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Mining's social and economic contribution

3 July 2017

Diane Tang-Lee
Senior Programme Officer

ICMM is dedicated to improving the social and environmental performance of the mining and metals industry.  A significant part of our research agenda is to explore the value of minerals and metals to society.

ICMM’s publication 'Role of Mining in National Economies' (3rd edition), released in 2016, provides a comprehensive picture of how important mining is to the economies across the world. Its Mining Contribution Index (MCI) synthesises into a single number the significance of mining and metals sector’s contribution to over 180 national economies. It shows that it is predominantly low- and middle-income countries that national economic life depends most heavily on mining. This is despite the commodity markets downturn.

Apart from amounting to a significant share of exports, what concerns most people about the economy in host countries is  the large share of mining’s contribution to government revenues and local employment. In terms of the allocation of a mining project’s revenue, while taxes and other payments to governments account for 15-20%, salaries and wages typically represent 10-20%.

But the further potential to create local economic opportunities lies in the fact that most of the project revenue (50-65%) goes towards operating and capital expenditures, creating additional potential indirect employment through the local supply chain in areas such as energy, water, food, etc. How these resources are used has significant implications on the economic and social progress of the host countries and communities.

While it is difficult to estimate the number of indirect jobs generated, a conservative estimate is that the mining sector contributes two to five additional jobs for every direct job created. However, available statistics of a few countries show that mining employment has declined during the periods of sustained low commodity prices between 2012 and 2015. These direct job losses could have knock-on effects on indirect employment.

Governance is an important determinant of the economic and social contributions of mining. The 'Role of Mining in National Economies' report shows that overall levels of governance in countries ranked in the top 50 on the MCI are low. However, many countries have put in place the key foundations for improved governance in the form of appropriate institutional and legal settings, and safeguards and quality controls. Transparency initiatives such as EITI are working to improve other important aspects of governance.

While 'Role of Mining in National Economies' illustrates the economic contribution of mining, its objective was not to show how this contribution is affecting human development more broadly. Dimensions such as education, health, household income, access to water, sanitation and electricity, need to be more closely examined. These are important areas of the Sustainable Development Goals (SDGs), and the impact of mining in these areas is under study in research ICMM commenced in 2017.

In particular, our research will ask:

  • Have mining activities and associated sustainability investments led to overall improved social outcomes?
  • What is the relative social progress for countries with significant levels of mining activity in comparison to those without?
  • For mineral-dependent countries, what is the relative social progress for sub-national regions with significant levels of mining activity in comparison to those without?

This research will allow ICMM and our members to evaluate the social outcomes of their mining and sustainability investments, which could lead to more effective partnerships with governments and other stakeholders to improve social progress, and ultimately to help support the realisation of the Sustainable Development Goals (SDGs).