Pandora's Box: Economic Policy Issues for the Mining Industry

This article, based on a paper presented at the CEPMLP seminar on mining in Dundee, Scotland, June 2001, looks at various aspects of mineral policy, with especial reference to sustainable development, the Pandora's Box of the titles. It examines this in three dimensions, not the usual slpit between economic, environmental and social, but in terms of the geographical hierarchy, the production to end-use continuum, and development/environmental trade/offs. The full resolution of the latter is properly a function of governments not mining companies. Their role is wealth creation via the generation of economic rent and profits. Economic rents can only be fully assessed in retrospect but that does not preclude their consideration. The mining industry has in aggregate destroyed rather than created wealth in recent decades. Its return on capital has been below its opportunity cost. The paper looks at various possible explanations, many of which appear embedded in the mining industry's objectives and methods of operation. It also discusses various policy issues that arise and asks a series of questions of the mining industry and governments.