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
    Innovative Approaches for Multi-Stakeholder Engagement in the Extractive Industries
    (World Bank, Washington, DC, 2013-06) Sheldon, Christopher Gilbert; Zarzar Casis, Alonso; Caspary, Georg; Seiler, Verena; Ruiz Mier, Fernando
    Extractive industries (oil, gas, and mining) have the potential to generate significant wealth for developing countries and to serve as important catalysts for growth. They generate large revenues-through royalties, taxation, and exports-and create employment. In some cases, however, resource wealth is associated with political turmoil, deteriorating standards of living, civil conflict, and elite capture. The management's response to the Extractive Industries Review (EIR) and accompanying evaluations signaled a critical turning point in the World Bank Group's (WBG's) engagement in the sector, which had hitherto focused primarily on exploration and development activities, sector policy reform, and commercialization of state-owned enterprises. This publication presents four of the finalist case studies, selected on the basis of project: 1) scalability; 2) replicability; 3) innovation; and 4) level of multi-stakeholder collaboration. In an effort to better document and showcase the variety of ways in which country teams are working with different actors on the often sensitive topic of good governance in the oil, gas, and mining sectors, the World Bank Institute and the World Bank Oil, Gas and Mining Unit (SEGOM) initiated an internal case story competition in 2011.
  • Publication
    Extracting Lessons on Gender in the Oil and Gas Sector : A Survey and Analysis of the Gendered Impacts of Onshore Oil and Gas Production in Three Developing Countries
    (World Bank, Washington, DC, 2013-05) Scott, Jen; Dakin, Rose; Heller, Katherine; Eftimie, Adriana
    The oil, gas, and mining unit series publishes reviews and analyses of sector experience from around the world as well as new findings from analytical work. It places particular emphasis on how the experience and knowledge gained relates to developing country policy makers, communities affected by extractive industries, extractive industry enterprises, and civil society organizations. This paper explores the divergent experiences of women and men who live in areas that are directly affected by oil and gas development, and highlights how the industry specifically contributes to 'gender gaps' in the unequal distribution of assets and risks. Evidence from surveys and interviews with community members, company representatives, and government an official in oil-and gas-affected areas is analyzed and potential solutions are presented to reduce inequality, increase operational efficiency, reduce risks, and foster sustainable development. The paper aims to demonstrate how oil companies, policy makers, and donors, as well as citizens and nonprofits, can benefit from facilitating more equitable sharing of oil and gas wealth, with a particular focus on the inclusion of women. It points out the gains that can be realized through mutual collaboration to minimize harm for those people whose lives and environments are most directly impacted by the industry. Gender, as defined here, is differentiated from biological sex: gender describes the separate behaviors, identities and roles into which males and females are socialized, and contrasts the freedoms and constraints that come with these roles. This paper therefore examines how gender influences risks and opportunities in upstream areas of oil-rich, low income countries. The paper adopts a qualitative approach to research, presenting the perspectives of the people who live in the immediate vicinity of upstream operations and attempting to faithfully interpret what can be learned from their testimonies.
  • 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
    Overview of State Ownership in the Global Minerals Industry : Long Term Trends and Future
    (Washington, DC, 2011) World Bank
    This study builds on a previous study from the raw materials group, a Sweden-based minerals consultancy, originally commissioned by the World Bank in 2008. The trend toward more state engagement in the mining industry as noted in the 2008 study has continued, based on more recent developments. This study includes an expanded section on the new forms of state control which are found in Africa and also in Russia, China, India, and other emerging economies. It lays out the possible political implications of these trends and draws lessons from previous periods of increasing state ownership, including how to avoid previous mistakes. Various metals and the history of nationalization in a number of countries are analyzed as are the possible factors influencing the decision to nationalize, such as the sector's strategic importance and the need to control it. China's role in investing in Africa is discussed noting the issues concerning negotiation strategies, looking at the history of deals made in Sub-Saharan Africa. State ownership is defined in detail in appendix one of this document. A consolidated list of state ownership in mining of selected minerals and mineral refining on which the study is based is presented in appendix two.
  • 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
    Environmental Governance in Oil-Producing Developing Countries : Findings from a Survey of 32 Countries
    (World Bank, Washington, DC, 2010-06) Mayorga Alba, Eleodoro
    The Petroleum Governance Initiative (PGI) encompasses three general themes, or pillars, that address issues issues of transparency and economic responsibility, environmental sustainability and responsible community development. Of particular interest here is the second pillar, environmental sustainability; the PGI is currently involved in four main activities surrounding this theme: 1) assessing environmental governance and management in oil-producing countries-the topic of this paper; 2) conducting a strategic environmental assessment of oil and gas activity in Mauritania; 3) conducting workshops and preparing a toolkit on decommissioning and abandonment; and 4) providing in-country assistance on environmental management to a limited number of countries. This paper presents the results of a survey undertaken by the PGI to measure the environmental governance of oil-producing nations against a benchmark standard representing a compendium of good management practices for minimizing impacts of oil and gas development. The objective is to identify areas where the World Bank can provide assistance to improve environmental governance and management systems, particularly in those developing countries whose oil and gas industry is rapidly emerging as a major component of gross domestic product. Detecting governance gaps-and, more importantly, facilitating the rapid implementation of corrective measures-is an important challenge for the World Bank in its efforts to preserve natural habitats and the culture of indigenous peoples.
  • 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
    Toward Strengthened EITI Reporting : Summary Report and Recommendations
    (World Bank, Washington, DC, 2010-01) Ravat, Anwar; Ufer, Andre
    This document draws on Extractive Industries Transparency Initiative (EITI) country implementation experience and contains the summary report and recommendations of a consultation process. The goal of the consultation process was to examine and recommend ways to strengthen EITI reporting by building on existing EITI policy guidance, while streamlining the reports and promoting qualitative improvements in disclosure within them. Accordingly, the recommendations in this document are addressed to the EITI International Secretariat and through it, to the EITI Board, as well as stakeholders in EITI-implementing countries.