A new ICMM report – The role of mining in national economies
A new ICMM report provides a comprehensive picture of how important mining is to economies across the world, with evidence that the mining and metals industry makes its most significant contribution in the most impoverished regions of the world.
The role of mining in national economies builds an understanding of the scope, scale, impact and potential of the industry to spur growth and development. Using ICMM’s original composite Mining Contribution Index, it ranks the world’s 214 economies according to the importance of mining and metals. The report shows that it is both possible and essential to strengthen the contribution of mining to economic and social development.
Of the 35 countries most dependent on mining, all but Australia and South Korea are developing countries. Of the top 70, 63 are low-income countries that stand to expand their national economies through the investment, exports, taxes and employment associated with mining.
“The critical focus is not on how mining can be sustainable, but on how mining, minerals and metals can contribute to sustainable development,” the report notes.
The traditional approach to understanding the economic importance of mining has been to focus on the percentage that any single country accounts for in total world mining production. From that perspective, the five BRICS (Brazil, Russia, India, China, South Africa) countries currently have the biggest share of world production value. Uzbekistan and Turkey are rising up the production value rankings to join emerging countries such as Chile, Indonesia and Mexico.
This index, originated by ICMM, demonstrates the significance of mining within each national economy. “If mining makes a major contribution to a small economy, national decision-making will be driven by the development opportunities that can flow from the mining and metals industry,” said ICMM President Anthony Hodge. “That is what we need to understand more clearly. This report increases our ability to strengthen the contribution of mining and metals to development.”
The new report, like the first edition in 2012, also assesses the different ways that mining brings growth to national economies. The most important channels are foreign direct investment when foreign corporations invest in mining and metals operations; and exports of the mining products.
Mining can account for 60-90 per cent of foreign direct investment in low- and middle-income countries, and 30-60 per cent of total exports. Taxes and other fiscal revenues from mining typically bring in only 3-20 per cent of a government’s total revenues in low-income countries. Some very low-income countries, however, do rely heavily on mining for fiscal revenues, DR Congo and Guinea around 25 and 23 per cent respectively. Botswana, a middle income country, draws 44 per cent of its revenues from mining.
Mining is an ancient industry that has fostered economic development since the dramatic evolutions for humankind in the Bronze and Iron Ages. In contemporary society, the critical need for mining and metals across all societies is undisputed. But this report dramatically illustrates that mining in today’s world is also a potentially powerful engine of development.
The research underpins the priority of ICMM members to foster sustainable development based on a strong understanding of the role of mining and evidence of what works. “The relationship between commercial mining and the economic and social development of host countries is complex and often contentious,” the report says.
“Global mining companies are large and influential institutions whose investments have the potential to generate significant economic benefits, but also to have disruptive economic, social and environmental impacts.” Positive impact is best assured by companies working together with governments and communities, using evidence and experience to plan well, and basing strategic decisions on long-term sustainability and the multiplier effects mining can have throughout the economy.
This 2014 report updates and expands on the first edition in 2012. A preliminary version was released in late 2014 and the final report is now available in published form.
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