Mining investment and regional development: A scenario-based assessment for Northern Sweden

Abstract

The way in which mineral development contributes to economic development in the region where it takes place is important for the mining industry’s relations to the local community. The purpose of this paper is to provide an assessment of the regional-economic impacts of a large-scale contemporary iron ore project in Northern Sweden (including two new mines, two processing plants, and one pellet plant). The regional input–output model rAps, provided by the Swedish government agency NUTEK is used, and it explicitly addresses the linkages between demographic development, the labour market, industrial production and the municipal finances in a consistent modelling framework. The simulation results suggest an average employment multiplier of about 2–2.5 during the maximum production phase, indicating that for every 100 jobs in mining about 100–150 jobs are supported elsewhere in the local economy. The positive impacts in this case are made possible in large because of the existing mining cluster and local suppliers in northern Sweden. Still, these results are perhaps best viewed as an indication of the potential for local economic development as they neglect, for instance, potential supply constraints (e.g., attracting the necessary labour force, road infrastructure, etc.). Specific policies to further strengthen the regional linkage effects may therefore be necessary in order for this potential to be realized in practice, and attention would preferably be paid to policy measures that have positive external spillover effects on the surrounding geographical area.