Mining is often seen as a destructive and exploitative industry that harms the environment and the people living near it. However, mining can also be a source of development and empowerment for rural communities, if done responsibly and sustainably. In this blog post, I explore how mines can support rural livelihoods in several ways.
Job Creation
One of the most obvious benefits of mining is that it can generate employment opportunities, both directly within the mining industry and indirectly in supporting industries. According to a study by the World Bank, each direct mining job can create several indirect jobs in the local economy, though the multiplier is context-specific (IFC). Mining can also provide skills training and education for local workers, enhancing their human capital and employability.
Economic Growth
Mining can stimulate economic growth in low-income countries and rural areas, bringing wealth to these regions. A report by the International Council on Mining and Metals (ICMM) found that mining contributed to 11.5% of the GDP of low-income countries in 2016, compared to 3.5% in high-income countries (ICMM, 2018). Mining can also increase tax revenues and foreign exchange earnings for the government, which can be used to fund public services and infrastructure. Rio Tinto’s Oyu Tolgoi operations, for example, spent $13.4 billion in-country between 2010 and 2021 in the form of salaries, payments to Mongolian suppliers, taxes, donations and other payments to the Government of Mongolia (Rio Tinto website).
Infrastructure Development
New mines often require infrastructure such as roads, schools, and health clinics. This development can benefit remote and previously impoverished areas, improving their access to basic services and markets. For example, in Mongolia, the Oyu Tolgoi copper-gold mine has built roads, schools, health centers, and power station in the surrounding area (Rio Tinto).
Business Opportunities
Mining operations can create new business activities in the local area, such as catering, transportation, maintenance, and retail. These businesses can provide income and employment for local entrepreneurs and suppliers, especially women and youth. Mining can also foster linkages with other sectors of the economy, such as agriculture, tourism, and manufacturing, creating a more diversified and resilient economic base.
Land and Credit Markets
The presence of extractive activities can infuse dynamism into local factor markets, such as land and credit markets. Mining can increase the demand and value of land, which can incentivize landowners to invest in land improvement and conservation. Mining can also increase the availability and affordability of credit, which can enable local farmers and businesses to access finance and expand their operations.
Responsible Mining
However, not all mining projects are beneficial for rural livelihoods. Some mining projects may cause environmental degradation, social conflict, human rights violations, and corruption. Therefore, it is crucial that mining operations are carried out responsibly, with a focus on sustainable development and equitable distribution of benefits.
Responsible mining means that mining companies adhere to high standards of environmental protection, social responsibility, governance, and transparency. It also means that mining companies engage with local communities and stakeholders in a meaningful and respectful way, ensuring that they have a voice in decision-making processes and share in the benefits of mining.
Some examples of responsible mining practices include:
- Implementing environmental impact assessments and mitigation measures to minimize pollution, waste, water use, greenhouse gas emissions, biodiversity loss, and land degradation.
- Adopting voluntary initiatives such as the Extractive Industries Transparency Initiative (EITI), the Voluntary Principles on Security and Human Rights (VPSHR), and the International Cyanide Management Code (ICMC) to improve accountability and performance.
- Supporting local economic development through local procurement, hiring, training, and community investment programs.
- Respecting the rights and interests of indigenous peoples and other vulnerable groups, such as women and children.
- Addressing potential conflicts and grievances through dialogue, mediation, arbitration, or judicial mechanisms.
- Contributing to post-mining transition planning and rehabilitation to ensure long-term sustainability.
Mining can be a powerful driver of rural development
Mining can be a powerful driver of rural development if done responsibly and sustainably. New mines can support rural livelihoods by creating jobs, stimulating growth, developing infrastructure, creating business opportunities, and enhancing land and credit markets. However, mining must also respect the environment and the people affected by it. Responsible mining is not only good for rural communities but also for the mining industry itself.