User:Vangelovski96/sandbox

Background
Laos is a landlocked communist state located in Southeast Asia surrounded by Vietnam, China, Cambodia, Thailand and Burma. The first people to ever migrate in Laos were the Lao people which moved from China in 8th century, and by the 14th century the first state was founded. The last calculated GDP in Laos was 15.9 billion dollars in 2016. Laos has managed to average 4.08 USD Billion from 1984 until 2016, with their highest being 15.9 billion in 2016 and lowest 0.6 billion in 1988. The mining sector in Laos is one of the more important sectors in regards to Laos, as it is worth more than 10% of the Gross Domestic Product (GDP) of Laos. There has been a rapid growth of interest in the investment of companies into the mining sector within Laos and from international corporations. Although Laos has rich resources of copper, gold, zinc and lead, the most prominent of the minerals is copper. Copper mining in Laos is mostly mined by two companies, Phu Bia Mining Ltd and Lang Xang Minerals Ltd. International companies, PanAust Ltd and MMG Ltd, own both these companies 90% respectively. The government of Laos owns the other 10%. In 2013, there had been an amount of 64,885 and 90,030 metric tons equalling a total of 154,915 metric tons of copper mined that year. Laos had agreed to join the World Trade Organisation, which has allowed for the mining sector to have an increase in investments due to a rise in production for copper mining.

The analysis
Mining is a major component of the economy in Laos and is heavily relied upon in order to increase the GDP of the country. For the mining industry, Laos uses Foreign Direct Investment (FDI) in order for the production of the copper mining to be increased and more efficient. FDI is the investment from a company outside of Laos (international) into production of a copper mine in Laos. For copper mining, there are two major companies that are in the form of FDI, PanAust Ltd and MMG Ltd. For example, PanAust Ltd acquired a company within Laos named Phu Bia Mining, this allows the company to expand its operations into Laos and follow the regulations the government set. Phu Kham is the mine that the company operates in and it is projected for the peak of between 85,000 to 95,000 tons of copper in the coming years.

The Porter Diamond theory is the identification on whether a company can have a competitive advantage with certain factors that are available to them. Laos presents a chance to international companies in regards to mining, which PanAust Ltd and MMG Ltd have taken. The chance must take into consideration the firm’s strategy, structure and rivalry, factor conditions, demand conditions, related supporting industries and the government of Laos. Factor conditions are the general factors that must be considered when choosing whether to invest in another country. Laos has all the basic factors for a proficient mine with the form of location, land and natural resources, however does not have the necessary advanced factors, which the two international companies have done.This allows for an international company to have the opportunity to gain revenue. The demand conditions include the amount of resources that is wanted by consumers, also the product quality and innovation that can be created. In doing so the international companies looking to invest in mining in Laos can create a competitive advantage over competitors. Alongside the demand conditions the internal firm values can create an advantage as the company can better itself by having an internal rivalry in innovation and revenue raising. The model includes related supportive industries that will help make the chance more valuable for the prospective company. For mining, it is the gathering of natural resources that can be of use for many industries that will need natural resources. An industry of major need is the construction industry. The construction industry needs to copper in order to make wiring for electricity to power all of the houses and buildings of the world. Other industries that use copper are the transport and automotive industries giving a lot of opportunities for the mining company to sell the goods to many other companies. In Laos, the two mining companies that operate the copper mines are also owned by the government which allows for the mining to be in interest of the government also. When looking at the cultural aspect of Laos and mining, we can talk about the Hofstede Dimensions. This is an analysis that describes the effect of how the population of Laos value their culture and how it all relates to their behaviour. The six Hofstede Dimensions are Power Distance (PD), Individualism vs Collectivism (IDV), Masculinity vs Femininity (MAS), Uncertainty Avoidance, Long Term vs Short Term Orientation and Indulgence vs Restraint.

The one that applies to the mining sector of Laos the most is the Long Term vs Short Term Orientation. It is about the future of Laos and what the government is doing now to be stable and rich in the future. Laos being a developing country has lots of unemployed people and people who are not willing to work hard jobs for not enough money. The government is not in a position where they can establish new mines and produce enough to be able to pay its employees enough. This is where Laos has sold most of their mines to International Businesses which have a lot more money and are investing in Laos. By doing this, Laos has managed to increase their GDP. The downside to this however is that when Laos sells its mines and its property to international companies, they decrease the possibility of ever getting that land back. Masculinity vs Femininity has a huge effect when talking about mining and the overall Laos population. Working in a mine requires strength and stamina which means mining jobs will be a lot more suitable for males. However, Laos people are very patient, un-confrontational and non-materialistic which makes them very un-masculine. All this means that companies that are willing to invest in mining in Laos will need to consider this and allow people that are willing to work those jobs get some training to make sure they will be strong and safe at their positions. Culture is a huge part of Laos population. When the government decided to sell the mines to international buyers so they can operate them, they needed to come up with cultural heritage plan. Mining sites can disrupt or damage places that are of spiritual significance as well as archeological. Another reason which is less obvious however is that mining can harm the “intangible heritage” of Laos. This means the language, their art, music, performance, religion as well as beliefs. MMG being one of the bigger companies has a cultural heritage plan that allows them to work without disturbing the population or ruining their peace. This not only allows MMG to have a peaceful environment to work, it also contributes to them showing respect and their “licence to operate” is seen with higher respect and less concerns from the society

Conclusion and recommendations
Copper mines in Laos have a huge effect on the economy in Laos. Mining is one of the more important sectors in Laos because it is worth over 10% of their Gross Domestic Product (GDP). Big international companies seek for potential where they can invest, and Laos being a developing country with lots of mines but not enough money, is their perfect opportunity. Mining in Laos not only has an impact on their investors, it also impacts the society, their government and economy as well. Trading almost 90% of their biggest copper mines to international companies has brought them a significant increase in money flow, increased jobs opportunity and overall more income for the average family. Mining industry in Laos represents 80% foreign direct investment, 45% of total exports, responsible for approximately 12% of government revenues and 10% national income. These a numbers that represent how beneficial mining has been for Laos and the sustainability of it. Investing in Laos will not only benefit their economy and money flow but it will have a huge impact on the investors as well. The currency difference and the average annual wages are a lot different than countries like Australia. This allows the international companies to invest more money and get increase their ROI (Return on Investment). Laos is a country where potential investors can make a lot of money as well make the Laos society happy.