Page 6 - AMANGO MODEL ANSWER 1

P a g e | 6

The unions have challenged our commitment to safety and have threatened to strike in 7 days if no
bold actions are taken. Unions are known to collaborate across the group and with a protected strike
unfolding elsewhere in our copper operations, failure to address this could see an escalation.

Do nothing: This is always the easiest option but if we decide to ignore the strike or call their bluff,
we could be faced with an actual strike with production stoppage at our other mines –inadvertently
demonstrating to our employees that we don’t care about their safety –yet it is one of our values!

Capitulate on union demands: Taking bold action could rebuild employee trust and validate our
strong stance on safety but it could be misinterpreted as a sign of weakness which unions may
exploit to make wage demands. Our actions may be considered appropriate for any shortcomings

noted yet may be deemed not bold enough by the unions. A negotiation could be one way of
approaching the capitulation as some of the measures may affect their work practices. Clearly, there
is need to audit the supply chain process for the appointment of, and management of the mineshaft
contractor but also the broader safety management practices especially in relation to the rushed

procedures at year end to meet targets as well as the false reporting on safety (see section 5 on
ethics).

4.1.3 Protected strike in motion
In yet another of our operations in Australia, an ongoing protected strike over wages has derailed
production. Workers are demanding a 16% pay hike whilst we have not only decided to freeze but to

actually cut their wages and benefits in line with group strategy to find US$5.8 billion in cost savings.
Salaries, wages and other employee benefits account for 50% of operating costs (US$12.3 billion) –
such a massive programme of cost reduction will inevitably fail should we not impose these wage
cuts.

Do nothing: This could be blended with ‘no work, no pay’ provisions which will save on costs. Should
it go on for longer, the lack of pay could affect their personal finances and some may resume. The

problem is that the strike is already in motion and we loosing on production and revenues of
approximately US$ 250,000 each day the strike prolongs (approx. US$66 million a year).

Threaten dismissals: This may scare the unions to resume work but as it is a protected strike, any
dismissal will be automatically unfair and will be in breach of the labour laws of Australia and related
common law principles. However, the company could structure this as a dismissal due to economic

viability of the mines as opposed to dismissal for participating in strike action.

Capitulate on union demands: With 50% operating costs being salary-related, any capitulation will be

counter-productive to our drive to find US$5.8 billion in cost savings, partly through wage cuts; most
especially as this will embolden the unions across our operations in other countries to collaborate
against our wage reduction drive group-wide.

Developed by The CharterQuest Institute for 'The CFO Business Case Study Competition 2017'
www.charterquest.co.za | Email: thecfo@charterquest.co.za