Economic growth and poverty alleviation

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Mineral resources are a form of natural capital that, when effectively managed, can catalyse long-term sustainable development. They are however, finite resources that need converting into more productive forms of capital. That is, they need to be transformed through investments in human resources, infrastructure and diversified forms of productive economic activities.   Companies have a choice. They can either insulate their activities from the local social and economic realities or try to integrate them within the local economy and improve the quality of life for local populations. Over the past two decades, responsible mining companies have increasingly chosen the latter option.

The importance of partnerships

The needs of local communities are often extensive. And while mining companies have a responsibility to create returns for local shareholders and host governments, through the responsible development of mineral resources, they cannot address all problems associated with poverty and deprivation.

This is where partnerships have a potentially powerful role to play. See our Mining partnerships for development: toolkitAt their most basic level, partnerships capitalize on the core competencies of different sectors in society – government, companies, civil society – to achieve progress on social and environmental issues. Two areas where partnerships offer great potential are regional development and local sourcing.

ICMM members have committed to progress in this area and working with others to maximise local benefits. 

Regional development

This involves a planning process to support long-term economic diversification and growth at a regional (sub-national) level. Large-scale infrastructure investments by mining companies can help stimulate other economic activities if planned and designed in line with regional needs

By integrating such investments into a regional development plan, governments can avoid creating a culture of dependency on mining projects. And diversify economic activities so that they endure beyond closure.

Mining companies can engage in planning processes either as participants in a government- or donor-led process, or by encouraging a collaborative, participatory process to be initiated.

Local sourcing

The share of resource revenue that stays in a country varies, in part due to differences in ‘local content’ – the sourcing of labour, materials, goods and services from local businesses and communities. While mining is a relatively small direct employer, rarely accounting for more than 2 per cent of jobs, multiplier effects arise by promoting linkages across sectors in the local economy.

This can either take the form of ‘upstream’ supply chain procurement or ‘downstream’ beneficiation (i.e. the transformation of metals or minerals to higher value products, like raw iron ore turned into steel). The use of local suppliers can have a multiplying effect of three to nine times on employment.