The 2018 Mining Contribution Index (MCI) confirms that many of the world’s most mining-dependent countries continue to rely on their natural resources as the primary driver of economic activity. This is despite continued falls in commodity prices.
The MCI synthesises into a single number – and an associated ranking – the significance of the mining sector’s contribution to national economies. MCI scores and rankings provide an indication of the relative importance of mining to the economic life of a country. It is not a measure of success. Whether or not a relatively high position on the Index ultimately translates into broader-based economic and social benefits depends on several factors, and quality of governance is a critical one.
This fourth edition of the MCI shows that, as with past editions, many low and middle-income economies remain dependent on the mineral sector. The data for each edition of the MCI is always from two-years prior to publication, so this year’s index relies on data from 2016, when mineral and metals prices were still in a sustained period of decline. The MCI is a composite of four indicators, each capturing different aspects of mining’s contribution to national economies:
- Mineral and metal export contribution 2016. This provides a measure for the scale of mining in relation to other productive activities, in particular for small and low to middle-income countries.
- Increase/decrease in mineral and metal export contribution 2011-2016. This adds a dynamic component to the index by providing an indication of whether the importance of mining as an economic activity is growing or falling over time.
- Mineral production value expressed as a percentage of GDP in 2016. This provides a sense of the value of the economy. Note that it does not represent the contribution of mining to GDP – on average around a third of production value represents value addition to the national economy.
- Mineral rents as a percentage of GDP. This is production values minus ‘normal costs’, which provides a clearer indication of tax and profit above ‘normal’ profits from mining.
What has changed in this edition of the MCI?
The results of this fourth edition of the MCI show some big changes at the top of the ranking. While 17 of the top 25 ranked countries remain the same, new entrants have made significant gains in rankings. All top 25 countries qualify as resource-dependent using the criteria applied in ICMM’s 'Social Progress in Mining-dependent Countries' report. This underscores the dependence of low and middle-income countries on mining as and its significance in the economic life of these countries, a factor that has continued across all four editions of the MCI.
Monetary value of metals and minerals
In contrast, when countries are ranked solely on the monetary value of metals and minerals production, the top-ranking countries are dominated by upper-middle or higher-income economies. Only 5 other countries – Ghana, India, Indonesia, Ukraine (lower-middle income) and the Democratic Republic of the Congo (low income) – feature in the top 20 countries based on production value. The top 20 has also changed little over the past 2 years, with only the Philippines and Mozambique falling out of the top 20, replaced by Finland and Turkey. This again underscores the dependence of low and middle-income countries on mining, which has featured in all four editions of the MCI.
What accounts for some of the major changes in MCI rankings?
Suriname has risen 46 places to top the fourth edition of the MCI. This dramatic rise is partly due to large increases in mineral rents – up from 6.3 per cent in 2014 to 24 per cent in 2016 – and in metals and minerals production value (which doubled over the two years). These combined with a significant decline in GDP (38 per cent) between 2014 and 2016 have led Suriname to overtake countries that have historically had greater a role for mining in their national economies.
The significance of changes in GDP to a countries MCI ranking can be seen across Africa, which between 2014 and 2016 endured collectively a fall in GDP, in absolute terms, of some 15 per cent from $1.783 trillion to $1.511 trillion. A drop leading to a rise in production value and/or a rise in mineral rents as a percentage of GDP. An outcome that sees African countries dominate the top 25.
This fourth edition of ICMM's MCI confirms that many of the world’s most mining-dependent countries continue to rely on their natural resources for as the primary driver of economic activity, despite continued falls in commodity prices. From the work of organisations, such as the NRGI’s Resource Governance Index and the World Bank’s Worldwide Governance Indicators (WGI), we also know that the governance of natural resources in many of these countries is weak.
Download the fourth edition of the MCI for more information.