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  • RTIO HBR Case - Whiteboard

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    Sagar Neel De
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    The document discusses the challenges faced by Rio Tinto Iron Ore (RTIO) in the global mining industry. Key challenges include increasing competition from global competitors like CVRD, disruptions in port operations, and mines operating below capacity. RTIO is also challenged by the dominance and fragmentation of the Chinese market, which accounts for 40% of global iron ore demand but has immature inland logistics. Other issues discussed include a shortage of skilled labor, using technology like HIsmelt to provide strategic advantages, and determining the best business model and supply chain approach for China. A number of strategies are proposed to address these challenges, including increasing production, enhancing supply chain capabilities, adding value to products, improving efficiency, and expanding operations

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    The document discusses the challenges faced by Rio Tinto Iron Ore (RTIO) in the global mining industry. Key challenges include increasing competition from global competitors like CVRD, disruptions in port operations, and mines operating below capacity. RTIO is also challenged by the dominance and fragmentation of the Chinese market, which accounts for 40% of global iron ore demand but has immature inland logistics. Other issues discussed include a shortage of skilled labor, using technology like HIsmelt to provide strategic advantages, and determining the best business model and supply chain approach for China. A number of strategies are proposed to address these challenges, including increasing production, enhancing supply chain capabilities, adding value to products, improving efficiency, and expanding operations

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    Attribution Non-Commercial (BY-NC)
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    117 Ansichten6 Seiten

    RTIO HBR Case - Whiteboard

    Hochgeladen von

    Sagar Neel De
    The document discusses the challenges faced by Rio Tinto Iron Ore (RTIO) in the global mining industry. Key challenges include increasing competition from global competitors like CVRD, disruptions in port operations, and mines operating below capacity. RTIO is also challenged by the dominance and fragmentation of the Chinese market, which accounts for 40% of global iron ore demand but has immature inland logistics. Other issues discussed include a shortage of skilled labor, using technology like HIsmelt to provide strategic advantages, and determining the best business model and supply chain approach for China. A number of strategies are proposed to address these challenges, including increasing production, enhancing supply chain capabilities, adding value to products, improving efficiency, and expanding operations

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Als PPTX, PDF, TXT herunterladen oder online auf Scribd lesen
    Markieren Sie unangemessene Inhalte
    von 6

    Rio Tinto Iron Ore - Challenges of Globalization in the Mining Industry

    Case Analysis
    Submitted by Carlos and Sagar

    The Challenge
    Competition - CVRD was positioning globally, and bridging the gap (in China)

    Irregularities and disruptions in port operations


    Mines operated in 60-70% capacity

    Low-scale indirect challenges

    The Chinese Challenge

    RTIO produces only 133 MM MT of ore, and China alone is expected to import 320 MM MT of ore in 2006. High market consolidation leaves very less opportunity for organic growth Exploration is resource consuming and comes with high risk

    Organic Growth

    Human Resource

    Shortage of skilled labor Culture transferability across geographies Impact: Increasing processing cost (replicating processes in Australia to Brazil, India and Africa)

    Technology

    How to use HIsmelt to its strategic advantage?

    External Environment: Opportunity, Threats, Competition Internal Organization: Resources, Capabilities, Core Competencies, Competitive Advantage

    The Chinese Challenge


    Is Chinese market sustainability for long term investment? Dominating global demand 40% consumption, trending towards 50% consumption Fragmented mills (owner and location)

    Sustainability

    How to address demand?

    Which business model to adopt - FOB or CFR Suppliers demand deliveries to mills Immature Inland logistics

    Supply Chain Challenges

    Operate in Spot Market?

    Spot prices skyrocketed Small-scale ore companies making advantage Impact on profitability: 45% higher than benchmark price

    External Environment: Opportunity, Threats, Competition Internal Organization: Resources, Capabilities, Core Competencies, Competitive Advantage

    Whats the big picture


    Chinese manufacturing industry is fueling the unprecedented demand in China .. And fragmented manufacturing is supporting the growth of fragmented iron and steel manufacturers.

    RTIO Whiteboard
    Current Fields

    Increase Ore Production

    Enhance Supply Chain and Trading Capability

    Add Value to Commodity

    Improve Efficiency

    Scale Marine Logistics (RTS + RTIO)

    Add value to low-grade ore, especially high phosphorous / alumina based iron ore

    Acquire fields in China & APAC

    CFR to offer better value over FOB

    Scale Hubs (RTS + RTIO)

    Build Inland Spokes (RTS)

    Benchmark Price
    Offer Spoke Network

    SPILLOVER Better price and service to Big Players

    SPOT Trading

    SPILLOVER (if any)

    Use HIsmelt

    Use Spoke Network


    Use Spoke Network

    Supply Big Players

    Supply Small Mills

    Make Iron & Steel


    Reduced Risk of Ops.

    Use Spoke Network

    Strategy Assessment Which problems are solved?


    Dominating global demand - 40% consumption, trending towards 50% consumption Fragmented mills (owner and location)

    Shortage of skilled labor Culture transferability across geographies

    How to use HIsmelt to its strategic advantage?


    Small-scale ore companies taking advantage Impact on profitability: 45% higher than benchmark price

    RTIO produces only 133 MM MT of ore, and China alone is expected to import 320 MM MT of ore in 2006. High market consolidation leaves very less opportunity for organic growth Exploration is resource consuming and comes with high risk

    Which business model to adopt - FOB or CFR


    Suppliers demand deliveries to mills Immature Inland logistics Is Chinese market sustainability for long term investment? Its practically impossible to predict this, but 10-year investments will pay off, considering the dominance of Chinese manufacturing industry and iron ore reserves

    Competition - CVRD was positioning globally, and bridging the gap (in China) Irregularities and disruptions in port operations Mines operated in 60-70% capacity

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