Economic rent and the mining industry

Abstract

The economist's concept of rent is purely technical and descriptive, yet it gives rise to many misconceptions and much emotional argument within the minerals industry. Many people in the industry, lacking the necessary theoretical background, even deny its very existence. Their objections are nearly always based on concerns about how any rent or surplus is to be divided between the various stakeholders, or, more narrowly, on resistance to the use of a theoretical concept as a basis for taxation policy. The concept of economic surplus or rent is, however, crucial to any understanding of the mineral industry's contribution to development, and of the extent to which that contribution is genuinely sustainable. This article tries to behind the emotions to the basic concepts involved.