Linkages in Ghana's gold mining industry: Challenging the enclave thesis

By 2009, Ghana was the second-ranked African producer after South Africa, and had become the world's ninth largest producer of gold, at some 3.8% of global production, up from 2.6% five years earlier. Gold production volumes and revenues rose significantly over the decade from 2000. Yet gold mining tends to be perceived negatively in Ghana, and is seen as providing far less than it should in terms of public revenue, employment, skills development and spillovers, and localised economic development. Gold mining is often depicted as having an enclave status, disconnected and isolated from the rest of the economy. In contrast, the research findings here demonstrate that after a period of strong investment and growth, gold mining can no longer be viewed as an enclave activity: it is in fact more deeply linked into the Ghanaian economy than hitherto understood, through a set of as yet under-researched but promising economic linkages, notably backward linkages, which can potentially be strengthened by policy and support measures.     

State mineral production taxes and mining law reform

Fuel and leasable minerals mined in the United States have historically been subject to federal royalties while locatable minerals have not. In recent years there have been multiple attempts to alter this policy and subject locatable minerals to federal royalties as well; most recently the preliminary 2012 Obama budget included a gross royalty on hard-rock mining on public lands. This paper analyzes the issue of imposing such federal royalties from both a legal and economic perspective. From a legal perspective, it is argued that the state of western property rights precludes royalties on currently extant claims so revenues from a royalty would not be realized for many years. From an economic perspective, it is argued that the effect on revenue would be smaller than one might anticipate due to such a royalty crowding out state levies or encouraging vertical disintegration on the part of mining firms to avoid much of the burden of the royalty.     

Corporate social responsibility in the mining industry: Perspectives from stakeholder groups in Argentina

Since the liberalisation of its investment regime in the 1990s, Argentina has seen a rise in foreign direct investment into large-scale exploration and exploitation of mineral resources. However, many social groups (local communities, grassroots movement and the church) often strongly oppose new mining projects on the grounds of environmental, ethical and economic concerns. In a situation marked by widespread conflict, mining companies continue operating and develop Corporate Social Responsibility (CSR) initiatives which are often promoted as a means of contributing to the sustainability and development of the nation. The paper develops a framework to highlight how the principles of stakeholder theory could be used as conceptual and practical guidance for conflict-resolution oriented CSR policies. The framework is further used to analyse two case studies of conflictive mining projects in Argentina. The paper explores how key stakeholders perceive contribution of CSR to welfare and the socio-economic development of mining communities and sustainable development of the nation. It demonstrates that institutional and social stakeholder networks often strongly oppose the idea of voluntary self-regulation implied by CSR in situations characterised by weak governance. Even though the CSR of companies could be improved in areas of corporate communication, transparency, stakeholder engagement and dialogue, it is not seen as a panacea for the social conflicts in the sector.     

The Environmental sustainability of mining in Australia: key mega-trends and looming constraints

At first ‘sustainable mining’ could be perceived as a paradox—minerals are widely held to be finite resources with rising consumption causing pressure on known resources. The true sustainability of mineral resources, however, is a much more complex picture and involves exploration, technology, economics, social and environmental issues, and advancing scientific knowledge—predicting future sustainability is therefore not a simple task. This paper presents the results from a landmark study on historical trends in Australian mining, including ore milled, ore grades, open cut versus underground mining, overburden/waste rock and economic resources. When complete data sets are compiled for specific metals, particular issues stand out with respect to sustainability—technological breakthroughs (e.g. flotation, carbon-in-pulp), new discoveries (e.g. uranium or U), price changes (e.g. Au, boom/bust cycles), social issues (e.g. strikes), etc. All of these issues are of prime importance in moving towards a semi-quantitative sustainability model of mineral resources and the mining industry. For the future, critical issues will continue to be declining ore grades (also ore quality and impurities), increased waste rock and associated liabilities, known economic resources, potential breakthrough technologies, and broader environmental constraints (e.g. carbon costs, water). For this latter area, many companies now report annually on sustainability performance—facilitating analysis of environmental sustainability with respect to production performance. By linking these two commonly disparate aspects—mining production and environmental/sustainability data—it becomes possible to better understand environmental sustainability and predict future constraints such as water requirements, greenhouse emissions, energy and reagent inputs, and the like. This paper will therefore present a range of fundamental data and issues which help towards quantifying the resource and environmental sustainability of mining—with critical implications for the mining industry and society as a whole.     

Permitting a new mine: Insights from the community debate

When a mining company selects a site for development, the company begins a dialogue with the local community about receiving the necessary approvals for the mining permits. The dialogue focuses on how well the company can use science and technology to manage risk to the local environment, and on how much economic benefit will be gained by the local community for accepting the risk. A useful approach to better understand how the debate affects the outcome of the permitting effort is to use the method of “discourse communities and analysis”. This paper analyzes two efforts by Kennecott (Rio Tinto) and one by Exxon to develop base metal mine sites in the Upper Midwest of the USA. As the three case studies show, the local pro- and anti-mining discourse community members will not be changing their basic positions as the permitting of a new mine is debated. Accordingly, both communities are trying to convince undecided stakeholders rather than talking to each other. Both sides are using ever more sophisticated media methods to communicate their message to the undecided residents of the community. By winning the support of the majority of the undecided residents, political pressure can be used to sway the decision.     

Mineral reserves under price uncertainty

National reporting organizations and regulatory bodies for the minerals and mining sector are requiring publicly reported Ore-Reserve estimates to take account of uncertainties. Whilst methodologies that account for physical uncertainty appear relatively well developed, methodologies which can take account of economic uncertainty appear much less so. To counter this shortfall, we present an efficient and general methodology which can quantify the effect of price uncertainty within reserve estimates, providing both the expected reserve size and the associated distribution (box whisker plot). This statistical information can be used by interested parties to understand precisely where the reserve risks lie, which we highlight in a worked example.     

Multiproduct mine output and the case of mining waste utilization

This article addresses the concepts of economies of scope and multiproduct production, subadditivity and transray convexity as it applies to the mining industry. The article goes on to expand these concepts to include the case of mining waste utilization. It discusses how the modification of mining wastes into a marketable product can develop a relationship across the cost functions of the modified mining waste and ore production and how this interrelationship affects the profit maximizing condition. It discusses four possible outcomes from mining waste modification and its development into marketable products on the profitability and production of ore by the firm. Finally, it discusses mining waste utilization effects on rehabilitation costs and the potential for a decrease in the adverse community effects due to mine closure.     

Classical foundations of the contemporary economic theory of non-renewable resources

There exists a formalized and well integrated neoclassical theory of the economics of non-renewable resources. While the classical economists did not deal with non-renewable resources as such, many of them did discuss the economics of the mining industry or of the mine. This paper reviews the theoretical aspects of the contemporary theory of the economics of non-renewable resources and contrasts them with the less formal treatment given by the classical economists. As well as affording a critical review of the classical literature this comparison indicates areas of the contemporary theory which need to be reassessed.     

New mercantilism: A perspective on how politics is shaping world metal supply

The major countries consuming metals tended historically to be also the major countries producing them. It was in their interest to promote mine development to provide low cost raw materials. Over the past fifty years, the share of global production accounted for by consuming countries has declined and producers and consumers of metals have been slowly moving into separate camps having distinct and differing interests. As a consequence of this, governments of producing countries have become more focused on how to maximise the benefit of metal extraction to their economies rather than on how to supply cheap raw materials; a tendency which has found expression in resource nationalism. Governments of consuming countries have in response become increasingly concerned about the implications of this tendency to their economic development and some countries, most notably China, have adopted robust policies to secure their supplies. Through their actions to influence capital flows within the mining industry and to force metals trade into channels which better serve their national interests (a process characterised here as ‘new mercantilism’), metal producing and metal consuming countries are reshaping global supply.     

Green accounting and sustainability of the Peruvian metal mining sector

This paper estimates the true economic income of Peru’s metal mining sector for the period 1992–2006, using a model of green economic income based on Hamilton (2000). The total depletion of natural capital caused by metal mining is calculated by estimating, on the one hand, the depreciation of mining resources (using the Hotelling rent approach) and, on the other, the environmental degradation provoked by metal mining activities. The results show that the total loss of natural capital represents between 31% and 51% of the metal mining GDP and between 2% and 4.9% of Peru’s GDP. On the other hand, correcting the usual GDP measure produced by the traditional National Account System (NAS) for the total loss of natural capital caused by mining activities shows that the GDP traditional measure overestimated by 51–64% the true economic income generated by Peruvian's metal mining sector during the period 1992–2006. The importance of the generation, taxation, and disposition of mining economic rents for Peru’s sustainable development in the future is also discussed.     

Geologic vs. geographic constraints on cement resources

This study evaluates the importance of geologic and geographic factors in constraining the location of limestone mining operations for the production of cement in the Great Lakes region of the United States. Cities and their infrastructure require abundant cement, which is manufactured from limestone and other quarry products, but expansion of cities limits the locations of these operations. Possible locations of limestone and cement operations are controlled by geologic factors including distribution and mineralogy of geologic formations as well as depth of overburden, and geographic factors including location of wetlands, cities, and other surface features that preclude development of quarries and manufacturing operations. Overlay analysis was used to evaluate the importance of these factors. Results show that, although limestone underlies about a third of the region, almost 50 percent of this limestone is unavailable for quarrying due to coverage by the built environment, protected natural areas, or excessive overburden thickness. When characteristics such as limestone quality are also accounted for, accessible resources shrink to as little as 2 percent of the total land area. Although the remaining 2 percent of land area may supply local needs for some years, geologic factors clearly must be included in long-term regional land use planning.     

Constraints on small-scale mining in Africa

Contrary to expectations, small-scale mining has had little impact on the development of Africa, despite the relative scale of activities in that field. This situation is due to the fact that the sector is facing various constraints and deficiencies, some structural in nature and others technical. However, the analysis of constraints and weaknesses shows that their impact differs according to the country and to the extent to which the government is involved in small-scale mining as well as to its efforts to strengthen this sector. While some drastic and immediate measures could be taken now, in depth scientific research will also be required.     

Public preferences for timeliness and quality of mine site rehabilitation. The case of bauxite mining in Western Australia

Government departments that regulate environmental management for mining have a range of choices about the timing and quality of rehabilitation. Economic theory suggests that the cost incurred by firms should relate to the social cost of the environmental damage, however, there has been little work done on non-market values for mine rehabilitation. This study uses choice modelling to assess these issues for bauxite mining in state owned native forest in south-west Australia. The results show that the public place a relatively high value on the re-creation of vertebrate habitat and would prefer in situ mine rehabilitation over environmental offsets. Alcoa's current rehabilitation practices appear to be supported by the preferences revealed in this study.     

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.     

Could a public ecology approach help resolve the mountaintop mining controversy?

In recent years, controversy has grown around decisions related to mountaintop removal mining of coal in Central Appalachia, USA. While this mining method can be particularly efficient, it necessitates removal and relocation of huge volumes of earth—permanently altering the natural landform and potentially impacting local environments and communities. Current decision-making systems and regulatory frameworks have been largely ineffective at incorporating the values and concerns of stakeholders. This is due, in part, to contradicting policies, a legacy of distrust, and problems related to scale. Further, the lack of good civic science related to mountaintop mining and meaningful routes for public involvement have also hampered effective decision-making. We propose that the fundamental concepts of public ecology may provide a progressive approach to resolving these complex issues, and examine the challenges that must be met along the way.     

Economic Linkages to Changing Landscapes

Many economic processes are intertwined with landscape change. A large number of individual economic decisions shape the landscape, and in turn the changes in the landscape shape economic decisions. This article describes key research questions about the economics of landscape change and reviews the state of research knowledge. The rich and varied economic–landscape interactions are an active area of research by economists, geographers, and others. Because the interactions are numerous and complex, disentangling the causal relationships in any given landscape system is a formidable research challenge. Limited data with mismatched temporal and spatial scales present further obstacles. Nevertheless, the growing body of economic research on these topics is advancing and shares fundamental challenges, as well as data and methods, with work in other disciplines.     

How have reforms fuelled the expansion of artisanal mining? Evidence from sub-Saharan Africa

This paper investigates whether and how World Bank mining sector reforms have fuelled the expansion of illegal artisanal mining activity in Sub-Saharan Africa. In doing so, the analysis examines three issues. First, the emerging correlation between reforms and poverty, mainly a result of increased unemployment caused by Structural Adjustment Programmes and concurrent privatisation of state-owned enterprises, is explored. Second, the possibility that reform of large-scale mining has decreased available land for peasant farming as well as legalised small-scale mining activity is discussed. Finally, the notion that the regularisation of informal mining activities has been an exceedingly bureaucratic procedure in Africa, therefore providing individuals with little incentive to operate within the legal domain, is examined. Faced with few employment prospects, a growing number of Africans are pursuing employment in the artisanal mining sector, a worrying prospect given its intimate association with environmental degradation and HIV/AIDS.     

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.     

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.     

The transformation and successful development of small-scale mining enterprises in developing countries

Proponents have long argued that small-scale mining, given proper direction and support, can contribute substantively to the socioeconomic development of rural areas in developing countries. The attitudes of governments, commercial mining companies and donor agencies have been coloured by the haphazard, informal, often dangerous and seemingly wasteful character of much local mining activity, especially at the smallest scale. Yet this 'artisanal' activity has come to assume a critical economic welfare function in many countries, especially those which have suffered through extended periods of environmental and economic stress. This paper argues that this type of mining, because of both its upside potential and its problematic nature, cannot be ignored: neither can it be eradicated. Instead, explicit and sustained attention from governments, non-government organizations, the private sector and donor agencies is advocated for an effort to rationalize and formalize this type of mining, to increase its economic and technical efficiency, and to maximize its social benefits and minimize its disadvantages.