors? The board should be structured in such a way that it ensures an appropriate mix of skills and expertise to govern the company and enhance its performance role. The committee should be structured in such a way that a majority of independent directors can enhance the board’s

Rio Tinto needs to improve their efforts and be more focus to prevent this type of

To improve the performance of the board of directors it is recommended that the following be implemented:

Rio Tinto operates around the world in over 40 countries throughout 6 continents and employs a workforce of 60,000 (Annual Report, 2014). The company is a conglomeration of entirely and relatively owned subsidiaries, partnerships, joint ventures and associated companies (Annual report, 2014). Rio Tinto focusses on 6 core areas of interest which are Iron Ore, Aluminium, Energy, Copper, Diamonds and Minerals together with provision groups of exploration, technology and innovation, people and organisation and legal and external affairs (Annual Report, 2014).

Rio Tinto corporate strategy is geared towards always getting the maximum profit to its investors. They achieve this by always attempting to operate in a sustainable and responsible fashion. The Group chooses to invest in opportunities that are large scale, long life and gain maximum profit. As a company that creates wealth by extracting minerals and metals from the earth Rio Tinto must also accept some of the responsibility that comes as a result of mining.

In 1986 Rio Tinto’s collaboration in Cornwall’s tin mining in UK comes to an end due to the declining demand and the metal prices, and on the next year after been conducted a strategic review Rio Tinto decides to concentrate only on mining and to sell the non mining interests that the company has with them.

The Company fosters a culture in which high standards of ethical behaviour, individual accountability and transparent disclosure are ingrained in all its business dealings and shared by its board of directors, management and

Being the second largest supplier of Iron Ore(Treadgold, 2014), Rio Tinto understand the importance of upholding the social obligations in which they must meet to keep their stakeholders and the community happy.

Rio Tinto is one the leading mining groups in the world whose main focus is to find, mine and process the Earth’s mineral resources for different benefits both domestic and international. It is in its true essence a mining and metals’ company. It has its operations in more than 40 countries expanding across 6 continents and has an employee base of around 66000 in 2014. (RIO TINTO, 2014) Its strongest representation is in the North American and Australian territory though it also has its bases spread over in Asia, Europe, South America and Africa. It has its main headquarters in the United Kingdom and the Rio Tinto group is comprised of two companies: Rio Tinto plc − a London and New York Stock Exchange listed company − and Rio Tinto Limited, which is listed on the Australian Securities Exchange. Rio Tinto claims that because of their global presence and with their expertise in technology and marketing it enables them to supply a quality and right product at the right time. (RIO TINTO, 2014)

Group Strategy:“Invest in and operate large, long-term, expandable, low-cost mines and businesses, driven not by choice of commodity or region but rather by the quality of each opportunity in the most attractive industry sectors”(Rio Tinto annual report, 2012)

The employees are also exposed to build and maintain strong partnerships via value chain. This will aid the workforce to maximize value from assets and to explore new opportunity. This is listed down under the strategy focus of 4P’s (portfolio, performance, people and partners). (Performance with purpose, 2017). The appointment of two executives on the management team had boosted the performance of employees and partnership capabilities. This had been done under the leadership of Chief Executive J-S Jacques. Moreover, cost reduction and also improvisation on effectiveness done by Hugo Bague, Rio Tinto Executive Committee member so that company can increase the capacity on financial

Corporate governance can be defined as the process, customs, laws by which the affairs of a company are managed and controlled it also

Corporate Governance refers to the way a corporation is governed. It is the technique by which companies are directed and managed. It means carrying the business as per the stakeholders’ desires. It is actually conducted by the board of Directors and the concerned committees for the company’s stakeholder’s benefit. It is all about balancing individual and societal goals, as well as, economic and social goals. Corporate Governance is the interaction between various participants (shareholders, board of directors, and company’s management) in shaping corporation’s performance and the way it is proceeding towards. The relationship between the owners and the managers in an organization must be healthy and there should be no conflict between the