The resource curse

Countries that possess rich mineral deposits, it is widely assumed, are fortunate. Such deposits are assets, part of a country's natural capital. Mining is the key that converts dormant mineral wealth into schools, homes, ports, and other forms of capital that directly contribute to economic development. Over the past two decades, however, a more negative view of mining has emerged that questions the positive relationship between mineral extraction and economic development. The impetus for the alternative view came from empirical studies suggesting that countries where mining is important have not grown as rapidly as other countries. More recent studies have explored the possible reasons behind the disappointing performance of many mineral producing countries. While the central point of contention between the conventional and alternative views — namely, whether or not mining usually promotes economic development — remains unresolved, there is widespread agreement that rich mineral deposits provide developing countries with opportunities, which in some instances have been used wisely to promote development, and in other instances have been misused, hurting development. The consensus on this issue is important, for it means that one uniform policy toward all mining in the developing world is not desirable, despite the recent suggestions by some to the contrary. The appropriate public policy question is not should we or should we not promote mining in the developing countries, but rather where should we encourage it and how can we ensure that it contributes as much as possible to economic development and poverty alleviation.     

The geographic concentration of world mineral supplies

Mineral reserves are unevenly and erratically distributed throughout the world; those countries which were intensively explored in the past — the USA, Canada, the USSR, Australia, South Africa, and a limited number of Asian, African, and Latin American countries — control a large share of many of the industrially important metallic minerals. Current attitudes towards exploration and the mining industry in both the developed and the less developed countries should clearly encourage rather than discourage new exploration. Given an increase in exploration, new reserves may well be found in previously unexplored areas, but any major increase in world mineral supplies will probably come from mining very low- grade deposits and developing new methods of mining and processing non-conventional ores. While it is vital to increase research and development in exploration techniques and mining and processing technology, it is also critical to maintain current levels of consumption and trade by reversing the trend towards trade restriction on the part of some of the less developed countries who are important mineral exporters.     

Informality in mineral resource management in Asia: Raising questions relating to community economies and sustainable development

Informal mining activities provide livelihoods for millions of poor in mineral‐rich developing countries. Yet, they continue to remain one of the least understood areas in mineral resource management. While its poverty reduction potential is acknowledged, the heterogeneous forms of mining that come under its purview are not well discussed. This article aims to draw attention to the politics of definition by briefly introducing the reader to the nomenclature currently used to describe such mining activities. Then the article examines the nature of informality that justifies the name, and then illustrates the claim by documenting a range of informal mining practices in India with cited examples from other Asian countries. It illustrates the variations in social‐economic, technical and legal characteristics, by putting such mining in a community and participatory framework. Finally, the article discusses ways to move towards sustainable development with community participation in mineral‐rich areas of developing countries.     

Informal coal mining in Eastern India: Evidence from the Raniganj Coalbelt

Unauthorized mines are not uncommon in mineral-rich regions of poorer countries, and India is no exception. Whether they constitute merely a law and order problem including safety issues, or there are important social and economic questions involved has yet to be thrashed out. The mining industry, at regional, national and international levels, is ambivalent towards such mining, tending to draw attention away from their informal nature to the size factor.
This article looks into the problem of such informal mining in the light of empirical surveys in eastern Indian collieries. These are called peoples' mines and they serve a significant purpose in local economies. The article's thesis is that peasant communities are trying to claim back a portion of the local resources lost to them through appropriation by mining companies thus re-asserting their traditional rights to local mineral resources. In conclusion, the need for a new moral economy for mining regions is stressed: an economy in which local communities will play a powerful role.     

Large-scale v small-scale mining

The paper reviews available information on how scale and technological sophistication affect the extent to which mineral industries in developing countries aid in meeting those countries' development objectives. It also identifies criteria for determining if small-scale or labour-intensive operations are suitable to particular mining projects.     

NATURAL RESOURCES AND THE CENTRE ON TRANSNATIONAL CORPORATIONS

The international community has a stake in reducing certain avoidable risks of mineral development in developing countries and in promoting more advantageous relations between these countries and transnational mining companies. In the following article, the author examines various programmes of the United Nations Centre on Transnational Corporations which contribute to the achievement of these objectives.     

METAL RESOURCES OF DEEP SEA NODULES

The deep ocean floor represents the latest frontier of knowledge about global mineral resources. The ocean environment poses unique problems for mineral resource development - problems of resource assessment, adaptation of mining technology, and management of resources common to all of mankind. In the first of three related articles on the mineral resources of the ocean, Mr. Odunton assesses the current state of knowledge about the nature and extent of marigenous minerals. He examines the processes of formation, the composition, and the regional distribution of ferromanganese nodules, which represent the most promising of these minerals at present. Attention is also given to the considerations involved in the location, evaluation and exploitation of nodule deposits. Future articles will review ocean mining technology and the economic and policy issues involved in the development of ocean mineral resources.     

Harnessing the bonanza: economic liberalization and capacity building in the mineral sector

Over the past decade many developing and transition economies have liberalized their investment regimes for mining and privatized formerly state-owned mineral assets. In response, these economies have witnessed increased foreign investment in exploration and development, growth in the number and diversity of mineral projects, and the opening up of new channels for harnessing increased economic and social benefits from development in the minerals sector. The restructuring of fiscal and regulatory regimes to encourage foreign investment, and the associated influx of mining capital, technology and skills, is transforming traditional relationships between mining firms, local communities and the government. This transformation necessitates a re-evaluation of the most effective policy approaches to capture increased economic and social benefits from mineral production. This article considers effective mechanisms for improving the capacity of developing and transition countries to maximize the economic and social benefits of mineral production. Common challenges associated with minerals economies are reviewed. Consideration is given to the opportunities for harnessing foreign direct investment and the possibilities for creating new partnerships between local communities, industry, government, and multilateral development agencies through social investment projects. The article concludes with a series of recommendations for the design and implementation of policy approaches towards harnessing mineral production for economic and social benefit following the liberalization of investment regimes for mining.     

Determinants of foreign direct investment in the mining sector in Asia: A comparison between China and India

The aim of this paper is to assess the conditions that influence foreign direct investment in the mineral industries of China and India. The paper first surveys literature on the determinants of foreign direct investment to identify key conditions, under which host countries attract mining FDI. It then builds an evaluative framework which allows for comparative analysis. The paper then comparatively evaluates the performance of foreign investment regimes that govern mineral industries in China and India. Its findings show that the overall conditions for foreign mining investment in China and India are not favourable and that substantial policy, regulatory and other changes in both countries need to be made if more investment is to flow.     

Risks and opportunities for foreign investment in the mineral sectors of the Central Asian Republics: Kazakstan,Kyrgyzstan, Tajikistan and Uzbekistan

With the dissolution of the former Soviet Union in 1991, the nations of Central Asia gained independence and began the transition to market driven economies. Both the political and economic transformations of the Central Asian Republics (CARs) (Kazakstan, Kyrgyzstan, Tajikistan and Uzbekistan) have been difficult primarily because of a holdover of various centrally planned `command and control' approaches to national development. The extensive mapping and exploration of the CARs during the Soviet era (approximately 1921–1991) led to the discovery of several hundreds of mineral deposits that were subsequently evaluated, and it is this `pool' of known, but undeveloped, deposits which is of major interest to foreign and domestic companies. However, foreign investment in the mineral sectors of the CARs is at best quite modest and there are very few positive signs that foreign investment will increase dramatically in the near term. The major risks that the mining industry faces as it works in the CARs arise primarily from the fact that the nations are transitional economies which lack both a comprehensive legal framework and experience in dealing with foreign mining corporations and their practices. The major risks are political, economic, financial, infrastructure, contractual, environmental, social and cultural and workforce related. If all individual risk factors are weighted equally, the relative ranking of the countries (from least risk to most risk for mineral development) would be Kyrgyzstan, Kazakstan, Uzbekistan and Tajikistan respectively. However, such a classification scheme does not effectively weight the importance of mineral potential. If the risk criteria are weighted with respect to geologic potential, the ranking of the countries would be (from least risk to most risk) Kazakstan, Uzbekistan, Kyrgyzstan and Tajikistan, respectively.     

Mining investment and regional development: A scenario-based assessment for Northern Sweden

The way in which mineral development contributes to economic development in the region where it takes place is important for the mining industry’s relations to the local community. The purpose of this paper is to provide an assessment of the regional-economic impacts of a large-scale contemporary iron ore project in Northern Sweden (including two new mines, two processing plants, and one pellet plant). The regional input-output model rAps, provided by the Swedish government agency NUTEK is used, and it explicitly addresses the linkages between demographic development, the labour market, industrial production and the municipal finances in a consistent modelling framework. The simulation results suggest an average employment multiplier of about 2-2.5 during the maximum production phase, indicating that for every 100 jobs in mining about 100-150 jobs are supported elsewhere in the local economy. The positive impacts in this case are made possible in large because of the existing mining cluster and local suppliers in northern Sweden. Still, these results are perhaps best viewed as an indication of the potential for local economic development as they neglect, for instance, potential supply constraints (e.g., attracting the necessary labour force, road infrastructure, etc.). Specific policies to further strengthen the regional linkage effects may therefore be necessary in order for this potential to be realized in practice, and attention would preferably be paid to policy measures that have positive external spillover effects on the surrounding geographical area.     

Good deposits are not enough: Mining labor productivity analysis in the copper industry in Chile and Peru 1992–2009

Chile and Peru produce almost 45% of world’s mine copper output. This situation reflects their natural endowment and mining tradition, but is also the result of development processes undertaken over the last decades. As a result, both countries multiplied its mine copper production in more than 3 times in the last 20 years. Mining labor productivity played a central role achieving these amazing growth rates. Although there is a consensus about the relevance of this variable for the mining industry, the specific factors behind labor productivity changes are not completely understood.     

Maintaining land use agreements in Papua New Guinea Mining: ‘Business as usual’?

Most large scale resource extraction projects in Papua New Guinea (PNG) require companies to negotiate with customary landowners for access to development sites. In the discussion of process and challenges of development and operation of projects, particularly mines, the paper, basing as a case study of land use arrangements in PNG mining, has several objectives to address. First, it discusses land use arrangements in the mining industry and how they have evolved over the last few decades. Today, most of these arrangements involve pluralistic framework agreements which have been shaped by land tenure debates, civil uprisings, government initiatives and increasingly politically savvy customary landowners. This pluralistic process encourages key stakeholder involvement, particularly customary landowner participation which has been an innovative piece of sustainable mineral policy development in PNG. Second, the paper argues that ‘it is not business as usual’ for mining companies as it would generally be the case in developed and many developing countries because they are increasingly forced to be proactive in addressing landowner and community interests while managing mining projects. A brief overview of land use debates in PNG is summarised at the outset to provide background to mining and development in the country. Third, the significance of the corporate social responsibility (CSR) paradigm and its impact on business, particularly the mining industry is acknowledged intermittently in the discussion to shed light on how it is influencing development of local communities. Finally, the paper argues that the post-Bougainville period has led to a change of the old enclave model of mining development to a broad based community driven form of development around mining. However, it is difficult to predict as to how this model of mining led development in rural PNG will span out in the long run. In the meantime, genuine landowner partnerships with developers and government in the management and operation of mining projects in the country are proving to be a positive outcome for everyone despite some major challenges.     

A review of mineral development and investment policies of Botswana

Botswana's mineral policy objective is primarily to maximize the national economic benefit from the development of mineral resources. In 1999, the government replaced the old mining code of 1977, which was out of tune with prevailing economic philosophies with a new mining code. Although, the old act had its shortcomings it served the country reasonably well for 20 years, during which time the country was transformed from being one of the poorest of the world's poor to a middle income country. One of the cornerstones of the new and old mining codes is that government does not subscribe to privately owned minerals rights. The Botswana government attempts to provide a fair balance between the various stakeholders. There are, however, areas in the mineral policy and mining codes that need to be critically reviewed as outlined in this paper.     

Resource exploitation and cross-region growth trajectories: nonparametric estimates for Chile

As a sector of primary concern for national development strategies, mining keeps stimulating an intensive debate in Chile, regarding its role for long-term growth. Partly drawn on theoretical contributions to growth and mineral resource accounting, this analysis assesses patterns of economic growth across Chilean regions. The theoretical and methodological rationale for focusing on weak sustainability, by testing convergence across regions in a distribution dynamics perspective, is first discussed. This is followed by a brief review of policy issues and previous empirical findings of concern to Chile's mining and regional growth. Panel data over the period 1960-2001 are analysed, with growth measured in terms of both income per capita as such, and sustainable measures of this variable. Kernel density and quantile regression estimates indicate persistent bimodal (if not possibly trimodal) distribution of nationally standardised regional incomes per capita, whereby conditions for cross-region convergence are matched only within the inner range of this distribution.     

International mining taxation issues and comparisons

This paper presents the quantitative results of recent research on Canada's minerals and metals industry, and its international competitiveness for mineral investment. The information and analysis presented are derived from the work of a Canadian government-industry task force that was created in 1991, under the auspices of the Intergovernmental Working Group on the Mineral Industry (IGWG). Much of this work deals with mining taxation in several Canadian provinces. More importantly, an attempt is made to evaluate the total tax burden that the mining industry must bear, on a project basis, at all levels from exploration through refining operations in many important competitor countries. While the focus of the paper is on an international comparison of mining taxation, some non-tax issues relating to Canada's competitiveness for mineral investment are addressed .     

The case of artisanal mining in Bolivia: Local participatory development and mining investment opportunities

Despite the buoyant expansion of Latin America's mining sector, the small-scale mining sub-sector remains marginalized. For many countries with small-scale mining resources, the way forward to sustainable mining development is not clear. Activities, in far too many cases, have led to environmental damage, social inequity and political violence among mining communities. This article, through a case study of the Bolivian Altiplano, seeks to advance the understanding of the conditions that drive mining communities into the chain of events of impoverishment associated with environmental damage. It also examines the opportunities for sustainable human development among these communities. In Bolivia's mining sector, social inequity is pervasive and holds the mineral resources captive. This situation is further aggravated by the fact that solutions, in the short term, are uncertain. Unresolved social inequity compromises foreign direct investments since social considerations are becoming increasingly important to mining corporations when deciding whether to invest. This article outlines a preliminary strategy to move forward on social inequity. The strategy revolves mainly around implementing alternative sustainable livelihoods with the participation of the government (central and local), the private sector, NGOs and donors as facilitators and partners. Its aim is to reduce the number of families eking out a living from artisanal mining in order to enhance the viability of small-scale mining. It is hoped that, as social inequity decreases throughout the sector, the increased stability will enable stakeholders to consider foreign direct investments within the framework of the country's sustainable human development goals.     

Small-scale mining and its socio-economic impact in developing countries

This article examines both the positive and negative socio-economic impacts of small-scale mining in developing countries, and outlines some key measures for improving sustainability in the sector. It is important to clarify that, in spite of experiencing its share of environmental- and health-related problems that adversely impact human quality-of-life, small-scale mining plays a pivotal role in alleviating poverty in the developing world, and contributes significantly to national revenues and foreign exchange earnings. Though these important socio-economic contributions make small-scale mining an indispensable economic activity, there is an obvious need for improved sustainability in the industry, more specifically, for operations to resolve pressing problems, many of which have wide-ranging impacts. However, because most small-scale mines are low-tech and employ poorly trained uneducated people, it is difficult for the sector to improve on its own. Thus, governments and regional international bodies must play an expanded role in bridging critical information, techno-logic and economic gaps. It is concluded that governments and regional organizations could accomplish much in the way of improved sustainability in the small-scale mining industry by: (1) legalizing small-scale mining and implementing sector-specific legislation; (2) contributing to community development and providing increased economic support; and (3) providing training and educational assistance, and playing an expanded role in the dissemination and transfer of important technologies.     

The internationalisation of the Australian mineral industry in the 1990s

Overseas mineral exploration and mining investment by Australian companies increased dramatically from the early 1990s until 1997. In the wake of the Asian economic crisis and lower commodity prices it declined somewhat in 1998 and 1999. Reflecting their international competitiveness, Australian resource companies were actively involved in projects in about eighty nations in 1999. This study assesses the extent of growth in exploration and mining operations, the distribution between large and small companies and the changing regional focus which has been occurring. It also reflects on some of the key influences on this development. These include a strong domestic finance sector, supporting mining services provision, technological competitiveness, a growing attractiveness of offshore locations and increasing structural impediments at home.     

A quantitative integrated evaluation of sustainable development of mineral resources of a mining city: a case study of Huangshi,Eastern China

It is generally considered that the non-renewable nature of mineral resources will make them gradually depleted over time. However, in the perspective of development availability of mineral resources in a long-term depends not only on their currently available amounts but also on future potential mineral resources (e.g. those undiscovered and low-grade ores) and substitutive renewable resources. In addition, it is influenced by factors like technology and capital. These factors interact with each other. As a result, it is possible to make the sustainable development of mineral resources by appropriate coordination between these factors. A new concept of Degree of Sustainable Development of Mineral Resources (DSDMR) and its conceptual model are proposed in this paper in the viewpoints of system science and sustainable development to evaluate the ability of sustainable development of mineral resources for a mining city. DSDMR refers to the ability of meeting needs of present and future generations for mineral resources by their logical distribution and substitution. An indicator system and a fuzzy integrated judgment model, which involve factors of resources, economy, society, environments and intelligence, are presented. They are used to evaluate DSDMR of Huangshi city, which is the most ancient and yet one of the most important mining cities producing iron and copper in China.