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Medium Investment Decision Strategic Planning

NABACO

#Mining #Land Use Alternatives
ProHub Comment

This case tests the candidate's ability to move beyond financial metrics and incorporate social/environmental criteria into strategic decision-making. The interviewer guide explicitly redirects candidates away from profitability-only analysis toward a 'social license to operate' framework, requiring them to recognize that qualitative factors (community needs, educational access, employment) should drive the final recommendation despite the sorghum alternative generating higher total profit.

Estimated Time 15 minutes
Difficulty Medium
Source IESE
50 / 100
North American Bauxite (pronounced box-site) and Aluminum Company (NABACO) is an American mining company specializing in extracting bauxite. Bauxite is a type of sedimentary rock with an aluminum content of 40%-60% and is the world’s principal source for aluminum metal. NABACO’s mineral extraction operations are concentrated in Australia, USA, Guinea, and Brazil, in that order. NABACO owns many inactive plots of land in these countries, them being either exhausted or unexploited bauxite reserves. NABACO is wondering how to make the most of this idle land and has hired you to help them decide between alternatives. What criteria should NABACO consider when evaluating alternatives?

Clarifying Information

  1. If asked about objectives, in addition to financial considerations, what NABACO is looking to get out of its selected alternative is a “social license to operate.”
  2. NABACO is market leader with $12 billion in revenue, 5% net income, and a solid balance sheet and cash position.
  3. The land tends to be in rural locations, usually close to a community. That being said, NABACO has no specific country or plot of land in mind yet.
  4. Bauxite mines tend to be shallow, open-pit mines.