Digging deeper for development: the case of Simandou and the Southern Guinea Growth Corridor

Abstract

Last decade’s surge in commodity prices has now abated, but some of its effects on the mining industry may well be longer-lasting. The combination of booming consumer demand and continued depletion of mineral deposits in established producing nations expanded investor attention to the developing world. Projects grew bigger to capture economies of scale and compensate for rising capital costs, and the industry’s pipeline soon filled with some of the largest projects ever proposed. Expectations of social and economic gain in mineral-rich nations also increased dramatically, fuelling a surge of resource nationalism worldwide. As a new tier of developers courted governments to access mineral resources, a sense of choice became entrenched. Individual mining corporations came under pressure to demonstrate that their ever-larger investments delivered commensurate economic benefits to host countries. In an attempt to balance the need to attend to local hegemony in policy making with a growing interest in economic development outcomes, some large mining corporations have started to develop innovative responses—illustrated in this paper with the case of Simandou and its promotion of a Southern Guinea Growth Corridor. The authors contend that a company’s ability to address and manage development matters will become an increasingly important dimension of competitive advantage in the mining industry.