Engineering & Mining Journal

AUG 2018

Engineering and Mining Journal - Whether the market is copper, gold, nickel, iron ore, lead/zinc, PGM, diamonds or other commodities, E&MJ takes the lead in projecting trends, following development and reporting on the most efficient operating pr

Issue link: https://emj.epubxp.com/i/1014254

Contents of this Issue

Navigation

Page 57 of 107

MINERAL ECONOMICS 56 E&MJ • AUGUST 2018 www.e-mj.com bility of an upturn, which will be steeper than expected, is not completely unreal- istic. Given the long lead times for a min- ing project to get into production, it is im- portant for mineral-rich countries not to focus too much on present metal prices, but to maintain a long-term approach to its national mineral resources. There are certainly many reasons why countries develop in this period, and nat- urally not only because of mining activity, but nevertheless a statistical conclusion from this study is that mining can and has triggered development in several coun- tries. When the analysis is expanded to include also how the GINI coefficient has developed in the mineral-rich countries it further seems as if the inequalities have decreased. In this sample of the 20 LIE and MIE countries with the highest MCI-W scores in 1996, the GINI coefficient has remained constant or decreased, i.e., in- equalities diminished in 13 countries and increased in four countries. The results of this survey do not sup- port the wide spread view that mineral resources create a difficult dependency, which might not be conducive to econom- ic and social development. Rather the op- posite — if more LIE and MIE were rich in minerals, their chances of economic development would have been better than they are at present when only limited mineral resources are known. Conclusions "Contribution" or "dependency" — al- ready by choosing the words to describe the relationship between national econo- mies and the extractive sector a funda- mental choice is made between good or bad. The traditional perspective in many historically resource-rich countries, such as Sweden, has been to view mineral resources as the fountains out of which wealth flowed and development grew. Since the 1990s until just a few years ago, the dependency description has, however, been the dominating norm. The resource curse paradigm was the start- ing point for critical analysis in a host of works on mining during the past 20 years. During the so-called super cycle with high metal prices, and high oil prices, this a prior negative starting point was sometimes abandoned. A view based on a hypothesis that it might not be the min- erals as such, but rather the way the eco- nomic results they created were handled that was the real problem, grew in impor- tance. The previously cited report from McKinsey called "Reverse the Curse" is but one example of this recent turn around in thinking. Another example is the discussion about mining's potential role as a catalyst for diversification of na- tional economies, the World Bank report "The Contribution of the Mining Sector to Socioeconomic and Human Develop- ment" and the study "Local Industrial Shocks, Female Empowerment and In- fant Health: Evidence from Africa's Gold Mining Industry." This study underpins this reversal and reorientation by presenting a thor- ough statistical analysis of almost all countries in the world including, in par- ticular, all metals and industrial miner- als producing countries. Throughout the study, the word "contribution" is used, as a world without metals and minerals cannot be imagined, and hence mineral resources need not be viewed as a curse if managed carefully. Among the 20 low- and middle-in- come countries with the highest MCI-W score in 1996, 11 economies have climbed up one step on the GNI devel- opment classification, to lower-middle, upper-middle or high-income catego- ry. There are, of course, many factors contributing to this development, but it seems likely that mining and miner- als could be one important factor. Geo- graphically, Africa has benefitted most and in particular West Africa, which is a region of growing mineral importance is the prime example of this fact. The figures for both GDP and export share of minerals and mining is further considerably higher on average for the LIEs than for the MIEs. The levels of GDP and export contributions in 2016 are still at a higher level than in 1996, in spite of the drop in metal prices since the end of the super cycle. It has not been possible to include employment in the mineral sector as one of the contributing factors to the min- ing contribution index because of lack of data. Nevertheless, the countries for which statistics are available, clearly demonstrate that employment is a stabi - lizing factor as it does not vary as rap- idly as the other factors studied. Further employment levels have in general been increasing over the period 1996-2016. The results of this survey do not sup- port the wide spread view that exploitation of mineral resources automatically create a difficult dependency, which might not be conducive to economic development. Certainly, the indicators on which we base our study only shed light on some aspects of economic and social development. But we think we have enough substance to claim that if additional LIEs and MIEs countries could localize additional miner- al resources, their chances of economic development would be better than they are at present when only limited mineral resources are known. This article provides an update to a study that was originally published by Unit- ed Nations University Wider, which can be found at www.wider.unu.edu. Olof Löf is an analyst with RMG Consulting (www.rmgconsulting.org) in Stockholm, Sweden. He can be reached at: olof.loef@gmail.com. Magnus Ericsson is an adjunct professor at Luleå University of Technology, Luleå, Sweden. Figure 6—Human development index (Source: UN).

Articles in this issue

Links on this page

Archives of this issue

view archives of Engineering & Mining Journal - AUG 2018