The globalization of the economy associated with development models based on the laws of capital and on ethical values that justify the deterioration of ecosystems and the loss of biodiversity, as well as the unfair distribution of wealth and consequently the increase in poverty are intrinsically linked to processes of cultural homogenization, oriented to export unsustainable consumption patterns that characterize economically developed societies and that constitute the core elements of environmental problems.
Many companies are between the dilemma of allocating economic resources or not to the prevention of pollution and pollution of the environment. In the short term, they would be saving cash outlays and achieving better liquidity ratios. On the other hand, in the long term, the same companies would be obliged to allocate large sums of money to repair the damage inflicted on the environment. Proper environmental management allows entities to use their resources efficiently, which produces a double effect: cost savings and a decrease in environmental impact.
Nickel mining constitutes one of the main economic sectors in Cuba and its impact on the environment is permanent and aggressive. It is not about eliminating an essential economic activity in the purchasing power of the population dependent on this sector. It is about continuing to exploit the mineral, with certain economic conditions, that allow the administration to anticipate and mitigate environmental impacts.
The work was carried out with the objective of: Proposing the application of a financial method to carry out the Economic Planning of the expenses associated with the environment that causes the exploitation of mineral deposits, so that the efficiency of the Financial Management of the entity is increased and increase the effectiveness of economic-accounting operations.
In the development of the Research, the calculations of the proposed Financial Method are described, the productive activity of Nickel is addressed, the economic planning of nickel producing companies is characterized and the proposed model is applied in a case study.
Different empirical methods were used, such as: direct observation and document analysis; other theorists like the Analytical - synthetic, Hypothetical - deductive and Historical - logical; Empirical studies such as: the Interview and the Expert Consultation, in addition Modeling was used to describe the calculation of the Financial Method and the Experimentation when applying the proposed model in the company.
At the end of the Work, a series of recommendations are suggested aimed at the implementation, monitoring and control of the proposed Financial Method as a tool that allows forecasting and acting on future environmental expenses derived from the exploitation of mineral deposits; In addition, the training of the staff of the Economic-Financial Subsystem is encouraged to achieve a greater understanding of the new financial methods and techniques that contribute to increasing the efficiency of operations.
The main result of the research is to provide a financial tool that allows estimating the behavior of environmental expenses for a chronological series of time, creating a controllable cash fund, which will affect profits to a lesser extent at the end of the period and guarantee better performance. economic business. This method has the possibility of generalization to companies with similar characteristics of exploitation of mineral resources.
ABSTRACT
The globalization of the economy associated to development models based on the laws of the capital and in ethical values that justify the deterioration of the ecosystems and the loss of the biodiversity, as well as the unjust distribution of the wealth and consequently the increase of the poverty, are intrinsically linked to processes of cultural homogenization, guided to export the untenable patterns of consumption that characterize the economically developed societies and constitute the elements adjacent to the environmental problem.
Many companies are among the alternative of dedicating or not economic resources to the prevention of the contamination and pollution of the environment. In the short term, the savings of cash and the achieving of better ratios of liquidity would happen. On the other hand, in the long term, the same companies would be forced to dedicate supreme discharges of money to repair the damages infringed to the atmosphere. An appropriate environmental handling allows to the entities, to use its resources efficiently, what produces a double effect: cost's savings and decrease of the environmental impact.
Nickel mining constitutes one of the main economic sectors of Cuba and its impact on the Environment is permanent and aggressive. It is not about eliminating an indispensable economic activity in the purchasing power of a population. It is about to continue to exploit the mineral, with certain economic conditions that allows the administration to foresee and to mitigate the environmental impacts.
The work was carried out with the objective of: To propose the application of a financial method to carry out the Economic Planning of the expenses associated to the environment that causes the exploitation of mineral locations, so that the efficiency of the entity's Financial Administration increases and the effectiveness of the economic-accountants operations rises.
In the development of the Investigation the calculations of the Financial Method are described the productive activity of the; is characterized the Economic Planning in the companies nickel producers and the pattern proposed is applied in the entity Object of Study.
Different empiric methods were used such as: the direct Observation and the Analysis of documents; other theoretical ones as the Analytic one - synthetic, Hypothetical - deductive and Historical - logical; empiric such as: the Interview and the Consultation of experts, the Modeling was also used to describe the calculation of the Financial Method and the Experimentation when applying the proposed pattern in the company.
When concluding the Work, a series of recommendations to guide the installation, pursuit and control of the Financial Method like a tool that it allows to predict and to act on future derived environmental expenses of the exploitation of mineral locations were suggested; it is also motivated the training of the personnel from the Economic-financial Subsystem to achieve a bigger understanding of the new methods and technical financial that contributes to elevate the efficiency of the operations.
The main result of the investigation is to add a financial tool that allows to estimate the behavior of the environmental expenses for a chronological series of time, creating a bottom of cash controllable that it will affect in smaller quantity the utilities at the end of the period and will guarantee a better managerial economic acting. This method has generalization possibilities to other companies with similar characteristics of exploitation of mineral resources.
KEY WORDS: Financial Method, Forecast, Expenses, Nickel Production, Environment.
KEY WORDS : Financial Method, Presage, Expenses, Nickel Production, Environment.
INTRODUCTION
Modern knowledge societies are reproduced in the context of globalized market societies. Science and technology, as heads and tails of the same coin, constitute the infrastructural infrastructures in the dominant economic system and condition the mechanisms of market rationality and productivity.
Globalization has deepened, since the 1990s of last century, asymmetric situations of production, commercialization, consumption and appropriation of natural resources without eliminating the threats of confrontations between countries and regions, in addition to contributing to the manufacture of growing risks for the individuals, societies and nature. The increasing differences between societies in the North, with high technological and consumer productivity, and those in the South, increasingly trapped by the structural factors of poverty and external indebtedness, put the coexistence of human societies at risk. ecological balance on the planet.
At the regional level, Cuba is closely linked to the activities of the Association of Caribbean States (ACS), as well as the Caribbean Environment Program (PAC), the United Nations Environment Program, and actively participates in the main global environmental agreements, at the Inter-American Institute of Global Change, maintains actions in the different environmental agreements signed before and after Rio 92 and close working relationships with different United Nations bodies such as: the United Nations Program for the Development (UNDP); the United Nations Environment Program (UNEP); the United Nations Educational, Scientific and Cultural Organization (UNESCO) and the United Nations Food and Agriculture Organization (FAO).
As a consequence of the political harassment, the economic blockade and the threat to security and sovereignty by the most powerful state in the world; Cuba depends, like no other country, on its own forces and resources; In this context, the rigor with which wealth and problems are handled, and the extent to which natural, social and cultural processes can be integrated with those of economic development, is of singular importance. The difficulties themselves provided at the same time a unique opportunity to develop a process of collective and creative construction of alternatives of scientific knowledge and practical solutions to environmental problems that today concern humanity as a whole.
The Cuban government, aware of this reality, created the Ministry of Science, Technology and Environment (CITMA) and within its powers and functions are those of directing and controlling Environmental Education Strategies and Programs.
As established by the National Environmental Strategy prepared by CITMA and put into effect in June 1997, the criteria for the ranking of environmental problems are considered to be the significant impact they produce on:
- The health and quality of life of our population Prioritized economic activities Considerable extensions of the national territory Ecosystems of economic and social importance
The identification of the main environmental problems makes it possible to establish a prioritized order of attention to the main efforts of environmental management. Research to date has identified the following fundamental problems:
- The entities lack monitoring systems for their effluents and wastes The waste treatment bodies required by the activities carried out by the entities are not counted or are in poor condition Workers do not have adequate preparation and environmental education Environmental economic management by the productive companies is still insufficient
The producing companies will approach the solution of environmental problems in the first place: with the integration of the environmental factor in the industrial operations of the entity, which will have a favorable impact on its economic management, society and the environment. Second guaranteed safe environmental treatment.
National and international regulations are continually being improved and are becoming increasingly stringent in the demands of the management of the industry-environment interface. The consequence of the negative impacts of the industry on the natural environment and man, are beginning to be better understood, considering that economic well-being can only be achieved together with safe environmental management. The competitiveness of a company and its survival in the medium term, requires the inclusion of the environmental factor in its economic management.
One of the fundamental economic activities of Cuba is the production of Nickel for sale. The rising situation of the Nickel price in the world market allows the profits generated by this sector to increase each year. Despite the fact that the production companies have accounting programs and financial software that enable the quality of accounting information, it has not been possible to forecast the behavior of environmental expenses in future periods, to plan them accurately and act preventively on them without affecting the earnings at the end of the period.
A study carried out in the Finance area of nickel-producing companies in the territory, in addition to interviews with specialists in the Planning area, made it possible to declare that there is no economic-financial instrument that allows estimating the behavior of environmental expenses originated by the productive activity of Nickel.
The application of the proposed Financial Method will allow estimating the behavior of environmental expenses for a chronological series of time, creating a controllable cash fund, which will affect profits to a lesser extent at the end of the period and will guarantee better business economic performance.
I. FOUNDATION OF THE FINANCIAL METHOD FOR ESTIMATING EXPENSES ASSOCIATED WITH THE ENVIRONMENT
Due to the characteristics of the Cuban nickel companies and their ease of use, it was decided to design a Financial Method that formulates a net present value approach to cash flow for the analysis of alternative environmental expenditure policies. The decision model is focused on calculating the net gains or losses resulting from estimating a certain value of environmental expenses for the company. Your cash flow timeline is a useful tool to illustrate the fact that investing in environmental expenses spreads its impact on the level of the company's profit or loss at the end of the period. The essence is to compare the results that an environmental expense policy will provide the company from one period to another,and its decision point is the criteria of the Net Present Value (NPV) in a resulting indicator called AUGA. Different factors are considered such as:
- P- price per unit of nickel produced C- cost per unit of nickel produced W- Nickel sales Q- Other income b- ratio of economic losses in the exploitation of mining deposits T-average collection period for Nickel sales K-Daily interest or discount rate
It is established as a condition that:
Formula - Environmental Costs in Mining
Being:
- AUGA o- Allocation of Profits from Environmental Expenses for the period taken as a basis AUGA 1- Allocation of Profits on Environmental Expenses for the current period (1-b) - Coefficient of Environmental Expenses
If the Value of the AUGA indicator for the current period is negative, the environmental expenses or the investment for the exploitation of mineral deposits that the company projects, will affect the profits (they will decrease) at the end of the period. On the other hand, if the Value of the AUGA indicator of this condition is positive, the environmental expenses will not affect the profits of the company by accelerating the cash flow and planning the estimated optimal investment.
II. APPLICATION OF THE PROPOSED FINANCIAL METHOD FOR THE FORECASTING OF ENVIRONMENTAL EXPENDITURE IN NICKEL PRODUCING COMPANIES
II.1 General characteristics of nickel producing companies in Cuba
In Cuba there are companies that produce and sell Nickel + Cobalt (Ni + Co) and other related products inherent to the process, whose main productions are: Nickel Sinter, Mixed Ni + Co Sulfide and Nickel Oxide, as well as other refined products. The operation of the plants is associated with the technology of the CARON process, whose main characteristic is the combination of lateritic and serpentine minerals. For this they have mines, with open pit deposits very close to the factories, which implies a low cost of mining, they also have main plants where the mineral is subjected to a series of processes related to obtaining the different types of final products.
Mission
Guarantee the production of Ni + Co with an internationally recognized quality, maintaining efficiency and effectiveness rates that allow it to be competitive in the market, for which it has an ideal human capital and constant improvement of its technology and care of the environment, constituting a symbol for the current Cuban industry.
II.1.1 Stages of business development
The companies were designed to produce 30,000 Metric Tonnes (MT) of Ni + Co annually. Its final products are: Nickel Sinter, Mixed Ni + Co Sulfide and Nickel Oxide.
In the period from 1986 to 1994, only 54,900 MT of Ni + Co were produced with an average metallurgical efficiency of 54%. The most relevant production in this period was carried out in 1989, where 10,001 MT of Ni + Co were reached, while the average of the three years of best production (1989, 1990, 1991) was 8914 MT of Ni + Co.
In 1995, a process of modernization and replacement of the facilities began, moderately introducing more efficient and innovative technologies. From 1995 to 1999, several investments were made that allowed increasing production to 28,500 MT of Ni + Co in 1999.
To justify the feasibility of executing the investments, two Technical-Economic Studies were carried out between 1995 and 1999.
The mission now consists of economically and financially evaluating the investment process, conceived as the first investment phase of the companies, which will allow the production of Ni + Co to be increased to 36,200 MT, while reducing operating costs.
II.1.2 Description of the technological process
The technological process is based on the Caron process, whereby the free moisture content of the mineral is removed, the mineral is crushed and the nickel is reduced through calcination under conditions that lead to relatively little iron with zero valence. The reduced product is cooled and then leached into an ammonia carbonate solution in the presence of oxygen, releasing the metal values as amine complexes. The leached pulp is washed, heated to remove ammonia and carbon dioxide for recycling to the process and then discarded.
Nickel impregnated in the leached liquor is concentrated through precipitation as basic nickel carbonate, which is produced by heating the solution until the ammonia and carbon dioxide boil, and then recycle them. Nickel oxide is then produced by thermal decomposition of basic nickel carbonate which is agglomerated by the addition of anthracite carbon at high temperature to produce the nickel sinter as a commercial product.
Lateritic nickel from the Caron process is more difficult to recover than nickel from sulphurous deposits, but it is a good source for superalloys and hyperalloyed steels, due to the absence of arsenic, selenium, bismuth and antimony. The process stages explained above are developed in the following Plants:
- Mineral Preparation Plant Reduction Furnace Plant Leaching and Washing Plant Cobalt Separation Plant Ammonia Recovery Plant Calcination and Synter Plant Auxiliary Plants
II.2 Characterization of the Planning and Finance groups
ECONOMIC FINANCIAL SUBSYSTEM
The article developed its Field of Action in the Financial Economic Planning of companies, which is subordinated to the Financial Economic Subsystem.
The Financial Economic Subsystem is structured by a group of workers (superior, middle and auxiliary technicians), distributed in three groups: Planning, Accounting and Finance; that guarantee efficient business performance.
Planning Group
Three fundamental activities are developed in the figure of an Economic Controller for each one: Investments, Statistics and cost sheet and the Control of the Production Plan
Investment Features
- Control of the physical and financial execution of the Investment Plan Control of the investment materials Preparation and fulfillment of the Statistical information of the Investments Preparation of the categories of the Investment Plan Economic Analysis of Investments Expenditure Budget by area of responsibility Control of the fulfillment of the Expenditure Budgets by areas of responsibility Monthly preparation of cost sheets for auxiliary productions Control of the daily Cost of the Main and Auxiliary Plants Control of the Price Policy Coordination between the different categories of plans to prepare the Budgets of Indirect, General Administration Expenses and Other Expenses.
Statistics functions and cost tab
- Preparation of the cost file at the end of each month Capture of compliance with the Expense budgets of the Main and Auxiliary Plants Preparation and issuance of all Statistical information of the Company Daily preparation of the Company cost file Control of the execution of the Work plan and Salarios Control of the Production Plan. (Economic Controller) Control of the execution of the Balance of Income and Expenditures in Foreign Currency Preparation of the monthly and quarterly economic analyzes Control of the execution of the Production Plan Control of the execution of the Research and Development Plan Strategic Projection
Finance Group
Collection and Payment Functions
- Keeping cash movements up to date in the bank Keeping track of the bills of exchange domiciled in the bank on a daily basis Keep the salary and subsidy cash plan updated daily Keeping the records of checks issued and loaded by the bank updated.
Cashier Features
- Make payments for the fixed fund (minor payments, diet, advance, settlement), as well as your daily balance and deliver documents to Accounting every day Prepare payments and claims a day or two after each payment Pay by payroll the alimony each month. Make daily report.
II.3 Procedure for the Preparation of the Expense Budget by Areas of Responsibility
An expenditure budget is a statement that shows estimated information on the results of a program or an operation plan, represents a projection of future conditions and events, expressed from a financial point of view, and constitutes the forecast, objectives and goals to reach by the bosses and workers of a labor collective.
The expense budget meets three basic objectives:
- Establish a commitment Serve as a guideline or guide Compare actual execution with forecast or budget
Determination of the Expense Budget by Areas of Responsibility:
Fundamental materials: They will be determined for each of the regulated inputs, multiplying the standard by the volume of production and the price. Otherwise it will be determined according to the needs of each area valued at the established prices.
Materials for operations: Proceed the same as the previous point for those who have standards, otherwise it will be determined according to the needs of each area valued at the established prices.
Maintenance: It will be prepared in conjunction with the Maintenance Department.
Fuel: The allocation of fuel by vehicle type and engine type will be taken into account. The Mine will plan independently, as they have consumption standards for these. The rest of the fuel will be calculated in the way explained previously.
Energy: The areas that have consumption standards will first determine the Total Consumption (Standard x Production Volume). Those that do not have consumption norms will determine their needs according to the real of previous periods or by a Load and Capacity Balance of their area.
Salaries: The approved number of workers will be multiplied, together with the Human Resources Department, by the Average Salary they earn. It must be taken into account that the Ministry, as a premise, does not accept to exceed the limits of the previous year. If so, the pertinent justifications must be submitted according to Studies or Load and Capacity Balance.
Amortization: Consider the actual for the last year, as well as take into account the additions and removals of the equipment and other basic means installed in each activity.
II.4 Application of the Financial Method for planning environmental expenses caused by the productive activity of Nickel
The application of a Financial Method, as part of the Company's Planning, constitutes a valuable financial tool that allows forecasting the cash flows for Environmental Expenses derived from the productive activity of Nickel, estimating its behavior in future periods and deciding what Expenses figures will imply less impact on profits.
Due to the characteristics of the sales and the ease of evaluating the results, this Financial Method was designed for companies producing nickel with the aim of providing an instrument for estimating Environmental Expenses.
For the corresponding calculation, an example of estimated figures is presented that can yield the following indicators in the Company:
| Needed information | Year 2009 | Year 2010 |
| Sales (in units) | 94.3528 | 94.3528 |
| Price by unit | 19685.3459 | 19685.3459 |
| Cost per unit | 8594.0615 | 8594.0615 |
| Other income generated by sales | 3582.00 | 3582.00 |
| Economic Loss Ratio for Environmental Expenses | 25% | 18% |
| Average Collection Period | 30 days | 30 days |
| Daily interest or discount rate | 0.018% | 0.018% |
Profits: Sales in Units X Price per Unit
U = V x P
U = 94.3528 x 19685.3459
U = $ 1 857 367.5046
- P- price per unit of nickel produced C- cost per unit of nickel produced W- Nickel sales Q- Other income b- ratio of economic losses in the exploitation of mining deposits T-average collection period for Nickel sales K-Daily interest or discount rate
Note: It works by estimating only the variation in the value corresponding to the Economic Loss Ratio for Environmental Expenses, because it constitutes the Object of Study indicator in the investigation; the other variables are kept constant so as not to alter the balance of the formula and to guarantee the reliability of the information. The increases or decreases in the remaining variables, motivated by the influence of external or internal factors, will affect the rest in a proportional way.
Environmental Losses
Environmental Losses
Histogram AUGA
The application of the proposed Financial Method allowed to demonstrate that the economic losses due to unplanned Environmental Expenses in 2009 (25%) led to the impact of the profits at the end of the period (AUGA) in an amount of $, however, when planning Economic losses from Environmental Expenses by 18% for 2010, a positive cash flow is projected that reduces the impact on the Company's profits (AUGA) by $ 249,244.
The Financial Method proposal provides important benefits, by determining the optimal or necessary cash that can be planned for Environmental Expenses, presenting lower risks of affecting profits in the Company and better conceptions to establish, forecast and control the Business Economic Planning.
CONCLUSIONS
1- The analysis of the application of the Financial Method for planning the environmental expenses caused by the productive activity of Nickel concludes in the following:
- Nickel-producing companies do not make estimates of the environmental expenses derived from their fundamental activity The Business Planning System lacks financial methods for environmental treatment Economic losses due to unplanned Environmental Expenses in 2009 (25%) led to the impact of profits at the end of the period (AUGA) in an amount of $, however, when planning the economic losses for Environmental Expenses by 18% for the year 2010, a positive cash flow is projected that reduces the impact on the Company's profits (AUGA) in $ 249,244.
2- The proposal of a Financial Method for its application in the Financial Planning of the environmental expenses generated by the productive activity of Nickel, will contribute to increase the efficiency of the economic operations of the entity
RECOMMENDATIONS
Taking into account the conclusions reached at the end of the work, the following is recommended:
- Present before the Management factors of the Nickel Producing Companies, the proposal of the Financial Method in the Financial Planning of environmental expenses Apply the Financial Method to foresee and plan the impact of the Expenses associated with the Environment by the productive activity that develops the Company Consult the diagnoses made in the investigation to develop strategies that minimize the negative effects of the Nickel production activity on the environment Assess the implementation, continuity and control of the proposed Financial Method Train and improve the staff of the Economic Area, To achieve a greater understanding of the new methods and techniques of Financial Planning. Generalize the proposed Method to other Nickel producing companies in the Region.
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