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.     

Corporate Social Responsibility and development in Africa: Redefining the roles and responsibilities of public and private actors in the mining sector

This paper revisits the role of Corporate Social Responsibility (CSR), suggesting the usefulness of adopting a holistic and historical perspective. It underlines the importance of taking into account the evolving regulatory frameworks within which mining activities take place in order to consider the changing roles played by the various actors involved, whether multilateral, national or local, public or private. In this broad context it then becomes possible to revisit issues of legitimacy, responsibility, and accountability, which CSR strategies aim to address. The article draws attention to the shortcomings of strategies, whether bilateral or multilateral, public or private, which, in an attempt to respond to problems of risk and legitimacy faced by mining companies, have put forward measures in the name of CSR that do not address the origins that give rise to such problems and, in so doing, tend to mask the very nature of the difficulties at hand. The analysis leads to quite different conclusions as compared to those that result from the adoption of a shorter term and investment-led perspective.     

Evaluating mine plans under uncertainty: Can the real options make a difference?

Over the last few years, many studies have presented the real options valuation (ROV) as a promising technique of valuing natural resource investments under conditions of uncertainty. Apart from the common conclusion that the ROV is better than the conventional net present value (NPV) method in integrating the value of management flexibility and proper handling of cash flows risk, there is a lack of procedures for testing the usefulness and advantages of the ROV over the static NPV method in practice. Arguably, it is not yet clear whether the ROV can deal with the complexity of mining projects and whether it can really be applied to make decisions that improve project value.     

Challenges of transformation: The case of Norilsk Nickel

As Russia’s largest mining company, Norilsk Nickel was for much of its history an archetypal Soviet institution. Following the collapse of the Soviet Union and the subsequent prolonged economic crisis, in 2001 new management came into the company with the objective of transforming the company into a modern global corporation. In the years that followed, management pushed through a series of radical changes to the organisation and its operations. Simultaneous with these changes, the company extended its asset base in Russia and acquired assets outside the country. The progressive direction of the company was, however, taking it further and further out on a limb and the programme of transformation was not being matched and supported by public policy and regulation. Pressures came to a head in the middle of 2008 when a change in the structure of company’s ownership and a collapse of metal prices combined to bring about increased involvement of the state in company’s affairs and a more national emphasis to its strategic orientation.     

The view from below: ‘lock-in’ and local procurement in the African gold mining sector

Through linkage creation, commodity extraction has the capacity to support local industrial production and capabilities building. Drawing on the experience of supplying inputs into the East African gold mining industry, this paper examines the constraints experienced by local suppliers arising from the purchasing procedures of large mining corporations and specialist construction companies contracted to construct these mines. Lead firms become locked-in to particular ways of working which minimise the opportunities that local suppliers have in providing products and services. After reviewing the situation for local mining suppliers in East Africa, the paper examines ways in which lead firms, the suppliers themselves and others (governments and industry associations) can better support local supplier involvement.     

Linkages to manufacturing in the resource sector: The case of the Angolan oil and gas industry

This paper discusses the current state and future prospects of backward production linkages to the manufacturing sector in the Angolan oil and gas industry. The paper finds that local value-added links are currently limited to labour and to a lesser degree in basic services. However, there is a realistic and strategic potential for local manufacturing linkages to expand in the oilfield services sector of the industry, which in turn can stimulate industrial development. For this to be achieved, the factors that are currently constraining the expansion and deepening of linkages have to be addressed, namely, a weak local content strategy, a weak local skills and industrial base and the integration of industrial and oil sector policies.     

“Horizontal” and “vertical” diffusion: The cumulative influence of Impact and Benefit Agreements (IBAs) on mining policy-production in New Caledonia

The scale, duration and intensity of conflicts over mineral resources vary greatly. However, they always involve, in varying proportions, the triad stakeholder model—corporation, state, community—each element of which is internally heterogeneous. Increasingly, new players are entering the scene: international non-governmental organizations (NGOs), environmental grassroots groups, indigenous transnational networks, international aid and development agencies. Nevertheless, conflicts and arrangements around access to and control over mineral resources can take the apparent form of dyadic relationships between companies and local communities, resulting in negotiated company-community agreements, often called “Impact and Benefit Agreements” (IBAs). In our analysis, local agreements on mineral resource governance are seen as building blocks in the production of mining policy “from below”, even though they seem at first sight to exclude the state. This paper argues that these agreements, and the negotiations surrounding them, inform debates around mining through both “horizontal diffusion” (influence on other localities facing similar situations) and “vertical diffusion” (influence on policy design and implementation at upper political and administrative levels). This diffusion may occur in a “positive” sense, effecting further change in line with the intent of the original agreement, or in a “negative” one, actually making substantive change less likely, whether at a community or policy level. We build this argument through two case studies from New Caledonia, in the south-west Pacific, where mining has long been a key issue, especially in the current context of “negotiated decolonization” launched by the 1998 Nouméa Accord.     

Small-scale mining in China: Assessing recent advances in the policy and regulatory framework

This paper explores the background of a proposed revision to the Mineral Resources Law of China, why and how the law was amended in the past, its salient features and objectives. Of equal importance is an analysis of how this national law, with its attendant regulations and policies, formed the basis for the growth and continued development of China's small-scale mining industry. The Xiaoqingling Gold Mountain case study is shown to justify the necessity and feasibility for formalizing and consolidating small-scale mines in China, and to some extent, the success of the nation-wide ASM resource consolidation policy at a local level.     

Mercury: An agent of poverty in Ghana's small-scale gold-mining sector?

There is consensus worldwide that the artisanal and small-scale mining (ASM) sector is comprised of individuals who are trapped in a vicious cycle of poverty, lacking the necessary financial and technological means to improve their standards of living. Minimal work, however, has been undertaken to identify the very factors behind miners’ plight, which inevitably vary from country to country. This paper uses a case study of Ghana to argue that an increased dependence upon mercury for amalgamation in artisanal gold-mining communities is one such—albeit overlooked—“agent of poverty”. There is mounting empirical evidence which suggests that dealings with the monoponistic middlemen who supply mercury, purchases of costly medicines to remedy ailments caused by mercury poisoning, and a lack of appropriate safeguards and alternatives to amalgamation, are preventing gold miners from improving their practices and livelihoods. The solution to the problem lies in breaking this cycle of dependency, which can be achieved by providing miners with robust support services, mercury-free technologies and education.     

The evolution of the Canadian mining industry: The role of regulatory punctuation

In this study, we analyze the evolution of Canada's mining industry from 1929 to 2006, focussing on the determinants of the number of firms in the industry and why this number changed over that period. Most empirical studies of industry evolution have focused on manufacturing industries that share similar structural characteristics. Perhaps because of this, extant models of industry evolution tend to ignore industry-specific and national-specific factors that can cause atypical trajectories, that is, heterogeneous industry evolution. Initial inspection of the Canadian mining industry shows that it is atypical in that it exhibits “negative skew” over time in the number of firms rather than the typical “positive skew.” We review two dominant theoretical approaches to industry evolution: the density-dependence theory and variants of industrial organization economics. We also consider possible sources of industry evolution heterogeneity, focussing particularly on “regulatory punctuation”. Using Canadian mining data, we find that the traditional models do not fully explain the changes in population size in Canada's mining industry. As a result, we introduce a number of hybrid models. The results from these hybrid models suggest that Canadian-specific regulatory punctuations, particularly the introduction of significant new taxes, environmental legislation, and incentives have shaped the trajectory of mining firm participation.     

Artisanal and small-scale gold mining in Burkina Faso: Suggestion of multi-agent methodology as a complementary support in elaborating a policy

In order to better manage artisanal and small-scale gold mining, the Burkinabe authorities have planned to build a suitable methodological support as an aid to elaborating appropriate policies and actions. The developed methodology concerns (a) at a spatial level, the generation and analysis of a geological resources map needed by the artisanal miners and (b) at a socioeconomic level, analysis of the miners' activity. This paper reports and discusses the results of our suggestion to also introduce the use of an approach known as multi-agent system (MAS) as a complementary part of this initial methodology, at a downstage level to the above two analysis stages. MAS methodology could be used to develop simulation models to forecast the future of the activity. MAS is appropriate for describing the dynamics of systems where it is impossible to obtain all output data of a model from a purely mathematical or statistical transformation of input data. Our suggestion involves (i) demonstrating the capacity of the approach to simulate all parameters needed by mining policy makers and (ii) evaluating to what extent the methodology is accepted by them, as well as, at a more scientific level, the literature regarding mining system simulation.     

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.     

Towards a governance of sustainable consumption transitions: how institutional factors influence emerging local food systems in Belgium

System innovations and transitions in the realm of sustainable consumption policies will seldom emerge automatically from the present socio-political and socio-technical contexts. This paper explores a set of perspectives related to the governance of transitions and develops their application to the relatively unexplored governance of sustainable consumption transitions. Empirical material stems from an extensive case study which analyses a food consumption niche in the form of collectively organised local food systems (LFS) in Belgium. More specifically, we analyse and discuss the institutional contexts and socio-political configurations within which the investigated system innovation cases are embedded. The results explore the role of governmental interplay in fostering innovative consumption practices for a transition towards a more sustainable, autonomous, citizen-based, LFS.     

Greenhouse gas mitigation options in the Forest sector of Russia: National and project level assessments

Greenhouse gas (GHG) mitigation options in the Russian forest sector include: afforestation and reforestation of unforested/degraded land area; enhanced forest productivity; incorporation of nondestructive methods of wood harvesting in the forest industry; establishment of land protective forest stands; increase in stand age of final harvest in the European part of Russia; increased fire control; increased disease and pest control; and preservation of old growth forests in the Russian Far-East, which are presently threatened. Considering the implementation of all of the options presented, the GHG mitigation potential within the forest and agroforestry sectors of Russia is approximately 0.6–0.7 Pg C/yr or one half of the industrial carbon emissions of the United States. The difference between the GHG mitigation potential and the actual level of GHGs mitigated in the Russian forest sector will depend to a great degree on external financing that may be available. One possibility for external financing is through joint implementation (JI). However, under the JI process, each project will be evaluated by considering a number of criteria including also the difference between the carbon emissions or sequestration for the baseline (or reference) and the project case, the permanence of the project, and leakage. Consequently, a project level assessment must appreciate the near-term constraints that will face practitioners who attempt to realize the GHG mitigation potential in the forest and agroforestry sectors of their countries.     

Economic impact measurement and evaluation of China's investment in geological exploration: The empirical analysis based on the data from 1999 to 2009

With the continued growth in demand for mineral resources and China's efforts in increasing investment in geological prospecting, economic impact evaluation of geological exploration becomes a research hotspot.     

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.     

The public good dilemma of a non-renewable common resource: A look at the facts of artisanal gold mining

Millions of people worldwide are involved in artisanal and small-scale gold mining. Many of them live in conditions of poverty and insalubrities due to the mercury amalgamation of gold and the application of other rudimentary techniques. In spite of this, the sector has been nearly overlooked by resource economists. In this paper we analyze the sector based on a survey of the existing literature. We find some commonalities of artisanal and small-scale gold mining in different countries of the developing world as follows: low levels of mechanization and technology, labor intensiveness, low awareness of environmental degradation, poor training, high transience among some miners, and lack of financial savings. Moreover, with these commonalities in mind, we present some topics and challenges for a research agenda in the field of environmental, ecological, and development economics.     

Surrender or resistance to the implementation of Local Agenda 21 in Portugal: the challenges of local governance for sustainable development

The aim of this paper is to understand how Local Agenda 21 (LA21) is contributing to update local policy and decision making towards sustainable development in Portugal. Departing from a theoretical view of governance for sustainable development – its core values and challenges – and the role of LA21 in its endorsement, the paper presents the main results of a questionnaire survey submitted to Portuguese municipalities, with the purpose of understanding how far LA21 is being incorporated into planning and management. The paper then tries to expose some of the main potential, limitations and challenges in the local Portuguese case for the short-term sustainable future.     

An analysis of factors leading to the establishment of a social licence to operate in the mining industry

Communities around the world have increasingly come to demand more involvement in decision making for local mining projects, a greater share of benefits from them if they are to proceed, and assurances that mineral development will be conducted safely and responsibly. At the same time, Bridge (2004) notes full legal compliance with state environmental regulations has become an increasingly insufficient means of satisfying society's expectations with regards to mining issues. There is now a recognised need for mineral developers to gain an additional ‘social licence to operate’ (SLO) in order to avoid potentially costly conflict and exposure to business risks. However, there is a correspondingly limited amount of scholarship specifically focused on SLO. More particularly, there is a need for research that uncovers those factors that lead to the issuance (or non-issuance) of a SLO in the complex and changeable environments that often characterise mineral development. In an effort to identify key determinants of SLO outcomes in the mining industry, this paper presents a comparative case study analysis of four international mining operations: Red Dog Mine in Alaska, USA; Minto Mine in Yukon, Canada; the proposed Tambogrande Mine in Peru; and the Ok Tedi Mine in Papua New Guinea. The analysis that is presented also makes use of insights from supplementary key informant interviews conducted by the author and the emerging literature on mining and communities. Five lessons for earning a SLO emerged from this analysis: (1) context is key; (2) a social licence to operate is built on relationships; (3) sustainability is a dominant concern for communities; (4) local benefits provision and public participation play a crucial role; and (5) adaptability is needed to confront complexity.