This comes under the category of financial risks. According to Trivedi (2014), the company has benefited from the falling Australian dollar. Though Rio Tinto has been falling over the previous years, currency fluctuations has helped Rio through lower production as well as operating costs, which led to higher profits, by nearly a 10% increase in its earnings (Trivedi, 2014). Thus, the company has not contributed anything for such an increase in its earnings and profits, but the global economic conditions have contributed. If the case is reversed, the company would be impacted negatively.
This comes under the category of operations risk. Rio Tinto has control of two of the Simandou’s four blocs in Guinea, Africa. Simandou is a mist-shrouded mountain range and a treasure trove of the world’s finest iron ore. However, there is no logistics access to Simandou. The area requires building 400 miles of railway, 24 km of tunnels, 35 bridges and a port, making it the largest logistic challenge. The cost has been estimated to be $20 billion (Reuters, 2014). Since Simandou is an unstable mountain terrain, Rio faces operational risk in this project.
This comes under the category of operations risk. African countries such as Liberia, Guinea, Sierra Leone and Nigeria have been affected by the outbreak of Ebola virus. With Rio Tinto’s investment in Simandou project, Guinea, the company has had to take serious measures for the safety of its employees. Rio Tinto has to add extra sanitation supplies and equipment in the concerned areas (Stringer, 2014).
4.Access to water
This comes under the category of operations risk. Access to water is vital for mining operations. Rio Tinto also operates in water constrained areas such as Peru (Rio Tintoa, 2014). Accessing water is becoming more expensive and complex in many global parts.