Explain the context, concept, lessons and recommendations from the Norsk Hydro's Utkal Venture case study with examples from other mining companies.

Authors Avatar


Explain the context, concept, lessons and recommendations from the Norsk Hydro’s Utkal Venture case study with examples from other mining companies.  


This report defines mining related conflicts between mining companies and local communities using corporate social responsibilities and Ethical models using examples from Norsk Hydro Utkal Venture in India and other benchmark companies.

The report begins by explaining corporate social responsibility. The report then describes mining industry overview and globalization drivers of mining industry. The report then describes some ethics and corporate social responsibility pro-organization & mining impact on external environment.

The reports then analyze mining industry by using different models of corporate social responsibility and Ethics. The report then conclude that there is much learning to be done by mining companies, and that they should acknowledge and confront their CSR challenges in an honest and transparent manner

Finally the report then tells how mining industry can develop a best practice model by using Harvard model, Stakeholder analysis and offer some actionable recommendations.      




Mining related conflicts have become a permanent feature in many developing countries,  where conflicts between mining companies and local community leads to violence, cultural issues, green issues, human rights issues, ethical issues and above all the violation of corporate social responsibility. In recent years mining companies have come under tremendous pressure from different organization in developing a global corporate social responsibility as part of their global business strategy.  

This report addresses by investigating corporate social responsibility policies in Norsk Hydro Utkal Aluminium international project in Orissa, India, followed by ethical analysis, cultural analysis. Norsk Hydro is a Fortune 500 energy and aluminum supplier & leading offshore producer of oil and gas; and a pioneer in renewable energy and energy-efficient solutions. The company is headquartered in Oslo, Norway and employs about 43,000 people & operates in 40 countries. 

Corporate social responsibility (CSR) is the detailed issues on which an organization exceeds the minimum required obligations to stakeholders. However some critics of corporate social responsibility argue that the organization main purpose is to maximize the return to shareholders whilst obeying the laws of the countries within which it operates. While some critics argue that the only reason organization start a project is utilitarian that they see commercial benefit in order improve their reputation with the public or the government.

The evolving CSR agenda for mining companies is driven by a global shift in the way the role of business is perceived. In the context of globalization and the challenges of sustainable development for mining companies in the developing countries, business is increasingly seen as a crucial element in the process of social transformation, for the benefit of society in general, as well as business itself. Globalization for mining companies have contributed towards improved social development, through providing jobs, paying taxes, building an industrial base, enhancing efficiency, earning foreign exchange and transferring technology,  but they have also been linked publicly to interference in sovereign affairs, deepening disparities in wealth, poor labour conditions, corruption, transfer pricing, pollution incidents, health and safety failings, and the disrespect of human rights. It is equally true the many developing countries are desperate needs of development and wealth creation that mining brings.

PESTLE analysis in the mining context send not only to offer the means of understanding  the risk associated with mining companies but also the socio-cultural changes resulting from its development. The key factors of change from PESTLE analysis for the mining companies are the globalization of economies which create an impact on all the PESTLE factors from creation of wealth for developing countries such as providing jobs, building industrial base to disrespect of human rights, affecting environment etc.


The mining industry has been transformed from a small industry into a group of multinational corporations (MNC’s) managing massive operations in increasingly remote areas of the developing world. The growing scale and intensity of modern mining operations have greatly impacted the local communities which are often rural, indigenous and poor and are particularly vulnerable to the environmental and social impacts unique to large-scale mining.


The metals mining industry is characterized by high risk and capital intensiveness. As purveyors of commodities whose prices are set by the world market, mining companies compete on the basis of cost, seeking to minimize the expenses while investing heavily in exploration to secure access to new resources at a rate that outpaces depletion of current reserves. 

The drivers for mining companies’ global expansion are both internal and external factors. At the industry level, improvements in ore extraction and processing technologies and efficient inventory management systems have dramatically cut the costs, rendering once uneconomic mine sites both feasible and profitable. The second major driver of expansion has been the liberalization of investment regimes and the privatization of state-owned mining industries in developing countries. Finally, demand cycles for raw metals which have pushed prices to notable peaks have given rise to a new segment of entrepreneurial mining juniors focused on exploration. These small to medium-sized firms specialize in obtaining recovery rights to unexploited mineral reserves in far-flung regions of the world, and typically sell these rights to larger, extraction-focused mining MNC. 


The wide range of mining techniques and production processes can lead to broad array of environmental impacts and number of conflicts between the mining industry and the host communities. The after affects of few mining industry are as follows:

  • Alaska: Red Dog, the world largest zinc mine releasing 196,000 metric ton of toxic pollutant per year.
  • Romania: Bal Mare, In 2000 the tailings dam from this gold mine spilled 100,000 metric tons of toxic waste water, killing fish and poisoning water of 2.5 million people.

The impacts of mining of Norsk Hydro Utkal Aluminium international project in Orissa, India are illustrated in the PESTLE analysis. The biggest challenges faced by Norsk Hydro were corporate social responsibility, ethical issues such as Loss of land or livelihood, Environmental degradation, Human rights violations, Health & Safety, Cultural issues etc.  


Caroll’s three dimensional model of Corporate Social Responsibility illustrates the relationship among the social issues involved, the categories of social responsibilities and the four level of the philosophy of reaction, or responsiveness: reaction, defense, accommodation and proaction.  Carolls model shows that the firm with proactive philosophy will put in extra effort and to fulfill the discretionary responsibilities and firm with a defensive philosophy will not be considered beyond its legal responsibilities. For example, Rio Tinto mining company met its ethical and discretionary responsibilities by setting up positive program by changing its strategy due to diverse culture and social environments each location was required to design a social responsibility program. The company also developed practical guidelines that can facilitate the implementation of its values. For Example Norsk Hydro, which were forced by the Norwegian pollution control authority to close down three of its plants in Norway using sodenberg technology ; a more proactive stance would have considered the environmental conditions.          

Join now!

There is a natural fit between the idea of corporate social responsibility and an organization’s stakeholders. MNC operating in international operations have to consider the home country, host country and society as shown in figure-2.

MNC face a big challenge to decide which stakeholders merit and receive consideration in the decision-making process. In any given instance, there may be numerous stakeholder groups both from host and home country along with society clamoring for company’s attention. For example, Norsk Hydro Utkal project in which Hydro’s five step project evaluation checklist promote the good beginning with what is best for ...

This is a preview of the whole essay