Friday, 17 February 2012

The mining boom: will residents of mineral rich countries benefit?

By Gerry Bloom (guest blogger from the IDS KNOTS team)

As part of my ongoing work investigating health markets and the role of non-state actors in provision of health services, I am involved in a project concerning the role of mining companies in supporting the provision of health services to their employees and the wider community in mineral rich countries. This provided me with the opportunity to participate in the Mining Indaba 2012 in Cape Town in early February. This is an annual event for managers of mining companies, financiers, officials of multi-lateral organisations and Ministers from many African countries. The meeting was an eye-opener.

I had not been sufficiently aware of the magnitude of the present boom in the demand for minerals, which seems to be associated with rapid economic growth in many low- and middle-income countries and the enormous investments being made in the infrastructure of many large cities.

I was impressed by the size of investments being made in a number of African countries. Several new finds will provide large revenue streams for many years. There was a lot of discussion of ‘resource nationalism’, stimulated by high mineral prices. There was a view that companies need to earn their ‘licence to operate’ over the many years needed to recoup the large investment in a new mine. This was seen to involve much more than ‘traditional’ investments in corporate social responsibility.

Mamphela Ramphele, who chairs the Board of Gold Fields, presented a vision of a partnership between large corporations, community social investment organisations and national and local governments aimed at solving major problems with the provision of education, delivery of health services and the development of communities where mines are located. She called on large mining companies to play a leadership role in helping governments address these problems, suggesting that they operate on a time frame longer than the usual political cycle.

The unspoken alternative, of course, was the possibility that calls to nationalise mines could gain political support and that mining companies from countries where demand for minerals is growing rapidly might be potential partners for joint ventures with governments.

The take home message from the Indaba is that we are in the midst of a major mining boom. If mining companies, governments and civil society organisations can create effective partnerships for development, many people living in mineral rich countries will benefit a great deal. Otherwise, we may be witnessing another turn in a boom and bust cycle that enriches few and leaves many more in poverty.

[See also the Globalisation team’s Business and Development seminar series. Three of the five seminars under last autumn’s theme ‘Conflicting Interests: How Businesses Operate in Areas of Conflict’ focused on mining.]


Olivia Mountgarrett said...

Like everything else, when mining industry is left to those who can buy the land and finance the workforce, the country will benefit. But there is no assurance if all people in that country will benefit. If the mining business will attract tourists, it will definitely be a benefit. But if the townsfolk starts to lose their land and environmental degradation sets in, that bane may not be worth privatizing the mining industry.

Pia Taylor said...

Indeed, a mineral-rich country is both a blessing and vice versa. It will depend on how those on authority will moderate the mining of these resources - use in moderation, yet preserve enough for the next generation.

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