Entry of Rio Tinto into Iron Ore Development in Western Australia

This paper examines the historical process behind the development of iron ore in the state of Western Australia by the British mining company Rio Tinto from 1959 to 1962. To analyze Rio Tito's iron ore operations, the author applies Michael Porter's 'five forces' concept. In its uranium case, Rio Tinto had strong bargaining powers in relationships with governments as buyers, which were the reasons for its successes. However, in the Western Australian iron ore case this factor did not influence the company's competitiveness. Thus, the iron ore case demonstrates that Rio Tinto did not just depend on its relationships with governments. On the other hand the positive factors in Rio Tinto's iron ore venture were its relationships with private companies as buyers or collaborators. Both advantages flowed from Rio Tinto's global status, but they were not enough for its entry into iron ore development and had to be complemented by localization in order to overcome the barrier built by the state government.