Mining
A new boom in prices for minerals started in 2003, after years of low commodity prices. Partially this is due to rising demand, which comes not only from the traditional industrialised countries but as well from emerging economies.
Volatility of prices
For some minerals a boost or even just the expectation of a boost in the relevant industry is enough to send prices flying. Uranium is one example for this, it is an example for the volatility of prices of minerals, too: By the end of 2002 a pound (0,45 kilo) Uranium cost US$ 10. Due to shortages in delivery of Uranium together with announcements of new nuclear reactors, which depend on Uranium as fuel, the price rose up to US$ 138 in June 2007, going down again to US$ 59 in June 2008. This decline followed the announcement of new investments in several new Uranium mines. Analyses on further development of the price differ between forecasts of continued low prices and forecasts of US$ 90 per pound in the near future.
Impacts
The boom in mineral prices has huge economic effects. The gross domestic product of the African continent for example grew of more than five percent annually over the past five years. However, this growth usually doesn’t trickle down to the local level, where heavy environmental and social impacts result from the mining sector, especially large scale mines:
- deforestation,
- granting access to forests causing further deforestation,
- moving huge quantities of earth,
- water and land pollution by chemical products used for the extraction (cyanide, sulphuric acid) or heavy metals,
- mineral residues,
- dust and mud that pollute air, soil and crops,
- poisonous gas emanations,
- mine effects remaining long after it has closed down with operators often only cleaning-up rather than rehabilitating the site.
Important social impacts are:
- population displacement,
- loss of means of subsistence (agriculture, fishing or breeding are endangered because of both land appropriation by mining companies and pollution of ecosystems),
- difficulties to obtain water (which is massively consumed and/or polluted by the mine)
- health problems due to pollution,
- growth of prostitution and sexually transmitted diseases (especially AIDS) linked to massive arrival of migrant workers
- empty promises on job creation as the mining sector creates little employment and does not absorb the jobs that disappear when traditional activities are replaced.
In countries characterised by political instability, corruption and weak institutions, large scale mining can contribute to deepen crisis and conflict. Where national authorities are too weak to protect citizens’ rights in communities affected by mines or to solve conflicts that may arise, people’s resentment may grow and get out of control. In certain cases, the presence of private security guards engaged by the mining companies to protect their working fields is the cause of violence, which a weak government cannot handle adequately.
Beyond local conflicts, huge mining projects also quite often represent a risk to political stability on a larger scale (pressure from neighbouring nations, war for the control of sites). The mines have often worsened existing conflicts or sustained them, minerals being sold by armed groups with the complicity of big mining companies. (More on this in the report “European Investment bank: six years financing the plundering of Africa”, November 2007, Friends of the Earth France)
Economic importance
Of the exported metal raw minerals (like copper, nickel, iron ore, gold etc.) worldwide, nearly a third came from developing countries (2004), with the prognosis that the portion of developing countries minerals will increase. In around 50 developing countries mining is an essential part of the economy. The most important mineral exporters from developing countries are Brazil, Chile, Mexico, Peru, Morocco, Democratic Republic of Congo, Indonesia, India, Malaysia, and the Philippines. While these countries export a variety of minerals, some countries depend on the export of only one mineral being even more subject to the volatility of the market. This is true for example for Guinea, Liberia, Mauritania and Zambia. Small-scale mining covers around 15-20% of the minerals needed worldwide, in countries like Ghana, Mali or Tanzania this small-scale mining is the most important part of the economy.
Companies
The mining sector undergoes a strong concentration process leaving few global players with enormous share in the world market and accordingly huge market control. Given their size, companies can often use their own revenues to finance new mines. Otherwise, the mining sector is still dominated by private and public financiers and corporations but sees a growing interest of hedge funds and other new financial players.
The report "From Money to Metals" (pdf) by Roger Moody looks into how the mining industry gets its money.
Complaints
Though mining attracts less public attention than the oil and gas sector, a wide range of groups has been working on mining for several years, partly from the financial angle. Oxfam Australia for example has set up the Oxfam Australia Mining Ombudsman, which receive and address community grievances and demonstrates the pressing need for an official industry mechanism. The reasoning behind setting up the Ombudsman were manifold:
1. The consistent allegations of human rights violations and environmental degradation against Australian Mining companies.
2. Self-regulation has proved an ineffective guarantee to community members at risk of harm from mining companies.
3. There is a lack of legal recourse for local communities affected by Australian mining companies, particularly those located overseas.
4. Through the repatriation of mining profits, Australian companies, shareholders and financiers receive considerable benefits from mining activities located abroad. Australia should therefore be pro-active in ensuring that these profits are not gained at the expense of basic human rights standards.
More info: The Mining Ombudsman project
Civil society
Other organisations, networks, movements working especially on mining:
