Financial failures in mining : Implications for LDC mineral policies

The risk of financial failure among LDC mining projects, always significant, has apparently increased during recent years. This situation, which is unlikely to change in the near future, has important implications for LDC mineral policies. In particular, it can no longer be assumed that mining will generate significant government revenues, traditionally regarded as the single most important economic benefit arising from large-scale mining projects in LDCs. Many LDC governments consequently need to reassess their mineral policies and place greater stress on maximizing economic benefits which will accrue even where mines fail to generate significant profits. Two such benefits are discussed, and concrete policy measures are suggested to illustrate the initiatives available to LDCs.