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Collaboration vs Competition in the Mining Sector – A Perspective From Western Australia Corporate Affairs Leaders

November 1, 2016

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The growth of the mining industry in Australia over the last two decades has firmly positioned the minerals and resources sector at the forefront of Australia’s international engagement and trade, and at the heart of domestic politics.  For the industry, this has created both challenges and opportunities within its mining communities, across the political landscape and with the public overall.

Anna Whitlam People travelled to Perth recently to bring together Western Australia’s Corporate Affairs leaders in the mineral and resources industry. As a key partner to Anna Whitlam people, Fortescue Metals Group co-hosted the event, with CEO Nev Power leading a conversation on the topic of Collaboration Vs Competition in the mining sector. Nev spoke of the need for an overarching industry narrative to government and community stakeholders while competing individually at the same time.

This group of corporate affairs leaders from both private and listed companies in the minerals and resources sector, speak from one of the most unique perspectives that exists within corporate affairs in Australia today.

They talk of operating in what is seen as a geographically secondary location compared to where the domestic public policy decision making epicentre is based in Canberra.  Yet, they operate in a global environment where core business sees them more likely on a plane to Asian capitals than Sydney or Melbourne.

Those who carry the responsibilities of Government and industry relations must balance the interests of the Federal Government with those of the State Government of Western Australia – a task that can present some competing challenges. They know the importance geography plays in this balancing act where mining is often at the heart of a GST or wider tax reform debate, and the front pages of the local masthead in Perth are different to those in Sydney reporting the same issue.

Geography, to Nev Power too, has helped form his view on how the mining industry can collaborate amid competition and ensure its sustainable success. He has drawn from the very powerful ‘Cluster theory,’ developed by Harvard Business School Professor Michael E. Porter, credited as the founder of modern strategy. Porter says that the world’s economic map is dominated by clusters which he defines as ‘(a cluster is) a geographical proximate group of interconnected companies and associated institutions in a particular field, linked by commonalities and externalities.’

There hasn’t been any cluster mapping of Australian industry like Harvard has done in the United States. However, we can certainly assume that by definition, the mining industry of Western Australia could be termed a cluster. Similarly, the manufacturing industry of Victoria, as a further Australian example that faces unique cluster challenges.

The Western Australian mining industry is currently faced with the proposal from the WA National Party Leader Brendan Grylls to raise a Mining Lease Rental charge levied on iron ore producers from 25 cents per tonne to $5 per tonne. Industry is opposed to this proposal both for the sovereign risk aspect as well as the significant impact on international competitiveness. The Federal Government has also rejected the proposal.

Yet, the proposal will potentially attract popularity from the local voter base through its ‘WA first’ sentiment. For the mining industry, and its corporate affairs leaders, this is a local example of a challenge very prevalent around the world as we see the emergence of a populist strain of politics in Australia, the United States and the United Kingdom.

In the mining sector leaders are located in Perth but have a responsibility to share a transparent and honest communication with their entire community. That community is made up of employees around the state on various sites, townspeople in mining areas and the wider public of Western Australia that are invested in the contribution of mining to their state. Many of these stakeholders share in the ‘WA first’ sentiment, while the sovereign risk argument is real to international stakeholders.

An evolution in Corporate Affairs and communication is occurring to innovate how that conversation with the community happens. Now, amid global populism, it must evolve if it is to ‘cut through’ in the current climate.

A significant part of this innovation is collaboration with competitors facing the same ‘common externalities.’ In this evolution, companies within the same sector are seeing the benefits of directing their communications resources into building trust between the community and the sector – rather than building trust solely between their individual company and the public. The outcome empowers sectors, or clusters, to have a greater voice and greater impact with their collaborative narrative.

A key pillar of this new collaborative strategy is to work more closely with industry associations and peak bodies to drive them to maximise effectiveness. Some peak bodies are more utilised by corporate affairs leaders than others, but their importance is increasing as a tool to disseminate a ‘one voice’ sector narrative.

The closeness of the mining and resources sector in Perth, because of its ‘cluster’ characteristics, has already brought this strategy to life. The Chamber of Commerce and Industry Western Australia is the first Chamber in Australia to adopt a ‘brand newsroom’ approach for advocacy and marketing. It features content and discussion from mining and resource sector member companies, creating a powerful channel for the industry.

There is a need for the sector to replicate the cohesive strategy it has implemented so well in Western Australia on the national stage to argue the sector’s case on GST and other tax reform. This will require the industry to advocate its positions effectively in national associations, ensuring that the voice of the WA mining sector is reflected in all relevant policy issues.

Internal communications is also part of the evolution of the mining industry’s conversation with the public.  An effective internal communications practice empowers employees to be brand champions in the community. Nev Power says that Fortescue Metals Group has a strong focus on ‘internal first’ in its communication engagement strategy rather than ‘external first’ which can often be the default outcome for business. He says this emphasis is one he’s proud of as a CEO because he believes that employees are the company’s most effective advocates.

The forum presented a view that intense focus on competition can negatively impact the establishment of broad community support, and this has been seen in some sectors, most notably the financial sector in recent years.  It was strongly recognised that mining companies have a significant impact both socially and economically in the communities they work within and the trust of the stakeholders and the workforce in those towns is the company’s number one asset.

The mining sector is committed to working collaboratively within the framework of pursuing the common goal of building trust with the community.

A strong view resonated among the group that the sector cannot afford to dilute its position of trust in any way by being complacent in how it communicates to staff, communities or external stakeholders.

In an increasingly crowded media marketplace, and an ever more politically disparate government landscape, there is overarching consensus that success will depend on collaboration not competition, trust will have to be won in new ways, and the most successful corporate affairs teams to lead the mining industry through its next decade will be those who can continue to find new ways of communicating effectively to the community – whether it be in Port Hedland, Cloudbreak, Melbourne or London.

The views and opinions in these articles are solely of the authors and do not necessarily reflect those of Teneo. They are offered to stimulate thought and discussion and not as legal, financial, accounting, tax or other professional advice or counsel.

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