Capital allowance schemes for mining projects in LDCs

The capital allowance structure for mining projects in developing countries affects the supply price of investment by determining the payback period, reinvestment and the timing of government receipts. Using the capital allowance structures of Sierra Leone, Tanzania, Zambia, Botswana, Papua New Guinea and Malaysia, the article develops a financial model and examines the effect of capital allowances on foreign investor and host government cash flows under various cost-price conditions. The study stresses the importance to governments of making accelerated depreciation a flexible tool to trade off against other elements in the fiscal package. From the government viewpoint, faster write-offs of capital are preferable to a tax holiday. The article places particular emphasis on evaluating the relationship between capital allowances, income tax and a rent resource tax.     

Efficiency in Welsh coal mining: A comment

Comparison of labour productivities and wage-to-price ratios suggests that the Coal Board's behaviour was not profit-maximizing. This does not make the use of production functions to determine optimal scale very relevant. In particular, the current debates about efficiency and closures cannot be approached solely or mainly from production function analysis.     

Economic analysis of reform policies for small coal mines in China

Over the last three decades, China’s coal industry has achieved dramatic increases in coal production, both in absolute terms and relative to the world as a whole. This achievement is due largely to its coal policies. Yet facing increasing pressures of environmental sustainability and market transition, the Chinese government was forced to make deep reforms and adjustments to regulate the coal industry effectively. This paper presents an historical overview of China’s coal economic policies, paying particular attention to the current reform policy of closing mines and restricting the yield for the small coal mines (SCMs) in the context of economic theories and methods. We argue that the SCM closure policy would not likely be efficiently enforced if a feasible market mechanism were not built up. The failure of closure policy is due largely to problems of property rights, coal pricing, ownership, and objectives.     

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.     

Advisory Committee: A Powerful Tool for Helping Decision Makers in Environmental Issues

/ It has been suggested that the general public should be moreinvolved in environmental policy and decision making. It is important forthem to realize that they will have to live with the consequences ofenvironmental policies and decisions. Consequently, policy makers shouldconsider the concerns and opinions of the general public before makingdecisions on environmental issues. This raises questions such as: How can weintegrate the perceptions and reactions of the general population inenvironmental decisions? What kind of public participation should weconsider? In the present study, using a new regional ecosystem model, weattempted to integrate these aspects in its decision making model byincluding the formation of an advisory committee to resolve problems relatedto waste management. The advisory committee requested the activeparticipation of representatives from all levels of the community: economic,municipal, and governmental intervenors; environmental groups; and citizens.Their mandates were to examine different management strategies available inthe region, considering all the interdisciplinary aspects of each strategy,elaborate recommendations concerning the management strategies that are mostsuitable for all, and collaborate in communication of the information to thegeneral population. The results showed that at least in small municipalitiessuch an advisory committee can be a powerful tool in environmental decisionmaking. Conditions required for a successful consultation process, such aseveryday lay language and the presence of a facilitator other than ascientific expert, are discussed.KEY WORDS: Public consultation; Environmental policies;Interdisciplinary aspects; Municipal sewage sludge management; Generalpopulation; Decision-making process     

Mine closure legislation in Indonesia: The role of mineral industry involvement

Major mining companies have recently embraced the sustainable development paradigm, in seeking to improve their competitiveness and increase shareholder returns. Successful mine closure is one important element of this process. Improved performance in this area is essential if surrounding communities are to see mining companies as responsible corporate and social partners.
In Indonesia, the new approach has coincided with the development of specific mine closure legislation. To facilitate the legislation, a consortium of mining companies joined to form the Industry Mine Closure Steering Committee. This Committee has lobbied the Government, actively negotiating to incorporate sustainable development ideals and practices into the new legislation. The Committee's aim has been to foster continued development of the mining industry, while taking account of variation in environmental, social and community conditions. In describing the process, this article seeks to provide guidance for the development of mine closure legislation in other nations.     

Imperatives for attracting investment and technology in the Indian mining sector

In India, the mineral resource inventory and the production of a large number of important minerals have registered significant increases during the last few decades. Yet the country continues to be a net importer of many high value and scarce minerals and metals, like gold, diamond, and several base metals. Exploration and development of the resources of these minerals are technology- and capital-intensive. To bring technology and capital through foreign direct investment (FDI) into the Indian mineral sector, it is imperative to lay stress on: accurate resource estimation and categorization, as well as realistic projection of the true values; rationalization of legislative measures based on R&D studies and reorganization of the implementation machinery; conducive tax structure; notification of acts and rules applicable to offshore mineral resources; time-frames for granting licences and leases; encouragement to labor productivity by rationalizing labor laws; reforms in the monetary system to increase market competitiveness of Indian minerals; and judicial reforms. FDI in the Indian mineral sector is important to firm up the knowledge-base of mineral resources and their optimum exploitation.     

The mining industry in the European Union: Analysis of inter-industry linkages using input–output analysis

Input–output modelling is a useful tool in policy analysis and economic planning. This methodology is used to detect the inter-industry linkages known as forward and backward linkages. Examination of these measures provides one mechanism for identifying “key” or “leading” sectors. The main objective of this paper is to measure the linkages of the mining and quarrying industry in the European Union (EU) and to determine if any of the industry subsectors can be considered key sectors. The paper shows that three subsectors can be considered key sectors: the mining of coal and lignite and extraction of peat in Germany; mining of metal ores in Sweden; and other mining and quarrying in Austria, Denmark and Spain. These sectors are more stimulated by overall industry growth than other sectors and have greater impacts in terms of investment expenditures on the national economy than other sectors. The values of the forward and backward linkages show that the mining and quarrying is an industry that would be stimulated by an increase in a regional economy's production more than other sectors, while an increase in the mining and quarrying industry's output would not stimulate this regional economy more than an increase in other sectors.     

Sustainable consumption in Brazil: Identification of preliminary requirements to guide product development and the definition of public policies

Sustainable product development is closely related to sustainable consumption. The understanding of consumers' purchase, use and discard behaviours may facilitate the identification of requirements to guide manufacturers in the development of sustainable goods and services. The aim of this paper is to investigate consumers' perception about factors that motivate or discourage the consumption of sustainable products to identify demands and convert them into requirements. South Brazilian green and traditional consumers were asked to complete an exploratory qualitative questionnaire. Their answers were organized and compared to identify differences and similarities between the demands of these two groups. Furthermore, demands were converted into requirements for packages, products, manufactures, stores planning and discard systems. The interpretation of factors that motivate or discourage the purchase of sustainable products given by interviewees led to the creation of a list of possible public policies or programmes, aiming to support sustainable consumption. The results demonstrate the necessity of further quantitative investigation between consumer groups, for validation purposes.     

Little by little,inch by inch: Project expansion assessments in the Papua New Guinea mining industry

Social impact assessment (SIA) has traditionally been practiced as an ex-ante predictive tool in the context of regulatory approval by government agencies. This model of SIA developed by Burdge and others is based on ‘greenfields’ development, of a new project going in to areas where there are no, or relatively few, similar types of development. The International Principles of SIA signalled a conceptual shift in the practice of SIA where greater emphasis is placed on the assessment and management of social issues across the life-cycle of developments. In addition forms of cumulative impact assessment have been developed for contexts where more than one project is likely to impact on populations or communities. With these changes to the traditional models of impact assessment there is a need to clarify how and when dedicated phases of ‘assessment’ might be undertaken over the life-cycle of a development. In the context of the mining industry, SIAs are increasingly required by governments for incremental increases in the size or impact of these operations. This paper reviews the development and application of Project Expansion Assessments (PEAs) for two large-scale mining operations in Papua New Guinea. It argues that a different set of assumptions need to underlie the model of IA for such assessments, with more emphasis on trajectories rather than baselines, a critical evaluation and attribution of effects, and the incorporation of adaptive management tools into the process.     

Collecting data in artisanal and small-scale mining communities: Measuring progress towards more sustainable livelihoods

This short note discusses methodological obstacles to the collection of microeconomic data in artisanal and small-scale mining communities. International donor organizations are supporting policy efforts that enhance the contribution to poverty alleviation of this mining subsector. The design and evaluation of such policy interventions require data on income, expenditure, investment, and savings in mining households and communities. These data are difficult to come by. Incomes are variable; migrants may work far from home; miners often work informally and sometimes illegally; mining populations and communities are heterogeneous and transient; and miners have many reasons to distort information. Legalization and organization of miners in cooperatives would facilitate documentation and research. These processes, however, are beyond the control of the typical policy consultant or donor organization. On their part, these parties can adopt an alternative model of research. This model involves the community in project development, data collection, and monitoring. It emphasizes continuity, cultural diversity, trust building and learning. The data thus collected should provide a firm basis for programmes that promote more sustainable livelihoods in artisanal and small-scale mining communities.     

The science of corporate social responsibility (CSR): Contamination and conflict in a mining project in the southern Ecuadorian Andes

In this article, I explain the role that scientific studies play in shaping collaboration and conflict over mining exploration in the Ecuadorian highlands. Toronto-based IAMGOLD conducted water quality studies to simultaneously fulfill legal obligations and secure support for drilling in an environmentally sensitive zone. With these studies, IAMGOLD generated collaborative relations with local authorities and university scientists. However, water quality studies were also used by dairy farmers to establish new connections for an opposition movement. The scientific studies enabled IAMGOLD and the dairy farmers to make competing claims about the responsibility for contamination of an important watershed. This article analyzes the conflict that resulted and challenges conventional wisdom that distinguishes a corporation's legal obligations from its voluntary CSR programs.     

Corporate social responsibility, partnerships, and institutional change: The case of mining companies in South Africa

Internationally and in South Africa, mining companies are increasingly referring to corporate social responsibility (CSR) and partnerships in terms of the business case, or the expectation that being responsible and collaborating with stakeholders is good for profits. Based on a case study of platinum and chrome mining in South Africa, this article argues that the business case is circumscribed by companies’ institutional context. In the past, mining companies’ dominant interpretation of CSR has been in terms of charitable donations and support to good causes. These efforts have not alleviated the contribution of mining companies to growing social problems around the mines, primarily because they have not impacted on core business practices and have not contributed to necessary cross‐sectoral collaboration. Recently, however, there has been an important transition involving the broadening of the interpretation of CSR and increasing commitment to these issues amongst corporate leadership. Though market‐based incentives have contributed to this, the key driver has been the State's legislated transformation programme premised on State sovereignty over mineral resources. Hence, while the interrelationship between companies and their institutional context has, in the past, brought about a vicious cycle of irresponsibility and minimal collaboration, this cycle may be reversed into a virtuous one, driven in particular by the State. The broader implication is that references to a business case for CSR and partnerships cannot be relied upon independently of continued efforts at shaping the public sector context of companies.     

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.     

Costa Rican Environmental Service Payments: The Use of a Financial Instrument in Participatory Forest Management

The core element of the Costa Rican forestry policy is a financial instrument called the environmental service payment. This instrument rewards forest owners for the environmental services (the mitigation of greenhouse gases, the protection of watersheds and scenic beauty, and the development of biodiversity) their forests provide. In this article, the experiences with this new instrument are analyzed by focusing on the way interests are represented and access is granted, the openness of information exchange, whether social learning occurred, and whether decision-making authority is shared. The analysis is based on a survey conducted in the Huetar Norte Region and on in-depth interviews with the major stakeholders. The Costa Rican case indicates that financial instruments can be used to share responsibilities and that stakeholders can successfully cooperate on forest issues. It also shows that such a participatory approach is only promising if certain cultural, economic, organizational, and political conditions are met.     

Innovation for sustainable development in artisanal mining: Advances in a cluster of opal mining in Brazil

The objective of this article is to understand how the promotion of clusters of small economic agents in the gem sector has brought some improvements in the economic, social and environmental conditions in the mining sector and activities related to it. The research provides policy and theoretical contributions to the field of gem production, as well as enhances understanding of the under researched opal production in Brazil. It argues that government funding and technical support dedicated to the development of mining clusters, i.e. working with small economic agents as a whole and not individually, could promote not only more economic development, but also effectively incorporate social and environmental issues, such as workers safety, water management and tailings recycling. The argument is based on an evaluation of environmental, economic, social and institutional aspects of the opal mining cluster in Pedro II municipality, Piauí state. The results suggest that some formalisation of existing practices and adequate policies have triggered innovation with some positive effects on the performance of artisanal mining. Nevertheless, there are indications that if decision-makers plan to make this cluster more sustainable, they will have to include other issues in the debate including developing substituting economic activities.     

A natural analogue for CO2 mineral sequestration in Miocene basalt in the Kuanhsi-Chutung area, Northwestern Taiwan

In general, CO₂ sequestration by carbonation is estimated by laboratory experimentation and geochemical simulation. In this study, however, estimation is based on a natural analogue study of the Miocene basalt in the Kuanhsi-Chutung area, Northwestern Taiwan. This region has great potential in terms of geological and geochemical environments for CO₂ sequestration. Outcropping Miocene basalt in the study area shows extensive serpentinization and carbonation. The carbon stable isotopes of carbonates lie on the depleted side of the Lohmann meteoric calcite line, which demonstrates that the carbonates most probably precipitate directly from meteoric fluid, and water–rock interaction is less involved in the carbonation process. Oxygen stable isotope examinations also show much depleted ratios, representative of product formation under low temperatures (∼50–90 °C). This translates to a depth of 1–2 km, which is a practical depth for a CO₂ sequestration reservoir. According to petrographic observation and electron microprobe analysis, the diopside grains in the basalt are resistant to serpentinization and carbonation; therefore, the fluid causing alteration is likely enriched with calcium and there must be additional sources of calcium for carbon mineralization. These derived geochemical properties of the fluid support the late Miocene sandstone and enclosed basalts as having high potential for being a CO₂ sequestration reservoir. Moreover, the existing geochemical environments allow for mineralogical assemblages of ultramafic xenoliths, indicating that forsterite, orthopyroxene and feldspar minerals are readily replaced by carbonates. Based on the mineral transformation in xenoliths, the capacity of CO₂ mineral sequestration of the Miocene basalt is semi-quantitatively estimated at 94.15 kg CO₂ chemically trapped per 1 m³ basalt. With this value, total CO₂ sequestration capacity can be evaluated by a geophysical survey of the amount of viable Miocene basalt at the potential sites. Such a survey is required in the near future.     

Social organization in deer: Implications for localized management

Populations of white-tailed deer (Odocoileus virginianus) inhabiting many state and national parks and suburban areas have grown to the point that they conflict with human activities. Conflicts range from destruction of vegetation through browsing to public perception that diseases carried by deer pose threats to human health. Traditional modes of hunting to control populations are inappropriate in many of these areas because of intense human development and activity. This article explores an alternative approach for population reduction based on deer social organization. Female white-tailed deer are highly philopatric and female offspring remain near their dams for life. This suggests that a population expands slowly as a series of overlapping home ranges in a form analogous to the petals on a rose. Incorporating the rose petal concept into a model of population growth shows that removal of deer by family unit can potentially alleviate conflicts in localized areas for as many as 10–15 yr.     

Corruption in natural resource management: Implications for policy makers

Corruption is the main reason why resource-rich countries perform badly in economic terms. Corruption in resource-rich countries takes two main forms, rent-seeking and patronage. Resource rents induce rent-seeking as individuals compete for a share of the rents rather than use their time and skills more productively. And resource revenues induce patronage as governments pay off supporters to stay in power, resulting in reduced accountability and an inferior allocation of public funds. This paper systematically reviews the literature on natural resources and corruption, and outlines the main policy implications for donors and domestic policy makers. A main conclusion is that priority should be given to policies that address rent-seeking and patronage. In other words, policy in resource-rich countries should be less about macro-economic management and more about institutions to prevent rent-seeking and patronage, and about giving the right incentives to players in the resource sector. Moreover, all policies need to take into account their impact on rent-seeking and patronage, and some current policies may actually be harmful in this respect.