Minings contribution to GDP and exports reached a maximum at the height of the super cycle in 2011. Ericsson, M. and Lf, O., Minings contribution to low- and middle-income economies, WIDER Working Paper 2017/148, June 2017. When the analysis is expanded to include also how the GINI coefficient has developed in the mineral-rich countries, it further seems as if inequalities have decreased. They may however contribute considerably to GDP and have important employment effects but due to lack of statistics their contribution is not included in this study. Ericsson, M., Lf, O. Minings contribution to national economies between 1996 and 2016. 14 shows, the price index has been on a downward trend since 2011 with a flattening in 2016 and increase in 2017 and the beginning of 2018. We have tried to contact national statistical offices in the most important countries with limited success. The paper covers all countries but low- and middle-income developing economies are given additional attention to follow up on our earlier study.Footnote 3 Our intention is to collect and analyse statistical data on a global level over a long period of time and to give an empirical contribution to the discussion about the role of mineral resources in economic and social development of countries. In countries above the line, minings contribution to national economies has increased and below the line they have decreased. Minings share of global GDP doubled in 4years, and was three times higher in 2011 than it was in 1996. Only 9 countries are high-income economies (see Tables4 and 5). Activities dwindled in the early 2000s and reached a trough in 2002 at around 2 billion USD. Extractive industries for development series no. The size of the circles is proportional to the value of mine production in absolute terms (USD). MCI-Wr for Top 50 countries 2016 (vertical) and 1996 (horizontal). Socio-economic development indicators also show signs of progress for African mineral-rich countries. World Bank https://data.worldbank.org/indicator/NY.GDP.MINR.RT.ZS. 2014. In both figures mining countries are shown in green, oil producing countries in black and non-mining countries in red. Based on available detailed data for the minerals and metals sector in as many countries as possible, an analysis is carried out of the current situation for 2016 compared with 2014, and how the contribution by mining to economic development has changed since 1996. The weighting was used to combine the price development of different metals and minerals into one index. GDP from Mining in Indonesia decreased to 214281.80 IDR Billion in the first quarter of 2023 from 223698.50 IDR Billion in the fourth quarter of 2022. Contribution by commodity to MCI-Wr for Top 20 low- and middle income economies (%) Source: RMG Consulting. This is the case for example for the DRC, Sierra Leone and Eritrea. Exploration spending in the countries studied increased over the period as a whole, but has been declining steeply since 2013. The map in Fig. In 2016 the contribution to exports by gold had increased to almost 80%. Use the Previous and Next buttons to navigate the slides or the slide controller buttons at the end to navigate through each slide. The results of this survey contradict the widespread view that mineral resources create a dependency that might not be conducive to economic and social development. Among the 20 countries with highest MCI-Wr, there are two high-income counties (Australia and Chile) while among the next 30 countries, Canada is the only additional HIE. The contribution of minerals and mining to GDP and exports reached a maximum at the peak of the mining boom in 2011. One preliminary conclusion of this survey is that mining countries perform better than oil-producing countries and non-mineral countries in Africa as measured by these indices of human development and governance. The contribution of mining to the economy of Mongolia will most probably remain on a high level. Gold mining is the major contributor in no less than nine countries in this top 20. Data in this graph are copyrighted. The figures for minings contribution have declined for most countries by 2016 but the levels were still considerably higher than in 1996. It is impossible from the statistics to ascertain what the reasons are for these figures. Explore resources provided by the Research Division at the Federal Reserve Bank of St. Louis, Federal Reserve Bank of St. Louis, Extractive industries for development series; no. Dec 12, 2022. Clearly, it is a great challenge for emerging economies with a high MCI-Wr index to make sure that they have sound policies, legislation and regulations in place and competent staff implement them in order to make sure that benefits continue to flow from the mining sector and that they are used in a sustainable way. bigger mines with larger investments, longer and more difficult permitting processes depending on more stringent societal demands and regulations and increasing opposition by local residents (NIMBY). For the countries with lower MCI-Wr scores, the absolute amounts spent on exploration in 2016 were a couple of tens of million USD (see Table 6). Addison T, Roe AR (2018) Extractive industries: the management of resources as a driver of sustainable development. In addition to mining activities covered by the statistics used in this study, almost all countries have some, often small scale, mining activity producing for example coal and aggregates for domestic use. Even copper and nickel, which experienced the deepest dip, bottomed out in 2016 at levels above where they were in the end of the 1990s. The four components of the MCI-Wr are the following: value of mine production, mineral exports, exploration and mineral rents. In this working paper there is also a more detailed discussion of employment in some mining countries. Other sectors of the economy having grown at a higher rate than the economy in general have probably offset the negative effect of declining copper prices Mongolia is however still heavily dependent on mineral exports, around 8085% in the years 20062016. If the mine production in a country, expressed as a percentage of total mine production in the world, is compared with exploration expenditure in the same country also measured relative to global exploration expenditure, it is reasonable to assume that if the relative share of exploration is higher than that of mining, it is likely that mining will grow in the future, and vice versa. Over the period since 1996, the ratio of global exploration expenditure to the value of total global mine production has varied between 1.7% in 1996 and 0.7% in 2016 with two peaks above 1% in between. The top ten countries in terms of the value of their mine production contribute 75% of the total value of non-fuel mineral production at the mine stage globally. The global mining industry might be facing a similar situation during the 2020s as it did in the early 2000s: slowly increasing demand but hesitancy about investing and low supply elasticity in response to demand. Naturally, the figures for minings contribution had declined for most countries by 2016, but importantly the levels were still considerably higher than in 1996. It is the country with the smallest value of its mining production included in the figure. All countries with an MCI-Wr index are given in Appendix 1. Advance estimate for real gross domestic product for April 2023. The paper starts with a methodological discussion and proceeds with the first question raised above: a review of the Mining Contribution Index (MCI-Wr) in 2016 compared with 2014. This is by far the largest increase of all asset types measured in this study. 4). For individual countries, however, changes in production volumes, start of entirely new mines, expansion of existing ones or closure of depleted operations are equally or more important. Hailo, D. and Kipgen, C. The Extractive Dependence Index (EDI), Resources Policy 51, pp. Could one explanation be that rents are also calculated on the production of metals and semi-products under way to become metal (blister copper and the like)? Minerals sector contribution to Canada's gross domestic product, 2021 . natural resource booms in theory and empirics. Among the top 20 countries, Congo (DRC) has the highest score followed by Burkina Faso, Mali, Papua New Guinea and Eritrea. Value Added by Industry: Mining as a Percentage of GDP [VAPGDPM], It also remains to be seen if the newcomers in the top 20 group of countries in 2016 such DRC, Burkina Faso, Mali, Eritrea and Liberia will benefit from their quickly developing mining sector and consequently MCI-Wr score and move up in the World Bank country classification as many in the 1996 top 20 group did during the past 20years. Chile moved from the upper-middle level to become a high-income country in the period. In some cases, it is further difficult to separate between employment in the mining sector from oil and gas industries. Among the top 50 countries, ranked by export contribution, 18 are low-income economies and 14 are lower-middle-income economies. Several LIE and MIE countries with high MCI-Wr scores in 1996 have developed successfully and risen in the World Bank classification from LIE to MIE, from LMIE to UMIE and from UMIE to HIE. By 2016, the production value as a percentage of GDP was around 6% and exports as percentage of total exports were growing continuously. Addison, Tony and Alan R. Roe. https://fred.stlouisfed.org/series/VAPGDPM, The industry has been one of the most important tools to drive Indonesia's economic growth, not. 2021, Natural Resources Canada 2001. This page . The 20 countries with the highest MCI-Wr score in 2016 are shown in Table 8. It is dependent on copper and coal for about 70% of its total mineral output. During the years of decline (20122016), prices were always at relatively high levels on average 23 times higher than in the period preceding the super cycle. Nickel and zinc are each roughly an order of magnitude smaller and approximately the same level as the fertilizer minerals phosphate and potash: 23% of the total value of production at the mine stage. Rini Novrianti Sutardjo Tui & Tsuyoshi Adachi, Smith I. Azubuike, Susan Nakanwagi & Jaqueline Pinto, Olga Shestak, Oleg L. Shcheka & Yury Klochkov, Jos Joaqun Jara, Stefano Delucchi, Carlos Marquardt, Bashir Muhammad, Muhammad Kamran Khan, Sher Khan, Mineral Economics In particular, African countries have benefitted. Coal contributed 470 billion USD, and iron ore 125 billion USD. The development of the Gini coefficient in the 20 low- and middle-income countries with the highest MCI-Wr ranking in 1996 over a period until the mid-2010s is shown in Table 10. The export contribution of mining is highest in Botswana, Sierra Leone, DR Congo and Mongolia at levels of 8090% of total exports, followed by, Mali, Burkina Faso and Zambia with export contribution levels at around 7080%. James Otto, The competitive position of countries seeking exploration and development investment, Journal of the Society of Economic Geologist, Special Publication 12, pp. 1 and 2. The regions where mining contributes less to national wealth are Western Europe, the Middle East and North Africa, Japan and some countries in South Asia. Sharing insights from research and practice, organised by the Centre for Energy, Petroleum and Mineral Law and Policy, Lule University of Technology and Bundesanstalt fr Geowissenschate und Rohstoffe. Quarterly. It is obvious that mining plays an important role particularly in many low- and middle-income countries. Mongolia is ranked as number 16 on the MCI-Wr 2016. Minerals for which this indicator is calculated by the World Bank are tin, gold, lead, zinc, iron, copper, nickel, silver, bauxite and phosphate.Footnote 8 Countries where other minerals and metals (coal being the most important one) are produced will get a lower MCI-Wr score as these rents are not included in the calculation. International trade in minerals and metals reflects regional and national advantages and specializations along the value chain. Note: Other circles indicate other countries and their position in 2014. Value added represents the sum of the costs-incurred and the incomes-earned in production, and consists of compensation of employees, taxes on production and imports, less subsidies, and gross operating surplus. It would be interesting to include also wealth developments into a future mining contribution index. Gold is the single most important metal for the highest MCI-Wr ranking LIEs and MIEs. For all these countries except Papua New Guinea, the contribution to GDP by mineral rents increased with 10 times (DRC) and two times for Guyana and Liberia. An industry-by-industry breakdown of gross domestic product. S&P Global Market Intelligence, Bastida AE Editor (2014) Can mining be a catalyst for diversifying economies?, special issue of mineral economics Vol 27, numbers 23, Ericsson M, Lf O (2017) Minings contribution to low- and middle-income economies, WIDER working paper 2017/148, Hailo D, Kipgen C (2017) The Extractive Dependence Index (EDI). The MCI-Wr index for individual countries has moved up and down depending on the performance of their mining sector relative to other sectors of the economy and on the global metal market trends. In the present version (MCI-Wr), we have chosen to relate the exploration expenditure to the mine production of each country and not as earlier use the absolute size of exploration as the indicator. Figure 2 shows the MCI-Wrindex bycountry in 1996. Nevertheless, the statistical conclusion from the 2014 MCI-W study is confirmed by this update including also socio-economic indicators. Releases from U.S. Bureau of Economic Analysis, More the average annual total compensation per job in the mining industry is almost twice the all-industry average of $69,311. At that time, GDP contribution reached as high as 25% for some countries and mining exports went over 85%. In recent years, several approaches to assess the magnitude of the contribution/dependence of countries on extractive resources have been presented.Footnote 4 This study is based on the Mining Contribution Index (MCI) that was developed by the ICMM.Footnote 5 A later version called Mining Contribution Index WIDERFootnote 6 (or MCI-W for short) was presented. The effect of these shortcomings in the available statistics is that for some countries, the economic contribution of mining is underestimated. The value of mineral production at the mine stage was 300 billion USD (in nominal terms) in 1996, equivalent to 0.6% of total world GDP PPP (World Bank 2016). World Bank, Washington, DC. The focus is on the following questions: How much do the mining industries statistically contribute to national economies? It is notable that the top 20 MCI-Wr group of countries has managed to develop at the same pace in this period as have the rest of world group (RoW) including most high-income countries. Categories > National Accounts > National Income & Product Accounts > Industry. There are only three high-income economies (HIE) among the top 50 countries in the 2016 MCI-Wr, but 17 upper-middle-income economies (UMIEs), 16 lower-middle-income economies (LMIE) and 14 low-income economies (LIEs) (see Table 2). Magnus Ericsson. The exploration expenditures in the early part of the period under study were also high as discussed above. 14. Current targets published by mining companies range from 0 to 30 percent by 2030, far below the Paris Agreement goals. 1995 is the base year for the index. For some countries, production value as percentage of GDP and mineral exports is even higher in 2016 because of a strong growth in production offsetting the decline in prices. Percentage change in Human Development Index in low- and lower middle Sub-Saharan African economies Source: McMahon and Moreira, Percentage change in Governance indicators in low- and lower middle sub-Sahara Africa economies 19962015 Source: McMahon and Moreira, Mining countries: Burkina Faso, DRC, Cote dIvoire, Eritrea, Ghana, Guinea, Liberia, Madagascar, Mali, Mauritania, Mozambique, Namibia, Niger, Rwanda, Senegal, Sierra Leone, Tanzania, Togo, Zambia, Zimbabwe. While there are 30 low- and lower-middle-income economies among the top 50 MCI-Wr countries, the high-income and upper-middle-income economies are substantially more important in terms of metal and mineral production value, for example China, Australia, USA, Canada, Chile, Russia, South Africa and Brazil (see Fig. In reality, if all metals and minerals would be included, and if all exploration undertaken by all types of entities, not only corporates but also governments, total exploration on both a national or global basis is definitely higher than indicated by SNL. The mineral rents for some countries are for some years higher or almost as high as the total value of mine production. Gross Domestic Product by Industry Statistics, Integrating the 2002 Benchmark Input-Output Accounts and the 2002 Annual Industry Accounts, Gross Domestic Product by Industry for 1947-86: New Estimates Based on the North American Industry Classification System, Annual Industry Accounts: Introducing KLEMS Input Estimates for 1997-2003, Gross Domestic Product by Industry for 1987-2000: New Estimates on the North American Industry Classification System, Preview of the Comprehensive Revision of the Annual Industry Accounts: Integrating the Annual Input-Output Accounts and the Gross-Domestic-Product-by-Industry Accounts, Improved Estimates of Gross Product by Industry for 1947-98, Gross Product by Industry Price Measures 1977-96. Australia remains a dominant global producer of mined commodities, and mining remains the largest sector by share of national GDP, with the Australian Bureau of Statistics reporting that the industry was responsible for 10.4% of GDP between 2019 and 2020. These exploration efforts have made it possible to start and expand mine production in the country in later years and the concomitant increase in the MCI-Wr index. 30, World Bank, Washington, DC, Natural Resources Canada (2001) Overview of trends in Canadian mineral exploration 2000, Canadian Intergovernmental Working Group on the Mineral Industry, Nlle GM, Davis GA (2018) Neither Dutch nor disease? McMahon, Gary; Moreira, Susana. Note: For details on the price index please see note of Fig. Rather the oppositeif more LIE and MIE were rich in non-fuel minerals their chances of economic development and possibly also socio-economic progress would have been better than they are at present when only limited non-fuel mineral resources are known. PubMedGoogle Scholar. 14, mineral prices are one important but not the sole determinant of the changing levels of exports, value of mine production, mineral rents and exploration expenditures also play an important role. Exploration figures give a dynamic aspect of mining activities in the sense that high exploration expenditures and activities could, if successful, lay the foundation for increased mine production 1015years later. Demand for metals and minerals in general has not dropped, rather it stays at the same levels as before and continues to increase slowly but steadily. Certainly, there are a host of factors influencing these gradual economic developments, but the contribution of mining is most probably one of the more important ones. It is difficult to draw conclusions from these changes over time as the relative MCI-Wr index. Profits decreased 2.0 percent in the fourth quarter after decreasing less than 0.1 percent in the third quarter. The Geneva office of the ILO has been reorganised and is lacking resources, which has created additional problems. Most of these newcomers showed a quick increase in MCI-Wr score, while for Sierra Leone, Mongolia and Tanzania, it grew at a slower pace. Among the top 50 countries with the highest non-fuel mineral exports relative to total exports in 2016, there are 21 with a total mineral export of more than 50% of the total. Mineral rents vary considerably over time and between countries. If coal is not considered, only metals and industrial minerals of Australia and China are roughly of the same size by this measure. In several low- and middle-income countries rich in non-fuel mineral resources, mining makes significant contributions to national economic development as measured by the revised Mining Contribution Index (MCI-Wr). Copper is the most important commodity in Zambia, DR Congo and Laos. The indirect effects from the minerals and metals sector added a further $33 billion to the GDP, for a total contribution of $125 billion. Series from Gross Domestic Product by Industry. The mining sector, which was formerly dominating, now contributes to barely 8% of South Africa's GDP (GDP). A U.S. metal mining job is one of the highest paying in the private sector, with an average annual salary of $96,000.Prospects are bright for those entering the field today, as it is estimated that every metal mining job generates 2.8 additional jobs elsewhere in the economy, and every non-metal mining job generates 2.5 . Figure 3 shows the top 30 MCI-Wr countries. African mining countries have done better than African oil-producing countries. Australia and South Africa would have considerably higher mineral rents if also coal would have been included as both these counties are important coal producers. Mineral rents (% of GDP) World Bank staff estimates based on sources and methods described in the World Bank's The Changing Wealth of Nations. For some countries, they have changed mainly due to the revision of export figures, which is done continuously by the UCTAD.