A Review of the External Positions of the Oil-Importing Developing Countries and their Relationship to the World Oil Market

Many oil-importing developing countries faced greater difficulties coping with the second oil shock (1979–80) than with the first (1973–74). The recent decline in oil prices has offset only a small part of the adverse effect of the earlier increases, and a number of these countries continue to face severe problems in servicing their external debt. This paper explores the reasons for these difficulties, which are associated in part with the higher levels of real interest rates in recent years and with the slowdown in economic activity in industrial countries. Estimates are provided of the effects of changing oil prices on the net real cost of oil imports in developing countries. The paper concludes with an assessment of the medium-term prospects for the financing of external deficits.     

Refinery deregulation in developing countries

For much of the 1980s refining has been unprofitable. The continued operation of small refineries in oil-importing developing countries has therefore come under intense scrutiny, especially by the international financial institutions concerned with high levels of external debt. This paper examines the specific case of Morocco. Even though refining may be unprofitable at the world's export refineries, refining may still be part of the least-cost solution to meeting developing country petroleum demands as a result of transport differentials. Unlike some other refineries in Africa, those of Morocco are well run, and closure is unwarranted. Rather the need is for regulatory and pricing reform, such that refiners can respond more flexibly to changes in world markets.     

Mining during the next 25 years: issues and challenges

This article examines possible future trends in the mining industry in the light of past developments. After a preliminary discussion, the article considers various aspects of demand, supply, corporate structures, geographic distribution of investment, and social and environmental factors influencing the minerals industry. Scepticism is expressed about the smooth, exponential growth envisaged by many commentators. Some risks are elaborated, and a digression about gold is included.
The article argues that, while the minerals industry has concentrated on reducing cash costs through technical innovation and productivity improvement, new approaches may be needed in future that are not directly linked to economies of scale. Contracting out is an interesting trend with major implications.
The view that the mineral industry's corporate structure is becoming increasingly concentrated is challenged. Developments in consumer countries as well as historical precedents strongly suggest a more diverse structure.
The spread of minerals investment from North America and Australasia, and the resurgence of foreign direct investment in minerals projects, are placed in context and discussed from the viewpoints of both companies and host countries.
Although the appropriate responses to many of these issues can only properly be made by governments at all levels, the industry has to play its part.     

Non-metallic Minerals and the Developing Countries: Patterns, Constraints, Initiatives

This paper reviews the role of non-metallic minerals in the economy and examines the relationship between demand patterns and the process of industrialization. As developing countries industrialize, large volumes of construction minerals (sand, gravel, crushed stone, etc.) will be required while with most other industrial minerals increasing quantities will be consumed only in the more advanced stages of economic development. In many developing countries the assurance of an adequate supply of these minerals from indigenous resources will necessitate initiatives aimed at removing constraints and barriers to mining sector development.     

INVESTMENT REQUIREMENTS IN THE NON-FUEL MINERAL SECTOR IN THE DEVELOPING COUNTRIE

Concern over the financial requirements for the long-term expansion of the world non-fuel minerals industry has led to growing interest in estimates of the magnitude of the requirements. The authors focus on the requirements in the developing countries for nine major minerals and deal with the most important among these, copper, in an appendix.     

Energy Conservation in Rapid-Growth Economies of Asia

Energy demand, including demand for petroleum, is expected to increase at a faster rate in the rapidly-developing nations of East and Southeast Asia than elsewhere in the world through the turn of the century. In the aggregate, the countries of this region are heavily dependent on imported oil, coal and natural gas. Rapid industrialization, electrification and increased consumer demand for energy-consuming durable goods and housing underlie the expected strong growth in energy consumption. Substantial scope for greater economy in energy-use exists in the industrial and transport sectors but effects in these areas will require effective management and institutional support in addition to getting prices right. In the context of balance of payments and external debt considerations, and the continued growth of energy consumption in East and Southeast Asia, improving energy conservation will be of great importance in lessening the likelihood that future economic development will be constrained by energy problems.     

Ranking countries for minerals exploration

This paper presents the results of a survey of multinational mining companies pertaining to the ranking of countries for non-fuel minerals exploration in the early 1990s. It ranks countries in order of greatest exploration interest in the early 1990s, as well as countries that have geologic potential but unacceptable investment climates. It provides a list of priority commodities for exploration, the criteria for exploration levels, critical and negotiable factors in selecting countries for exploration, and the investment climate ratings of countries where exploration is probable in the early 1990s. The results of the survey indicate that major minerals exploration activities are concentrated in a small number of countries. Political and economic reforms around the world should increase the number of countries receiving active private sector minerals exploration in the 1990s.     

Natural resources and development: The gold sector in Mali

Resource-rich countries do not necessarily perform well, especially developing countries. A debate has developed since the 1990s about a “resource curse” hypothesis, which threaten to impede the resource-rich countries in taking advantage of their natural endowments. In Mali, a less-developed country, gold export has substantially increased since the 1990s. In this paper we show that widespread analyses, such as those of the Dutch disease and the quality of institutions, are not sufficient to understand what is at stake in Mali, and that the mining sector has proved to be neither a blessing nor a curse, at least until the present. Gold mining has brought budget revenues but induced few spillovers. As gold mining has now come to maturity, the die is probably cast.     

THE ECONOMICS OF DEEP SEA NODULES: AN APPRAISAL OF RECENT ESTIMATES

The metal resources of deep sea nodules are attracting investment from many international corporations. Commercial interest in nodule mining is related to, but not governed by, existing estimates of economic profitability of the first generation ventures. Mr. Chacko reviews some of the latest published figures on costs and revenues, and these are updated and put on a comparable basis. He then argues that more attention should be paid to the long-term objectives of corporate policy in analysing the future development of the nodule mining industry.     

Innovative Approach to Financing Energy Conservation Investments in Developing Countries

A common barrier to undertaking conservation measures in developing countries is the limited ability or the reluctance of energy users to acquire and deploy the capital needed to develop these opportunities. Industrial firms, for example, have had frequent opportunities in recent years to benefit from the use of new, more energy-efficient production technologies, but insufficient internal cash, combined with an ability to raise debt or equity capital under favourable terms, have often prevented firms from funding these investments.
Confronted with such impediments to mobilizing capital for conservation investments, some financiers and entrepreneurs in industrialized countries have recently implemented five innovative arrangements for financing conservation and other energy-related investments. These five financing arrangements are discussed. For each arrangement, the structure and operation, the distribution of risk between the energy user and the creditors/external investors, and the financial benefits that accrue to the energy user are described.     

Soviet non-fuel mineral resources : Surplus or scarcity?

The USSR has long been regarded as a resource-rich country with no need for external sources of non-fuel mineral resources. Increasingly, however, it is beginning to appear that such an assessment of the Soviet non-fuel mineral resource picture is overly optimistic. The Soviet mineral industry is beset by a variety of problems which complicate the extraction and utilization of needed minerals. The USSR remains a resource-rich country, but the difficulties it encounters exploiting its resources are multiplying. This article examines the Soviet aluminium, chromium, cobalt, copper, gold, iron, lead, manganese, platinum, titanium and zinc industries, and offers views of the Soviet resource future in each area.     

Fuel substitution in sub-Saharan Africa

Deforestation and decline in agricultural productivity are major concerns over large parts of sub-Saharan Africa. One of the principal causes for both these phenomena is the export of woodfuels from rural agroecosystems to urban markets. This process is noteworthy because of the size of the trade. Wood fuels (fuelwood, charcoal, and agricultural residues) constitute the most important source of energy in these countries, varying from 60% to 95% of total energy consumption. In terms of the environmental impact of the fuelwood trade, solutions typically considered are the introduction of improved cookstoves, fuelwood plantations, and fuel substitution by conventional fuels. This article examines the structure of the fuelwood problem, reviews the successes and failures of past experiences, and focuses on the potential for fuel substitution as an option to reduce the urban demand for fuelwood.     

Privatizing the minerals sector

The end of the Cold War presents new challenges for the dynamics associated with mineral resources development. Broader approaches are needed to help mineral rich developing countries develop their minerals sector. These countries need to embark upon programmes of policy reform and privatization in order to make their mineral resources industries more efficient and responsive to free market forces (such as supply and demand and price), and to turn mineral sector decision making over to the private sector. This article examines the use of policy reform and privatization strategies to increase mineral resource production in developing countries, thereby contributing to both developing country economic growth and developed country access to mineral supplies .     

Dynamics of state mining enterprises during the 1980s and the outlook for the 1990s

This paper examines the evolution of the control by the state of mining and smelting from 1975 to 1989. In 1950, there was little state-owned mining capacity outside the centrally planned economies. A wave of nationalizations of mine assets swept over the developing countries in the late 1960s and early 1970s. State control continued to rise, in developing countries as well as in the developed market economy countries, until the mid-1980s, when the trend reversed. At present some 20% of Western world mineral production is state controlled. The level of control is highest for those minerals mined mainly in the developing countries, and lowest for those minerals mined mainly in the developed market economy countries. The current trend is toward privatization of state-owned mining enterprises in developed countries and it is expected that as the 1990s progress, privatization of such enterprises will also begin to take place in developing countries.     

Net value royalties : Practical tool or economist's illusion?

The petroleum industry has traditionally generated substantial revenues for governments. Where governmental power is divided, as in federations like Canada and Australia, a junior level of government normally collects royalties while the senior level levies a variety of imposts (income tax, export duties, excises on production). The combination of recent sharp reductions in prices, more price volatility and an era of freer markets has subjected existing tax and royalty systems to severe strain and has shifted attention to the design of fiscal systems that are more profit- sensitive. For the royalty element, interest focuses on net value royalties (NVRs). This paper deals with the nature and problems of NVRs. It proceeds by looking first at the application of resource rent royalties in Australia. It then focuses on recent megaproject royalty arrangements in Alberta and evaluates the degree to which Alberta's current royalty system is profit- sensitive. Problems associated with NVRs are discussed in the fourth section; concluding remarks are made in the last section.     

Capital structure and asset utilization: the case of resource intensive industries

This research studies the relationship between the capital structure of a firm and its asset utilization rate in resource intensive industries. We study this issue from both private and public policy perspectives. From a private perspective, it's conceivable that a positive relationship may exist because a company is trying to increase its use of debt to effect a more efficient utilization of its assets. However, from a public policy perspective, finding a positive relationship between asset utilization and debt levels in natural resource sensitive industries may signal a sub-optimal exploitation of natural resources when debt levels rise. This research examines measures of leverage and asset utilization in firms from the mining, oil, and timber industries to determine whether the behavior alleged in the PALCO/MAXXAM case (an increased cutting rate to pay off junk bond financing) has been observed more systematically. We observe a positive relationship between leverage and asset utilization in all three industries when leverage is calculated using book value measures. When market value measures are used, this positive relationship no longer holds in the mining industry. Possible explanations for these results are offered.     

Sustainable development in the mining industry: clarifying the corporate perspective

This paper examines sustainable development in the corporate mining context, and provides some guidelines for mining companies seeking to operate more sustainably. There is now a burgeoning literature that examines sustainable development in the context of minerals and mining, most of which is concerned with sustainability at global and national scales. What is often challenging to ascertain, however, from these numerous perspectives on sustainable mineral extraction, minerals and metals recycling, environmental management, and social performance, is how sustainable development applies to mining companies themselves, and what steps a mine must take in order to improve the sustainability of operations. Since mining processes have the potential to impact a diverse group of environmental entities, and are of interest to a wide range of stakeholder groups, there is ample opportunity for the industry to operate more sustainably. Specifically, with improved planning, implementation of sound environmental management tools and cleaner technologies, extended social responsibility to stakeholder groups, the formation of sustainability partnerships, and improved training, a mine can improve performance in both the environmental and socioeconomic arenas, and thus contribute enormously to sustainable development at the mine level.     

The USSR, China, India and the world metals industry to 2010

Remarkable changes are occurring within the economies of the USSR, China and India that are influencing mineral industry activities. These three countries account for a major share of world minerals production and consumption. Their domestic reforms may ultimately have a serious impact on the global mining industry. This paper examines the present status of the Soviet, Chinese and Indian mineral industries, and forecasts conditions to 2010. Long-term characteristics analysed include industrial production, intensity of use, consumption, mine and plant expansion and trade policy. Six metals are highlighted in the study – aluminium, copper, lead, nickel, steel and zinc.     

Improving pesticide regulation in the third world: The role of an independent hazard auditor

Central to the environmental and health hazards created by the expanding use of pesticides in developing countries is the weakness of national regulatory agencies. This article reviews current international efforts aimed at supporting these institutions and describes the contribution that an external “hazard auditor” might make in assessing the pesticide industry's adherence to accepted standards of health and environmental protection. An independent evaluation of this kind may prove attractive to all parties in the long-standing confrontation over the control of pesticide technology: the industry, public interest groups, developing and developed countries, and international agencies. The article outlines one approach to operationalizing the concept and examines initial responses to the proposal. An earlier version of this paper was presented at the International Commission on Occupational Health/International Development Research Centre Symposium on the Impact of Pesticide Use on Health in Developing Countries, 17–21 September 1990, Ottawa, Canada.     

Evaluating environmental plan quality: the case of planning for sustainable development in New Zealand

This study examines the quality of local and regional environmental plans produced under New Zealand's Resource Management Act (RMA) of 1991, which sets forth a national sustainable development strategy. Plan quality characteristics are defined and used as criteria for plan evaluation. A key finding is that planning programmes have significantly advanced since passage of the RMA, but that high quality plans are not necessarily produced by simply passing mandate legislation. Implications of study findings for sustainable development initiatives in other countries and for future research are presented.