Topic: Stakeholder Management

Orgamed Mining Company is located close to Erin river in Owode town and it has over 4,000 workers on its payroll, 1,250 of whom come from the town. Since the company started its operations 5 years ago, the town has witnessed considerable development in infrastructure such as hospitals, schools, and electricity. Before commencement of operations of Orgamed Mining Company, Erin river had served as the main source of livelihood for the natives, most of whom are fishermen. A thriving fish market and small scale industries had emerged from the fishing activities. A few neighbouring towns also depend on water from Erin river for domestic activities.

Lately, chemical pollution from the company’s mining activities has become a threat to the survival of fish in the river. Marine experts have pointed out that within the next three years, all the fish and other living organisms in Erin river would be dead as waste water from the mining operations containing sulphuric acid, iron and sulphate particles are lethal to most organisms living within the aquatic environment. There is also a record of health hazards in the neighbouring towns which have been traced to the water from Erin river finding its way into these towns’ water supplies.

When delegates from Owode town and the affected neighbouring towns met with the management of Orgamed Mining Company to discuss this problem of water pollution, it became evident that the costs of controlling the pollution will have significant consequences on the operations of the company. One of these is that there would be a reduction of over 50% of the workforce, and to put Erin river back to its normal state would require closing down the mines.

Required:

a. Explain the forms of accounting that would be applicable to the situation described above.
(6 Marks)

b. How would you advise the management of Orgamed to minimize its social costs and liabilities?
(8 Marks)

c. Using the idea of retributive justice and the utilitarian approach, explain why Orgamed Mining Company should bear the costs of the water pollution.
(6 Marks)