Economic rents, the distribution of gains from mineral exploitation, and mineral development policy

Abstract

The ‘once-and-for-all’ character of mineral exploitation introduces a unique element into the analysis of mining and the formulation of mineral policy, making issues of mineral ownership, questions of the interests of producers and consumers, and of the timing of exploitation particularly important. Developing countries account for a considerable, though by no means dominant, proportion of the world's mineral output, but the bulk of consumption is in high-income industrialized countries, and these countries also own the major corporations with mineral exploitation expertise. The high degree of horizontal and vertical integration among these corporations, and their participation in mineral processing, is a further complication. This paper argues that the resource rents inherent in mineral exploitation, and the other monopolistic rents associated with mining and processing, are essential to an understanding of past trends and to the formulation of future policies. The difficulties of measuring these rents adds to the problems of determining their equitable distribution among mineral-rich countries, mineral exploitation companies and mineral consumers. The proper timing of mineral exploitation in relation to national economic development is a further complication. It is thus perhaps not surprising that in high-income, no less than in developing countries, mineral exploitation and use policies are in disarray. The paper concludes with a discussion of the principal mineral development policy options emerging from the debate on the distribution of gains from mining.