1. INTERNATIONAL ISLAMIC UNIVERSITY
H-10, ISLAMABAD
FACULTY OF MANAGEMENT
SCIENCES
IB & WTO
PROJECT
Country of origin Australia
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2. Table of contents
CHAPTER 1
Introduction……………………………………………………………………………………………1.1
History…………………………………………………………………………………………………..1.2
Location …………………………………………………………………………………………………1.3
Statistics…………………………………………………………………………………………………. 1.4
CHAPTER 2
Comparative Advantage……………………………………………………………………………2.1
a) Mining …………………………………………………………………………………………….
Porters diamond model……………………………………………………….
Absolute advantage……………………………………………………………………………………2.2
b) Agriculture …………………………………………………………………………………….
CHAPTER 3
Oil and gas industry……………………………………………………………………………………..3.1
a. Company introduction………………………………………………………………………….
b. History………………………………………………………………………………………………..
c. Products………………………………………………………………………………………………
d. Operations…………………………………………………………………………………………...
CHAPTER 4
Country of destination…………………………………………………………………………………..4.1
Theory of FDI……………………………………………………………………………………………….4.2
a. Seekers of advantage…………………………………………………………………………4.2.1
Market ……………………………………………………………………………….
Security………………………………………………………………………………
Resources……………………………………………………………………………
Knowledge…………………………………………………………………………..
b. Market imperfection…………………………………………………………………………4.2.2
Access ……………………………………………………………………………………....
Factor mobility………………………………………………………………………….
Management………………………………………………………………………………
Internalizers ……………………………………………………………………………..
c. Reasons and justifications…………………………………………………………………4.2.3
CHAPTER 5
Modes of expansion…………………………………………………………………………………………..5.1
a. Exporter…………………………………………………………………………………5.1.1
b. Franchising…………………………………………………………………………….5.1.2
c. Licensing………………………………………………………………………………..5.1.3
References:………………………………………………………………………………………………………. 5.2
3. INTRODUCTION
Australia is a country in Oceania bordering the Indian Ocean and the Southern Pacific Ocean. Australia
is comprised of mainland Australia, the island of Tasmania and several small islands in the Indian and
Pacific Oceans. The terrain is mostly low plateau with deserts. The government system is a federal
parliamentary democracy and a Commonwealth realm. The chief of state is the Queen and the head of
government is the Prime Minister. Australia has a mixed economic system in which the economy
includes a variety of private freedom, combined with centralized economic planning and government
regulation. Australia is a member of Asian Pacific Economic Cooperation (APEC).
Australia is having 6 states
Australia is having 2 territories also
Brief Introduction
Sovereign: Queen Elizabeth II (1952)
Governor-General: Quentin Bryce (2008)
Prime Minister: Kevin Rudd (2013)
Land area: 2,941,283 sq mi (7,617,931 sq km); total area: 2,967,893 sq mi (7,686,850 sq km)
Population (2012 est.): 21,015,576 (growth rate: 1.13%); birth rate: 12.28/1000; infant
mortality rate: 4.55/1000; life expectancy: 81.9
Capital (2009 est.): Canberra, 384,000
Largest cities: Sydney 4.429 million; Melbourne 3.853 million; Brisbane 1.97 million; Perth
1.599 million (2009)
Monetary unit: Australian dollar
4. HISTORY
The first inhabitants of Australia were the Aborigines, who migrated there at least 40,000 years
ago from Southeast Asia. There may have been between a half million to a full million Aborigines
at the time of European settlement; today about 350,000 live in Australia.
Dutch, Portuguese, and Spanish ships sighted Australia in the 17th century; the Dutch landed at
the Gulf of Carpentaria in 1606. In 1616 the territory became known as New Holland. The
British arrived in 1688, but it was not until Captain James Cook's voyage in 1770 that Great
Britain claimed possession of the vast island, calling it New South Wales. A British penal colony
was set up at Port Jackson (what is now Sydney) in 1788, and about 161,000 transported
English convicts were settled there until the system was suspended in 1839.
Free settlers and former prisoners established six colonies: New South Wales (1786), Tasmania
(then Van Diemen's Land) (1825), Western Australia (1829), South Australia (1834), Victoria
(1851), and Queensland (1859). Various gold rushes attracted settlers, as did the mining of
other minerals. Sheep farming and grain soon grew into important economic enterprises. The
six colonies became states and in 1901 federated into the Commonwealth of Australia with a
constitution that incorporated British parliamentary and U.S. federal traditions. Australia
became known for its liberal legislation: free compulsory education, protected trade unionism
with industrial conciliation and arbitration, the secret ballot, women's suffrage, maternity
allowances, and sickness and old-age pensions.
LOCATION
Australia is located between the latitudes of 10 degrees south and 46 degrees south and
between the longitudes of 110 degrees east and 160 degrees east. This places Australia directly
south of the eastern part of Asia and east of Africa.
5. STATISTICS
Economy
Budget Expenditures
$523.60 billion (2011 est.)
Budget revenues
$465.90 billion (2011 est.)
GDP - purchasing power parity
$915.10
billion
Note: data are in 2011 US dollars
GDP - real growth rate
2.1% (2011 est.)
Imports
$242.20 billion (2011 est.)
Industrial production growth rate
-0.1% (2011 est.)
Inflation rate (consumer prices)
3.4% (2011 est.)
Labour force
12.05 million (2011 est.)
Natural Gas Consumption
27.56 billion cu m (2011 est.)
Natural Gas Exports
25.53 billion cu m (2011 est.)
Natural Gas Imports
8.102 billion cu m (2011 est.)
Exports To
(2011
Trade Value
Share
Growth
(thousands)
(%)
(% 5yr)
Japan
34,356,598
23.76
110.75
China
24,169,232
16.71
200.02
South Korea
13,936,736
9.64
106.44
India
10,997,943
7.61
176.14
United States
7,681,757
5.31
9.43
United Kingdom
6,890,688
4.77
85.65
New Zealand
6,022,057
4.16
(6.46)
Singapore
4,452,301
3.08
85.68
Thailand
4,204,843
2.91
86.56
Malaysia
2,720,729
1.88
52.39
est.)
6. AUSTRALIAN ECONOMY
Australia's economy is dominated by its services sector, yet it is the agricultural and mining
sectors that account for the bulk of Australia's exports. Australia's comparative advantage in the
export of primary products is a reflection of the natural wealth of the Australian continent and
its small domestic market; 23 million people occupy a continent the size of the contiguous
United States. The relative size of the manufacturing sector has been declining for several
decades, but has now steadied at around 8.5% of GDP. The global recovery is putting upward
pressure on prices for Australia's commodity exports, which caused a substantial rise in the
terms of trade in 2011.
GDP
of
Australia
is
$1.372
(in
trillions)(as
of
January
2013)
Since the 1980s, Australia has undertaken significant structural reform of its economy and has
transformed itself from an inward-looking, highly protected, and regulated marketplace to an
open, internationally competitive, export-oriented economy. Key economic reforms included
unilaterally reducing high tariffs and other protective barriers to free trade, floating the
Australian dollar, deregulating the financial services sector including liberalizing access for
foreign banks, increasing flexibility in the labor market, reducing duplication and increasing
efficiency between the federal and state branches of government, privatizing many governmentowned monopolies, and reforming the taxation system, including introducing a broad-based
Goods and Services Tax (GST) and large reductions in income tax rates.
Australia enjoys one of the highest standards of living in the G7. Australia's economic standing in
the world is a result of a commitment to best-practice macroeconomic policy settings, including
the delegation of the conduct of monetary policy to the independent Reserve Bank of Australia
and a broad acceptance of prudent fiscal policy where the government aims for fiscal balance
over the economic cycle. Economic recovery is strengthening, with GDP forecast to grow by
3.25% in 2011-2012 and 2012-2013. The success of monetary and fiscal stimulus is projected to
return the budget to surplus in 2012. Net debt is forecast to peak at 8.9% of GDP in 2011-2012.
The unemployment rate was 5.3% in November 2011. Labor market participation has remained
at around 65%. Both the federal and state governments have recognized the need to invest
heavily in water, transport, ports, telecommunications, and education infrastructure to expand
Australia's supply capacity. The largest river system in Australia, the Murray-Darling, and
related coastal lakes and wetlands in South Australia are threatened, although the long drought
has broken, and the government has developed a plan to improve irrigation infrastructure and
efficiency
and
buy
back
unused
water
allocations
along
the
river.
A second significant issue is climate change. A report commissioned by Prime Minister John
Howard recommended a domestic carbon emission trading scheme and that Australia take an
active role in developing a future global carbon emissions trading system. The Gillard
government has passed legislation to price carbon at a rate of a$23 (about U.S. $24) per ton
from July 2012, with free carbon credits provided to many companies.
The Australia-U.S. Free Trade Agreement (AUSFTA) entered into force on January 1, 2005. The
AUSFTA was the second free trade agreement (FTA) the United States concluded with a
developed economy, following the U.S.-Canada FTA in 1988. Australia also has FTAs with New
Zealand, ASEAN, Singapore, Thailand, and Chile, and is pursuing other FTAs, including with
China, Japan, Malaysia, and South Korea. Australia is also involved in ongoing Trans-Pacific
Partnership (TPP) trade negotiations.
7. Comparative advantage
Mining is a comparative advantage of Australia. The mining sector earns 19 % of the total GDP of
Australia and exports its products to the East Asian markets.
Absolute advantage
Agriculture is an absolute advantage of Australia.
8. COMPARATIVE ADVANTAGE
Mining in Australia is a significant primary industry and contributor to the Australian economy.
Historically, mining booms have also encouraged immigration to Australia. Many different ores
and minerals are mined throughout the country.
Mining has had a substantial environmental impact in some areas of Australia. Although mining
services, equipment and technology are being exported, the mining sector employs 2.2% of the
total labour force
Mining contributed significantly to preventing potential bankruptcy for the early colonies in
Australia. Silver and later copper were discovered in South Australia in the 1840s, leading to
the export of ore and the immigration of skilled miners and smelters. The first economic
minerals in Australia were silver and lead in February 1841 at Glen Osmond, now a suburb
of Adelaide in South Australia. Mines including Wheal Gawler and Wheal Watkins opened
soon after The value of these mines was soon overshadowed by the discovery of copper
at Kapunda (1842), Burra (1845) and
in
the Copper
Triangle (Moonta, Kadina and Wallaroo) area at the top of Yorke Peninsula (1861)
Gold Rushes
In 1851, gold was found near Ophir, New South Wales. Weeks later, gold was found in the
newly established colony of Victoria. Australian gold rushes, in particular the Victorian Gold
Rush, had a major lasting impact on Victoria, and on Australia as a whole. The influx of wealth
that gold brought soon made Victoria Australia's richest colony by far, and Melbourne the
island's largest city. By the middle of the 1850s, 40% of the world's gold was produced in
Australia.[5]
Australia's population changed dramatically as a result of the gold rushes: in 1851 the
population was 437,655 and a decade later it was 1,151,957; the rapid growth was
predominantly a result of the new chums (recent immigrants from the United Kingdom and
other Commonwealth states) who contributed the 'rush'.[6] Although most Victorian goldfields
were exhausted by the end of the 19th century, and although much of the profit was sent back to
the UK, sufficient wealth remained to fund substantial development of industry and
infrastructure
9. Australia has mining activity in all of its states and territories. Particularly significant areas
today include the Goldfields, Peel and Pilbara regions of Western Australia, the Hunter Region in
New South Wales, the Bowen Basin in Queensland and Latrobe Valley in Victoria and various
parts of the outback. Places such as Kalgoorlie, Mount Isa, Mount Morgan, Broken Hill
and Coober Pedy are known as mining towns.
Major active mines in Australia include:
Olympic Dam in South Australia, a copper, silver and uranium mine believed to have the world's
largest uranium resource.
Super Pit gold mine, which has replaced a number of underground mines near Kalgoorlie,
Western Australia
Mining Employment by Sector in 1000's
Economics
Total employment in metal ore mining (thousands of people) since 1984
Total employment in coal mining (thousands of people) since 1984
Total employment in oil and gas extraction (thousands of people) since 1984
A number of large multinational mining companies including BHP Billiton, Newcrest, Rio
Tinto, Alcoa, Chalco, Shenhua (a Chinese mining company),Alcan and Xstrata operate in
Australia. There are also a lot of small mining and mineral exploration companies listed on
the Australian Stock Exchange (ASX). Overall, the resources sector represents almost 20% of the
ASX market by capitalisation, and almost one third of the companies listed.[19]
Mining contributes about 5.6% of Australia's Gross Domestic Product. This is up from only 2.6%
in 1950, but down from over 10% at the time of federation in 1900.[20] In contrast, mineral
exports contribute around 35% of Australia's exports. Australia is the world's largest exporter
of coal (35% of international trade), iron ore, lead, diamonds, rutile, zinc and zirconium, second
largest of gold and uranium, and third largest of aluminium.[21] Japan was the major purchaser of
Australian mineral exports in the mid-1990s.[5]
10. Of the developed countries, perhaps only in Canada and Norway does mining play as significant
a part in the economy; for comparison, in Canada mining represents about 3.6% of the Canadian
economy and 32% of exports,[22] and in Norway mining, dominated by petroleum, represents
about 19% of GDP and 46% of exports.[23] By comparison, in the United States mining represents
only about 1.6% of GDP.[24]
Despite its export importance, the mining sector employs only a small proportion of the
workforce – roughly 129,000 Australians, representing only about 2.2% of the total labour force.
PORTERS DIAMOND MODE L
Factor conditions
Large quantities of minerals and resources are extracted in Australia. These
include:
Iron ore – Australia was the world's third largest supplier in 2008 after China and Brazil,
supplying 342 million metric tonnes.[7]
Nickel – Australia was the world's second largest producer in 2006 after Russia.
Bauxite/aluminium - Australia was the world's largest producer in 2011.
Gold – Australia is the second largest producer after China.
Uranium – Australia is responsible for 11% of the world's production and was the world's third
largest producer in 2010 after Kazakhstan and Canada.
Diamond – Australia has the third largest commercially-viable deposits after Russia and
Botswana. Australia also boasts the richest diamantiferous pipe with production reaching peak
levels of 42 metric tons (41 LT/46 ST) per year in the 1990s.
Opal – Australia is the world's largest producer of opal, being responsible for 95% of
production.[12]
Zinc – Australia was second only to China in zinc production in 2008, producing just under 14%
of world production.
Coal – Australia is the world's largest exporter of coal and fourth largest producer of coal behind
China, USA and India.
Oil shale
Petroleum – Australia is the twenty-eighth largest producer of petroleum.
Natural gas - Australia is world's third largest producer of LNG and forecast to be world leader
by 2020.
11. RARE EARTH ELEMENTS
Much of the raw material mined in Australia is exported overseas to countries such as China for
processing into refined product. Energy and minerals constitute two thirds of Australia's total
exports to China, and more than half of Australia's iron ore exports are to China.
COAL MINING
Australian coal, coke and briquette quarterly exports ($A millions) since 1969.
Coal is mined in every state of Australia. It is used to generate electricity and is exported. 54% of
the coal mined in Australia is exported, mostly to eastern Asia. In 2000/01, 258.5 million tonnes
of coal was mined, and 193.6 million tonnes exported, rising to 261 million tonnes of exports in
2008–09.[14] Coal also provides about 85% of Australia's electricity production.[16] Australia is
the world's leading coal exporter.[17]
URANIUM MINING
Uranium mining in Australia began in the early 20th century in South Australia. Australia
contains 23% of the world's proven estimated uranium reserves. In recent decades opposition
to uranium mining in Australia has increased, resulting in many government inquiries into its
extraction. The three largest uranium mines in the country are Olympic Dam,Ranger Uranium
Mine and Beverley Uranium Mine. Future production is expected from Honeymoon Uranium
Mine and the planned Four Mile uranium mine.
NATURAL GAS
Based on 2008 CSIRO report, Australia estimated to have stranded gas reserves with about 140
trillion cubic feet or enough to fulfil the needs of a city with one million people for 2,800 years.
12. LABOUR
Despite its export importance, the mining sector employs only a small proportion of the
workforce – roughly 129,000 Australians, representing only about 2.2% of the total labour force.
Total employment in metal ore mining (thousands of people) since 1984
Total employment in coal mining (thousands of people) since 1984
Total employment in oil and gas extraction (thousands of people) since 1984
CAPITAL
The mining industry's contribution to the Australian economy is now $121 billion a year. In
terms of export income, it generates $138 billion per annum, which represents over half (54 per
cent) of total goods and services. Across the nation mining employs 187,400 people directly and
a further 599,680 in support industries. In wages and salaries that amounts to $18 billion; an
additional $21 billion is contributed through company tax and royalty payments. Not least, the
industry spends $35.2 billion on new capital investment, $5.7 billion on exploration, and $4.2
billion on research and development.
ENTREPRENEURSHIP
The Australian Centre for Entrepreneurship Research (ACE) at QUT Business School is seeking
interested PhD candidates to work on a project that is concerned with the Australian mining
industry. The project’s aim is to further develop a large scale longitudinal panel data set of
companies in Australia’s mining industry, and to advance our knowledge of the “business side”
of the booming resources industry. The primary data for this project is already collected and
available for use.
FIRM STRATEGY
He report states that a national minerals strategy would deliver a coherent and responsible
approach to ensure that mineral resources are used wisely to advantage Australia and
complement work undertaken for the recent white papers on Energy and the Asian Century.
The findings, released as one of a series of reports in Sydney today, are the result of a three-year
collaboration between The University of Queensland, UTS, CSIRO, Curtin University, CQ
University and the Australian national university.
13. Dr Damien Guirco, research director of the UTS institute said the current state of play in
Australia is inadequate.
“The minerals industry has always operated in an evolving global landscape, but it’s becoming
clear that social and environmental factors will become more important to head off future
vulnerability,” Dr Giurco said.
“A national strategy would remove the complexities of differing regulations across states and
territories and shift the focus towards maximising long-term social, economic and
environmental benefits for communities, regions and the nation,” he said.
Anna little boy, leader of CSIRO’s mineral futures research, said that the industry is working in
an increasingly difficult environment.
RIVALRY, RELATED AND SUPPORTED INDUSTRIES
A number of large multinational mining companies including BHP Billiton, Newcrest, Rio
Tinto, Alcoa, Chalco, Shenhua (a Chinese mining company),Alcan and Xstrata operate in
Australia. There are also a lot of small mining and mineral exploration companies listed on
the Australian Stock Exchange (ASX). Overall, the resources sector represents almost 20% of the
ASX market by capitalisation, and almost one third of the companies listed.[19]
Mining contributes about 5.6% of Australia's Gross Domestic Product. This is up from only 2.6%
in 1950, but down from over 10% at the time of federation in 1900.[20] In contrast, mineral
exports contribute around 35% of Australia's exports. Australia is the world's largest exporter
of coal (35% of international trade), iron ore, lead, diamonds, retile, zinc and zirconium, second
largest of gold and uranium, and third largest of aluminium.[21] Japan was the major purchaser of
Australian mineral exports in the mid-1990s.[5]
Of the developed countries, perhaps only in Canada and Norway does mining play as significant
a part in the economy; for comparison, in Canada mining represents about 3.6% of the Canadian
economy and 32% of exports,[22] and in Norway mining, dominated by petroleum, represents
about 19% of GDP and 46% of exports.[23] By comparison, in the United States mining represents
only about 1.6% of GDP.[24]Despite its export importance, the mining sector employs only a small
proportion of the workforce – roughly 129,000 Australians, representing only about 2.2% of the
total labour force.
STRUCTURE
Structure has two types
Vertical structure: Australia does not have vertical structure as it is not independent.
Horizontal structure: Australia has dependent structure as depends upon many factors
discussed above.
DEMAND CONDITIONS
Australia has mining activity in all of its states and territories. Particularly significant areas
today include the Goldfields, Peel and Pilbara regions of Western Australia, the Hunter Region in
14. New South Wales, the Bowen Basin in Queensland and Latrobe Valley in Victoria and various
parts of the outback. Places such as Kalgoorlie, Mount Isa, Mount Morgan, Broken Hill
and Coober Pedy are known as mining towns. Australia is having very big demand of coal or
other minerals in producing electricity and other products.
ABSOLUTE ADVANTAGE
Australia is a significant player in world trade for several commodities and agriculture is a vital
part of the Australian economy.
Around 60% of Australia is devoted to agriculture, with three broad zones in which agricultural
activity occurs, as illustrated in the map above. These are referred to as the pastoral, wheatsheep, and high rainfall zones. The three main zones: the high rainfall zone of Tasmania and a
narrow coastal zone (used principally for dairying and beef production); wheat, sheep zone
(cropping (principally winter crops), and the grazing of sheep (for wool, lamb and mutton) plus
beef cattle) and the pastoral zone (characterized by low rainfall, less fertile soils, and large scale
pastoral activities involving the grazing of beef cattle and sheep for wool and mutton).
Agriculture and its closely related sectors earn $155 billion-a-year for a 12% share of GDP.
Australian farmers and grazers own 135,996 farms, covering 61% of Australia’s landmass, so
average farm size is high. There is a mix of irrigation and dry-land farming.
Australia’s agriculture is market driven and export-oriented. Figure 1 shows the importance of
exports for most major agricultural commodities produced. For some products, aggregations for
values of production and for export values are not directly comparable because export values
reflect the value of more highly processed products such as sugar and wine. Overall, about 65%
of Agricultural production is exported, representing about 25% of total merchandise exports.
Australian agriculture continues to be responsive to market signals and consumer preferences
and has leveraged this to realize positive gains.
15. `Australian agriculture continues to be responsive to market signals and consumer preferences
and has leveraged this to realize positive gains.
Western Australia
Agriculture is Western Australia’s second major export industry. The state’s vast area provides
soils and climates suited to a variety of agricultural production from open grazing and broad
acre cereal cropping to irrigated pastures and horticulture orchards and vineyards. Wheat, wool,
beef and lamb are its main products and stock feed are also important. Farmers and investors
are identifying new specialised markets in Asia and taking advantage of seasonal differences
with the northern hemisphere. A diverse and efficient agriculture sector provides the raw
material for a rapidly growing range of processed exports. These include wine, ice-cream, barley
malt, noodles and fine leather.
New South Wales
Agriculture is spread across throughout the eastern two thirds of New South Wales. Cattle,
sheep and pigs are the predominant types of livestock produced in New South Wales and they
have been present since their importation. Economically the state is the most important state in
Australia, with about one third of the country’s sheep, one fifth of its cattle and one third of its
small number of pigs. New South Wales produces a large share of Australia’s hay, fruit, legumes,
lucerne, maize, nuts, wool, wheat oats, oilseeds (around 51%), poultry, rice (about 99%),
vegetables, fishing and forestry including wood chips.
16. Victoria
Victoria provides almost a quarter of Australia’s total rural output. Agriculture and pastoral
products include wool, sheep meat and beef, wheat, oats, barley, maize, tobacco, hops and
fodder crops, citrus, grapes, apples, stone fruits and vegetables and dairy products. Victoria is
Australia’s main producer of mutton and lamb, dairy products and dried vine fruits and
substantial amounts are exported. Victoria is also an important producer of timber from its 8
million hectares of forests. This includes 223,000 hectares of forest plantations.
Queensland
Queensland agriculture industry is made up of plant industries including field crops,
horticulture and forestry and animal industries including livestock and livestock products.
Queensland has the largest area of agricultural land of any Australian state and the highest
proportion of land dedicated to agriculture. About 30,500 businesses carry out agricultural
activity in Queensland. Agricultural industries contribute more than $10 billion to the state’s
economy each year.
17. INDUSTRY: OIL AND GAS
Oil and gas companies list
BHP Billiton
Orbital Corporation
Origin Energy
Woodside Petroleum
And I have selected BHP Billiton for further proceedings:
18. BHP BILLITON
INTRODUCTION OF COMPANY
BHP
MELBOURNE
Billiton
Centre,
171
Collins
BHP Billiton is one of the world's largest mining and resource companies with roughly 100,000
employees in over 25 countries. The company is headquartered in Melbourne, Australia and
listed on the Australian Securities Exchange (as BHP Billiton Ltd.), as well as on the London
Stock Exchange and the Johannesburg Stock Exchange (as BHP Billiton Plc).
Financial Summary (2010):
Market Capitalization: US$ 166 billion
Revenue: US$ 52.8 billion
Net Operating Cash Flow: US$ 17.9 billion
HISTORY
BHP Billiton was formed in 2001 as a result of a merger between Broken Hill Proprietary (BHP)
and Billiton. Billiton originated as a tin mine on Indonesia's Belitung Island in the 1860s, while
BHP was first incorporated in 1885 as a silver, lead andzinc producer in Broken Hill, Australia.
The two companies merged in June 2001 to become one of the world's largest diversified
resource companies.
PRODUCTS
BHP
Billiton
is
among
the
world's
largest
producers
of aluminum, copper, manganese, iron ore, uranium,nickel, silver and titanium minerals.
The
company also has petroleum and coal assets.
19. ALUMINIUM OPERATIONS:
BHP Billiton's is the world's seventh largest aluminium producer. The company's aluminium
portfolio includes bauxite production, bauxite refining for the production of alumina, as well as
the smelting of aluminium metal.
Aluminium assets include:
The Alumar refinery and smelter - Brazil (36-40% ownership)
The Boddington bauxite mine and Worsley refinery - Australia (86%)
The Mozal smelter - Mozambique (47.1%)
The Hillside and Bayside smelters - South Africa (100%)
Mineração Rio do Norte - Brazil (14.8%)
BASE METAL OPERATIONS:
BHP Billiton base metal production includes copper, silver, lead and zinc. The Escondido mine in
Chile is the world's largest single producer of copper.
Base metal assets include:
Antamina - Peru (33.75% ownership)
Pinto Valley - USA (100%)
Spence - Chile (100%)
Cerro Colorado - Chile (100%)
Cannington - Australia (100%)
Escondida - Chile (57.5%)
URANIUM OPERATIONS:
The company's uranium assets include Olympic Dam in South Australia and the Yeelirrie
uranium deposit in Western Australia. According to BHP Billiton, Olympic Dam is the world's
largest uranium deposit and fourth largest remaining copper deposit. Uranium oxide from the
project is used for the generation of electricity, while copper cathodes are produced and
supplied to customers Europe, Australia and Asia.
NICKEL OPERATIONS:
BHP Billiton is the world's fourth largest producer of nickel, producing and selling nickel
briquettes, powders, and ferronickel granules, as well as nickel matte and concentrate. The
company's nickel assets include Cerro Matoso in Colombia and Nickel West in Australia.
20. IRON ORE OPERATIONS:
BHP Billiton's iron ore operations are concentrated in Western Australia and Brazil. Producing
fine and lump iron ore, the Mt. Whaleback mine in Western Australia is the biggest single-pit
open-cut iron ore mine in the world and is more than 5 kilometres long and nearly 1.5
kilometres wide. More than 1000 kilometres of rail infrastructure and port facilities connect this
with BHP's six adjacent mines.
The Samarco operation in Brazil produces more than 21 million tonnes of iron ore pellets and
one million tonnes of concentrates.
MANGANESE OPERATIONS:
Manganese products include ores, alloys and metal from locations in South Africa and Australia.
BHP Billiton is the largest producer of seaborne manganese ore and one of the world's largest
producers of manganese alloy.
Manganese assets include:
The Hotazel mines - South Africa
The Groote Eylandt Mining Company (GEMCO) - Australia
Tasmanian Electro Metallurgical Company (TEMCO) - Australia
Wessels - South Africa
Mamatwan - South Africa
Metalloys - South Africa
Note: South African interests are held through a 60% holding in Samancor Manganese
Proprietary Ltd., a partnership with Anglo American.
OTHER OPERATIONS:
BHP Billiton produces titanium minerals at their Richards Bay operations in South Africa. These
include titanium slag, high-purity pig iron, retile (ZrO2) and zircon.
Gold and silver are produced as by-products at the Olympic Dam uranium and copper mine in
Australia.
BHP BILLITON is a global organization, with over 100 locations in more than 70 countries
across the WORLD
21. Algeria
Ohanet gas field
ROD gas field
Angola
Diamond exploration
Australia
Appin, New South Wales
Area C mine, Western Australia
Bass Strait, Victoria (50 percent owned)
Broadmeadow, Queensland
Cannington Mine, Queensland
Dendrobium, New South Wales
Eastern Ridge, Western Australia
Elouera, New South Wales
Goonyella Riverside, Queensland
Gregory/Crinum, Queensland
Griffin, Western Australia (45 percent owned)
Groote Eylandt, Northern Territory
Hunter Region, New South Wales
Jimblebar, Western Australia
Kalgoorlie, Western Australia
Kambalda, Western Australia
Kwinana, Western Australia
Leinster, Western Australia
Minerva offshore, Victoria (90 percent owned)
Mount Keith, Western Australia
Mount Whaleback, Western Australia
Nickel West operations
North West Shelf Venture, Western Australia (16.67 percent LNG phase, 8.33 percent
domestic gas phase)
Norwich Park, Queensland
Olympic Dam, South Australia
Orebodies 18, 23 and 25 mine, Western Australia
Peak Downs, Queensland
Port Hedland, Western Australia
Saraji, Queensland
22. Temco George Town, Tasmania
West Cliff, New South Wales
Worsley, Western Australia
Yandi mine, Western Australia
Yarrie mine, Western Australia
Brazil
Alumar aluminium smelter/refinery – Sao Luis
Samarco iron ore mine and pelletising plant – Belo Horizonte
Canada
Potash Development, Saskatchewan
Chile
Escondida
Cerro Colorado
Spence
Colombia
Cerrejón coal mine in Guajira department (33.3 percent owned)
Cerro Matoso, ferronickel mine in Córdoba department
Guinea
Sangaredi bauxite mine and alumina refinery (currently in feasibility study) (33.3
percent interest)
Indonesia
Wetar gold mine
Mozambique
Mozal, aluminium smelter
Pakistan
Zamzama gas field
Peru
Antamina
South Africa
Bayside, 100 percent owned aluminium smelter in Richards Bay
Hillside, 100 percent owned aluminium smelter in Richards Bay
BECSA (BHP Billiton Energy Coal South Africa), comprises several coal mines in
theWitbank/Emalahleni area in Mpumalanga
Metalloys manganese production facility in Meyerton, Gauteng
HMM (Hotazel Manganese Mines) including Mamatwan and Wessels mines
near Hotazelin the Northern Cape
Suriname
Trinidad & Tobago
23. Angostura oil and gas field
United Kingdom
Liverpool Bay oil and gas field
United States
Permian Shale, Texas
Eagle Ford Shale, Texas
Haynesville Shale, Louisiana
Fayetteville
Shale,
Arkansas,
shale
natural
gas
fields,
including
the
associated midstream pipeline system
New Mexico Coal Company, coal mine in New Mexico consisting of San Juan and Navajo
mines
Southwest Copper, Arizona
San Manuel, Arizona
Pinto Valley, Arizona
Gulf of Mexico, oil and gas field (Shenzi & Neptune fields)
Resolution Copper, near Superior, Arizona
24. COUNTRY OF DESTINATION
KAZAKHSTAN
Kazakhstan is a major oil producer, and estimated total liquids production was 1.64 million
barrels per day (bbl/d) in 2013. The key to its continued growth in liquids production from this
level will be the development of its giant Tengiz, Karachaganak, and Kashagan fields.
Development of additional export capacity also will be necessary for production growth.
Although Kazakhstan became an oil producer in 1911, its production did not increase to a
meaningful level until the 1960s and 1970s, when production plateaued at a nearly 500,000
bbl/d, a pre-Soviet independence record production level. Since the mid-1990s and with the
help of major international oil companies, Kazakhstan's production soared to more than 1
million bbl/d in 2003. Rising natural gas production over the past decade has both boosted oil
recovery (as a significant volume of natural gas is re injected into oil reservoirs) and also
decreased Kazakhstan's reliance on natural gas imports. Natural gas development has lagged oil
due to the lack of domestic gas pipeline infrastructure linking the western producing region
with the eastern industrial region, as well as the lack of export pipelines.
Kazakhstan is land-locked and lies a great distance from international oil markets. The lack of
access to a seaport makes the country dependent mainly on pipelines to transport its
hydrocarbons to world markets. It is also a transit country for pipeline exports from
Turkmenistan and Uzbekistan. Kazakhstan consumed a total of 2.3 quadrillion Btu of energy in
2010, with coal accounting for the largest share of energy consumed at 64%, followed by oil and
natural gas at 19% and 14%, respectively.
25. List of Top 11 Oil Reserves Countries in the World
1
Venezuela
297,570 Reserves (MMBBL)
2
Saudi Arabia
267,910
3
Canada
173,625 - 175,200
4
Iran
157,300
5
Iraq
140,300
6
Kuwait
104,000
7
United Arab Emirates
97,800
8
Russia
80,000
9
Libya
48,014
10
Nigeria
37,200
11
Kazakhstan
30,002
26. THEORY OF FDI
SEEKERS OF ADVANTAGE
First of all we will see the advantages for this we will follow the theory. So we will
start from Markets.
Markets:
Security:
Resources:
Knowledge:
Seekers of Advantage
Resources
Kazakhstan is estimated to have around 30 billion barrels (4.8×109 m3) of crude oil reserves,
which place it eleventh in the world. In 2000s, the oil production has increased rapidly due to
foreign investment and improvements in production efficiencies. In 2006, Kazakhstan produced
54 million tons of crude oil and 10.5 million tons of gas condensate 565,000,000 bbl
(89,800,000 m3), which makes Kazakhstan eighteenth-largest oil producer in the world. At these
production levels Kazakhstan is thought to have approximately 50 years of remaining
production. According to the president Nursultan Nazarbayev, Kazakhstan is planning to
increase its oil production up to 3.5 million barrels (560,000 m3) of oil a day, of which 3 million
will go to export. This will lift Kazakhstan into the ranks of the world's top 10 oil-producing
nations.
Kazakhstan's proven oil reserves were estimated at 30 billion barrels by the Oil and Gas Journal
in January 2013. The country's main oil reserves are located in the western part of the country,
where the five largest onshore oil fields (Tengiz, Karachaganak, Aktobe, Mangistau, and Uzen)
are located. These onshore fields account for about half of current proven reserves, while the
offshore Kashagan and Kurmangazy oil fields, in Kazakhstan's part of the Caspian Sea, are
estimated to contain at least 14 billion barrels, with Kashagan accounting for around 9 billion
barrels.
The main production sites are the Tengiz field 290,000 bbl/d (46,000 m3/d), located on the
northeast shores of the Caspian, and the Karachaganak field 210,000 bbl/d (33,000 m3/d), and
located inland near to Russian border. In future Kazakh oil production will also rely on
the Kashagan field, the largest oil field outside the Middle East, which possess anywhere from
7 Gbbl (1.1×109 m3) to 13 Gbbl (2.1×109 m3)in recoverable reserves, and the Kurmangazy
field in Northern Kazakhstan. There are some smaller oil fields neat to Chinese border, which
not developed yet. 76% of Kazakhstan's oil and gas production and remaining reserves are
concentrated in these three oil fields as well as the Uzen Field; a further 14% of reserves and
production are located in 6 further fields
27. Largest currently producing oil fields
Tengiz is currently Kazakhstan's largest producing oil field with an output of
approximately 540,000 bbl/d through August 2013, accounting for nearly a third of
total production. The field is located onshore in northwestern K azakhstan. It is the
world's deepest operating giant field at 12,000 feet. It has been in development
since 1993 by the Tengizchevroil (TCO) joint venture, which includes Chevron
(50%), ExxonMobil (25%), KMG (20%), and LukArco (5%). According to Wood
Mackenzie, production at Tengiz is expected to increase to 854,000 bbl/d by 2021.
Tengiz output is currently exported through the Caspian Pipeline Consortium
(CPC) oil pipeline, which runs from Tengiz to Novorossiysk, Russia on the Black
Sea. In addition, smaller volumes of the Tengiz oil are transported via rail to
Odessa and Feodosiva, Ukraine, as well as to Aktau, Kazakhstan.
28. Exploiter of imperfection
a)
b)
c)
d)
Access
Factor mobility
Management
Internalizers
EXPLOITERS OF IMPERFECTION
Management:
Management is about getting things done. Managers work in different ways to achieve many
diverse and often specific objectives. Theorists have tried to identify the functions and processes
that all managers carry out. The oil and gas industry contains many layers of management
within many types of organization. Hierarchies are organizations that are structured in layers.
The managers in the higher levels have more seniority than those further down.
Everything from geological exploration, drilling, technical and scientific support, human
resources, finance, maintenance, welding, sales, logistics, safety and emergency planning falls
within management responsibilities.
Henri Fayol, an early theorist, said that management had the following elements:
Planning looking ahead, consulting with others, setting objectives for staff
Organizing arranging people and things so that objectives can be achieved
Commanding giving instructions to workers
Coordinating bringing activities together into a common approach
Controlling measuring what is happening and adjusting activities to achieve goals.
In the oil and gas industry, a variety of management styles may be used in different contexts:
A manager working offshore might be supervising important or dangerous high voltage
maintenance work. In this context matters that are basic to health and safety are not open to
debate. The manager will simply instruct workers in an autocratic style.
In another context a manager who is based onshore could be coordinating the supply of LPG, gas
or oil from the fields to buyers. Here, managers can be more democratic consulting or discussing
with colleagues the best ways to proceed.
Leadership differs from management. Leadership encompasses the skills and qualities needed to
inspire others to achieve goals. Leaders can see the heart of a problem and suggest (sometimes
unusual) solutions; they have a positive self image; they tend to be creative; they are often
experts in a field and can sense change and respond accordingly. Many managers are also
leaders, but people in the oil and gas industry are encouraged to show leadership at every level.
The industry has an inclusive and involving culture so that even the newest Trainee Instrument
Technician may spot a better way of doing something and will be able to influence positive
change. A key role in the industry is the Offshore Installations Manager (OIM). This experienced
manager has vital responsibilities such as the safety and well-being of everyone on board the
installation. Employees must comply with instruction at all times due to the nature of the work.
An offshore facility must be fit for its purpose; the working environment on it must be managed;
every worker must have completed the correct safety training. In this context the management
style must be autocratic. Rules and procedures must be followed to assure safety
29. MODES OF EXPANSION
Modes of Expansion
Exporting
Franchising
Licensing
EXPORTING
Kazakhstan is an important exporter of light, sweet crude oil. In 2012, Kazakhstan's net total
liquids exports totalled nearly 1.4 million bbl/d. The current infrastructure delivers the oil to
export markets by pipelines to the Black Sea via Russia; by barge and pipeline to the
Mediterranean via Azerbaijan and Turkey; by barge and rail to Batumi, Georgia on the Black
Sea; and by pipeline to China. According to Kazakhstan's Customs Control Committee of the
Ministry of Finance, the largest share of its exports was destined for Italy in 2012 (355,000
bbl/d). Other notable importers of Kazakhstan's liquid fuels included China, the Netherlands,
France, and Austria. The United States did not import any oil from Kazakhstan in 2012, the first
time this happened since at least 2004. Kazakhstan's exports likely will expand in the coming
years, as new fields, particularly Kashagan, come online. However, the rapid growth of oil
production and exports will require an expansion of export capacity.
Most of the current pipeline system was developed as part of the Soviet system, and its goal
was to maximize transport of oil to Russia. Following the break-up of the Soviet Union,
Kazakhstan was wholly dependent on Russia for its exports, giving Russia complete control
over Kazakhstan's exports. Over time, however, Kazakhstan has been able to reduce its
dependence on Russia's infrastructure by utilizing trans-Caspian tankers and rail, and by
building a pipeline to China. Still, a majority of its exports have to be shipped via Russia's
pipelines. Kazakhstan engages in oil swaps with Iran, where oil is shipped to the Iranian port of
Neka and sent further to refineries in Tehran and Tabriz. In return, Iran delivers the equivalent
amount of oil through its Persian Gulf ports on behalf of Kazakhstan. However, despite a
number of agreements to increase swap volumes between Kazakhstan and Iran, volumes have
declined over the years, and according to some reports were as low as 25,000 bbl/d in 2012. In
the past, trading firms Vitol, Select Energy, Litasco, Silk Road, and Ocean Energy all had swap
arrangements with Iran.
so we can have much of options to expand our business internationally or globally by exporting
our products to other countries nearer to our country of destination by using their resources.
Due to this we can earn profit and also can save a lot of expenses. Here is a figure which shows
the exports of the country in global market.
30. Advantages:
Involves less financial risk
Little cost or investment associated with the exception of establishing distribution networks
or local advertising
Allows business to enter the global market gradually
Agents are used as they have better understanding of local markets n assist in the marketing
strategies
Disadvantages:
Loss of control over the product once it has been sold to the distributor or agent
Lack of understanding of the firm’s history and product range
Types are:
Direct – this involves a business selling directly to an overseas buyer (not really the end
user). They use their own sales representatives based in foreign markets or agents
Indirect – is where businesses use intermediaries to get their products into overseas
markets. Adv is that its easy and inexpensive and using the agents experience. Dias is that
the agents may be handling more than one customer so negligence can occur and ending
contracts can be a very expensive and time consuming process.
Now the reasons and justifications:
As I have shown the details I select Kazakhstan my country of destination because
Kazakhstan has a lot of minerals and other reserves to be invested easily by drilling
minerals out from land. Kazakhstan exports more of its oil and gas products to USSR,
Europe, Asian countries including the south Asia and Middle East countries, and I
proposed my future developments given below in the area of Kashagan.
Future and proposed developments
Development of Kashagan and other future projects requires significant expansion of
Kazakhstan's export capacity. To this end, Kazakhstan is promoting the Kazakhstan
Caspian Transportation System (KCTS), which includes the construction of an 515 -mile,
600,000 bbl/d capacity onsh ore pipeline from Eskene in western Kazakhstan to Kuryk
onthe Caspian near Aktau, where a new 760,000 -bbl/d oil terminal is to be built. This
system also includes a maritime link to Baku, Azerbaijan, new port facilities, and a
transfer station in Baku, whe re the crude oil will be put into an expanded BTC pipeline to
Turkey. The total cost of the KCTS is estimated at $4 billion. The Kazakhstan -China oil
pipeline is currently upgrading to accommodate expected oil from the Kashagan oil field.
Other proposals include the construction of the Trans -Caspian oil pipeline, which would
provide a western export route for both Kazakhstan and Turkmenistan.
