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Case Study

Coal: Exit, voice or loyalty? The case of three mining multinationals

By David Bach and Shih-Han Huang

22 pages

June 2023

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Reference: IMD-7-2436

Coal plays a critical role as an energy pillar in many parts of the world. In three of the world’s most populous countries – China, India and Indonesia – coal supplies more than 60% of electricity needs. However, coal is also one of the most polluting and greenhouse gas emission-intensive substances, holding the dubious title of the single largest contributor to global warming. Mining is one of the industries under scrutiny for its role in the coal supply chain. Amid growing negative public sentiment and investor pressure, the mining majors are pursuing different strategies regarding coal. Rio Tinto completely exited in 2018. Anglo American spun out its coal assets into a separate company, effectively putting the decision in shareholders’ hands. Meanwhile, Glencore held on to coal, declaring “managed decline” the most responsible approach. The case’s dilemma – “who has it right” – offers fertile ground for debate. Participants should analyze the pros and cons of the company’s strategies from different angles and explore the repercussions on various stakeholders, on shareholders and on the environment. The potential learnings from this case and previews of the difficult trade-offs leaders face extend beyond mining to many industries in transition.

Learning Objective

Analyze the pros and cons of a company’s strategy from different angles (stakeholder, shareholder, environmental, competitive, etc) and the potential ramifications within and beyond the company itself.
Understand the potentially difficult trade-offs leaders face during transitions.
Explain the diversification discount and when companies might want to be diversified despite the associated “discount.”
Recognize the role proactive stakeholder engagement plays in transitions.

Keywords

Disruption, Strategy, Sustainability, Coal Mining, Corporate Sustainability Management, Governance, Competitive Strategy, Risk Management, Responsible Production, Energy, Stakeholder Management, Shareholder Engagement, Shareholder Activism, Clean Energy, Affordable Energy, Climate Action

Settings

World/global
Rio Tinto Group, Glencore, Anglo American, Materials, Metals and Mining
2013-2023

Type

Published Sources

Available Languages

English

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Teaching note

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