Mineral Resources and Development

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This series aggregates and presents the World Bank`s knowledge on oil, gas, and mining in an accessible format. It is meant to assist knowledge sharing and trigger policy dialogue on topics relevant to managing natural resource wealth sustainably and responsibly. The series is produced by the Extractive Industries Unit of the World Bank. The unit serves as a global technical adviser that supports sustainable development by building capacity and providing extractive industry sector-related advisory services to resource-rich developing countries.

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  • Publication
    The Contribution of the Mining Sector to Socioeconomic and Human Development
    (World Bank, Washington, DC, 2014-04) McMahon, Gary
    Many low and middle-income mineral-rich countries have experienced strong growth for a decade or longer, propelled by a rapid expansion of their mineral exports and a rise in prices of these commodities. This sustained strong economic performance goes against the accepted wisdom that even though the mining sector, like other extractive industries, can generate foreign exchange and fiscal revenues, it contributes little to sustained economic growth and, by extension, human development. Through the presentation of trends and patterns of various indicators, this paper shows that in addition to economic growth, countries rich in minerals other than oil have experienced significant improvements in their human development index (HDI) scores that are on average better than those experienced by countries without minerals. In a sample of five low and middle-income countries with relatively long histories of mining, benefits came from foreign direct investment (FDI), export revenues, and fiscal revenues. The overall impact of the mining sector was much stronger if there were infrastructure benefits and strong linkages to other industries, especially through domestic procurement. Contrary to the notion that there are no jobs in mining, in this small sample, employment related to the mining sector was very high in countries where linkages were strong, even before the multiplier and fiscal expenditure impacts were accounted for. Cooperation between the public and private sectors seemed essential to increasing such linkages. In addition, mining firms often made substantial contributions to local and regional development, at times due to legal requirements but often not. All five countries have either relatively high HDIs (compared with neighboring countries) or strongly improving HDIs.
  • Publication
    Implementing EITI at the Sub National Level : Emerging Experience and Operational Framework
    (World Bank, Washington, DC, 2011-10) Aguilar, Javier; Seiler, Verena
    The fundamental rationale behind Extractive Industries Transparency Initiative (EITI) is that increased transparency and knowledge of revenues from the extractive industries will empower citizens and institutions to hold governments accountable. By implementing EITI at the sub national level, countries could reduce opportunities for mismanagement or diversion of funds from sustainable development purposes, especially for prominent oil, gas, or mining regions. It is also an effective way of strengthening EITI local ownership among stakeholders. This report presents a preliminary analysis of emerging experiences in EITI countries implementing sub national EITI. Six countries have been selected as case studies: Ghana, Indonesia, Mongolia, Nigeria, the Democratic Republic of the Congo (DRC), and Peru. Based on these experiences, the report proposes a common operational framework for implementing EITI at the sub national level, laying the ground for further practical guidelines on deepening or strengthening the sub national plans or activities of implementing countries.
  • Publication
    The World Bank's Evolutionary Approach to Mining Sector Reform
    (World Bank, Washington, DC, 2010-10) McMahon, Gary
    In this report, in addition to aggregate results, six brief case studies are used to highlight the impact of Bank supported mining sector reform on various indicators at different links of the value chain. These include: the impacts on investment; production and employment in Argentina; institutional capacity building in Papua New Guinea; production and fiscal revenues in Tanzania; community and regional development in Madagascar; mining sector reform and sustainable development in Mongolia; and mining and resource corridors in Liberia. The reforms of the 1990s and early 2000s, which focused on increasing investment and building regulatory capacity, have often had spectacular results with respect to investment and good results with respect to institution building. The work on increasing the efficiency and transparency of fiscal regimes has also achieved significant success, although it is still too early to make a final assessment. While the mining sector-specific aspects of the management and allocation of fiscal revenues are still in early days, there do seem to have been important impacts on poverty reduction and sustainable development in a number of countries that have undergone mining reform, although there has been an insufficient passage of time to make definitive judgments.
  • Publication
    Expenditure of Low-Income Households on Energy : Evidence from Africa and Asia
    (World Bank, Washington, DC, 2010-06) Bacon, Robert; Bhattacharya, Soma; Kojima, Masami
    Patterns of household energy use and expenditure have been the subject of a large number of studies. Household expenditures on energy-particularly, how much the poor spend-have policy implications for several reasons. First, policies to mitigate or cope with energy price shocks are increasingly focusing on targeted support to low-income households as a way of limiting the fiscal cost of such policies while offering protection to the most vulnerable members of society. Second, for governments looking to reform energy price subsidies, the effects on household welfare- especially effects on poor households-of price increases resulting from subsidy reduction/removal is an important policy consideration. But subsidies for liquid fuels targeting the poor are difficult to design and implement effectively, because liquid fuels tend to be used more by the rich than by the poor, and are also easy to transport (and hence to divert to non-poor users). For this reason, there is a growing recognition of the need to move away from price subsidies for liquid fuels to alternative forms of targeted assistance to compensate the poor for the adverse effects of higher fuel prices. Third, in areas where many households have not yet begun using modern commercial energy regularly, the amount they can afford to pay for such energy services is a relevant question. Quantifying expenditures on different types of energy at varying income levels provides a basis for addressing these questions. The paper also examines expenditures on motorized passenger transport and food, two items for which the price of oil is an important component of their cost structure and which are consequential in the budget of poor households.
  • Publication
    Rockets and Feathers : Asymmetric Petroleum Product Pricing in Developing Countries
    (World Bank, Washington, DC, 2010-06) Bacon, Robert; Kojima, Masami
    This paper aims to provide those working in developing countries with a review of the issues that can help address the four questions: 1) are petroleum product margins excessively high at certain times?; 2) Does asymmetry of price responses to cost changes exist and, if so, what are the possible reasons that could account for it?; 3) If there is asymmetry of petroleum product price responsiveness, how large is the cost to consumers compared with symmetric pricing?; And 4) what policies can combat excessive petroleum product margins? The discussion focuses mainly on liberalized markets, because, in markets subject to price control, the pattern of responses of prices to cost changes will be determined partially or largely by the Government. Chapter one describes asymmetric pricing and the structure of the oil market, focusing in particular on the links between the retail sector and the rest of the chain of supply. The chapter next briefly reviews types of legislation that exist in liberalized markets to protect consumers from monopolistic or collusive behavior in petroleum products pricing. Chapter two describes different types of firms' pricing behavior, including both collusive and non collusive behavior, and provides an overview of how lags in pricing behavior arise and the reasons they can lead to asymmetry. Following this section on theories, econometric studies testing for the presence of asymmetric pricing are reviewed, with special reference to those studies carried out in developing countries. Based on these models, a sample calculation of the extra costs to the consumer of asymmetric pricing relative to those under symmetric pricing is given, including an illustration based on a specially constructed estimate for Guatemala. Chapter three provides an overview of policy responses to asymmetric pricing.
  • Publication
    The Aluminum Industry in West and Central Africa : Lessons Learned and Prospects for the Future
    (World Bank, Washington, DC, 2009-12) Husband, Charles; McMahon, Gary; Veen, Peter van der
    The purpose of this working paper is to evaluate the future of the aluminum industry in West and Central Africa, with a focus on aluminum smelting and its relationship with power generation and availability in the regions. The organization of this study is as follows. It continues with an overview of the global aluminum industry, including a description of the production process, current and projected supply and demand, and the most important cost considerations for companies investing in the industry. Chapter two provides a brief history and future prospects for the aluminum sector in West and Central Africa. Chapter three contains an analysis of the viability of the two most important existing smelters in the regions, Valco in Ghana and Alucam in Cameroon, as well as a briefer analysis of Alscon in Nigeria and the potential for other smelters in the regions. In chapter four, the recent experience of the three large aluminum smelters in southeast Africa is reviewed and lessons are extracted for West and Central Africa. Conclusions and recommendations are in chapter five.
  • Publication
    Changes in CO2 Emissions from Energy Use : A Multicountry Decomposition Analysis
    (World Bank, Washington, DC, 2009-10) Kojima, Masami; Bacon, Robert
    The continued growth of global emissions of carbon dioxide (CO2) and their likely adverse effects on global warming are focusing debate on the contribution of various countries to total emissions and the comparability of efforts across countries in mitigating these emissions. This paper examines recent trends in CO2 emissions across countries at different levels of development and asks what has been contributing to the growth of emissions as well as to their moderation. The paper applies a decomposition analysis, an accounting methodology based on a log mean Divisia index, to analyze the change in CO2 emissions over a decade.
  • Publication
    Mainstreaming Gender into Extractive Industries Projects : Guidance Note for Task Team Leaders
    (World Bank, Washington, DC, 2009-08) Eftimie, Adriana; Heller, Katherine; Strongman, John
    Extractive industries (EI) can bring many positive development impacts to the communities involved, but also have the potential to create or exacerbate vulnerabilities within these communities. Benefits and risks are often evaluated and measured at the community level, with little examination of the different impacts on men and women. In fact, evidence suggests that a gender bias exists in the distribution of risks and benefits in EI projects: benefits accrue to men in the form of employment and compensation, while the costs, such as family and social disruption, and environmental degradation, fall most heavily on women. Despite the ample evidence of gender bias, and its implications, in EI, there is significant scope for increasing the gender focus of most EI projects in the World Bank. Analyzing and adapting projects to local gender issues can help to mitigate the risks created by EI, and amplify the potential benefits to both men and women, leading to increased profitability and more sustainable development impacts. Furthermore, understanding and adapting projects to improve gender sensitivity is essential to realizing the Bank's stated commitment to both mainstreaming gender and to the third Millennium Development Goal (MDG) of gender equality and empowerment of women. The following guidelines briefly outline some of the ways that EI can impact men and women differently and the associated development implications, and provide step by step suggestions for how to understand and integrate gender issues into World Bank Group EI project design.
  • Publication
    Gender Dimensions of the Extractive Industries : Mining for Equity
    (World Bank, Washington, DC, 2009-08) Eftimi, Adriana; Heller, Katherine; Strongman, John
    Extractive industries (EI) impacts can be positive and negative, spanning economic, social, and environmental issues. Oil, gas, and mining projects may create jobs, but may also consume farming land for their use, changing livelihoods and limiting access to water, food, and firewood. Water sources may become polluted, but new roads may be built and communities may become electrified. Markets may boom, but prices may rise steeply. Given male and female relationships to each other, to the economy, to the land, and to their communities, men and women have very different experiences of these EI impacts, and evidence increasingly demonstrates that in general women are more vulnerable to the risks, with little access to the benefits. This publication presents how and why men and women are differently impacted by EI, exploring what the implications are for business and development, and providing policy and action suggestions for how to mitigate negative impacts and amplify positive ones and how to monitor and improve results. The publication focuses primarily on larger scale commercial operations but also considers some of the issues relating to artisan and small-scale mining (ASM). The report is addressed to the stakeholders in extractive industries, i.e., oil, gas, and mining development and operations community members and leaders; government officials; and managers and staff of EI companies.
  • Publication
    Government Response to Oil Price Volatility : Experience of 49 Developing Countries
    (World Bank, Washington, DC, 2009-07) Kojima, Masami
    Oil prices rose from 2004 to historic highs in mid-2008, only to fall precipitously in the last four months of 2008 and lose all the gains of the preceding four and a half years. The steep price increase from January 2007 to July 2008 was challenging for all economies. While the sharp drop in prices since August 2008 has been welcome news for consumers, the cause of it, the global financial crisis, is not. Moreover, currency depreciation against the dollar in many developing countries has meant that, in local currency units, petroleum product prices have not fallen as sharply as in U.S. dollars. This report examines the policy responses of 49 developing country governments to world oil price movements in the last three years. The sample includes 16 countries in Sub-Saharan Africa, 15 in Asia, 10 in Latin America, and 8 in the Middle East and North Africa. The report updates a companion 2006 publication on coping with higher oil prices and builds upon two other publications: one on oil price volatility and another on the degree of pass-through of world oil price increases between January 2004 and August 2009. As with all other publications in this series, this report examines issues related to oil price levels and volatility in the downstream petroleum sector and other sectors where oil is an important input, such as transport, fisheries, and agriculture, from the point of view of consumers. It does not consider macro-level policies (such as monetary or exchange rate policy) or the impact of oil price changes on the macroeconomic performance of countries, nor does it discuss management of the windfall income by large oil exporters and the long-term economic consequences of revenue management.