The economic impact of mining


What's the contribution of mining to economic development?

According to the proponents, mining leads to economic expansion and decreasing poverty. They especially regard the following aspects as economic advantages:

  1. Higher tax incomes for states, thanks to mining activity.
  2. Improving services and increasing employment in local communities.
  3. The raised demand for goods and services makes the economy of local communities thrive.

More critical accounts, however, doubt that mining is prosperous to local communities. They state that: 

  1. The costs and profits of mining are not fairly distributed and in many cases the profits even don't live up to the costs, as a result of the enormous passive social and ecological costs.
  2. Private enterprises make profits, but the agricultural communities have to bear the (passive) costs.
  3. The local economies are seriously disturbed, by e.g. the dutch disease effect, a macro-economic phenomenon which occurs when foreign currencies gain by the extraction of natural resources. In many cases the contribution of mining to a micro-economic situation, then, in a global perspective, is rather negative than positive.
  4. Pollution of the environment means a serious threat to the ecosystem and the health of the local communities, with grave consequences for the farmers, who depend on agriculture.
  5. On a global level, it is injust that natural resources which actually belong to the South, produce enormous profits for western enterprises and shareholders in the North and merely a very small percentage remains as 'royalities' for the local communities. The well-known story about the colonisation of the South just goes on, but on a much larger scale today than centuries ago.