As the war in Ukraine adds further pressure to the supply of raw materials and minerals, mining is back in the spotlight. The access to raw materials has been a strategic security question for some time in strategies such as the European Green Deal or the Canada-US joint action plan to increase autonomy and secure supply chains for critical minerals. With the light “shining on mining”, can this critical sector bring better well-being outcomes for local communities?
Find the “mining of life”
It starts by realising that minerals and metals are part of our daily lives. They help us grow our food (tools and fertilisers), move around (vehicles and infrastructure) and communicate with each other (microchips and cell phones). For some OECD countries like Australia and Chile, the mining sector represents more than 50% of national exports and in Canada and Colombia, it is an important source of fiscal income.
Transition to a zero-carbon economy means our dependence on raw materials and minerals is set to increase. Clean energy technologies require more minerals than fossil-fuel based counterparts. For example, a typical electric car using lithium, cobalt and manganese requires six times more minerals than a conventional car.
Unlike other industries, mining activity is geographically concentrated – around deposits. Only around 10% of regions in OECD are specialised in mining activities, yet many others have mines in their territory. The activity creates a unique mix of positive and negative impacts for local communities, which in many cases are home to indigenous peoples, for example in the Northwest Territories in Canada, Pilbara in Australia or Norrbotten in Sweden. As global demand for minerals and national demands to secure sustainable supply increase, it is time to talk about how well-being in communities can benefit.
Mining communities have unique assets but face pressing challenges
National plans and policies alone will not bring well-being gains to communities. Governments need to develop local policies that are sensitive to the characteristics of mining communities, such as demographics and geography. OECD data show that mining regions can shine in a number of well-being dimensions. They have a greater share of young people and a lower death rate than in OECD rural regions. They represent the main source of income in many communities.
Mining regions also register some positive environmental outcomes. They have a higher average growth of green-land cover (0.34 percentage points between 2004-19), in contrast to the drop across OECD rural regions (-0.04 percentage points). Benefits from lower risk of drought from water depletion measured through soil moisture anomalies index also exist.
Mining regions are younger and healthier but face population, employment and pollution challenges compared to other rural regions
Despite these positive numbers, mining regions face acute challenges in terms of well-being. They have lower levels of economic diversification, which increases their vulnerabilities to external shocks such as income volatility from changes in international commodities prices. They register lower population growth (0.2% annual average 2007-20) and slightly lower job-creation rate (0.1% annual average 2007-20) than the average OECD in rural regions (0.5% and 0.4%, respectively). A pressing challenge for mining regions is the low female participation in the workforce – on average there are 50% more male workers than women.
Mining regions also generate more CO2 emissions across the energy, industry and transport sectors. They produce 47,605 Kilograms of CO2 eq. per capita. This is much higher than the OECD regional average at 14,798 CO2 eq. per capita. The CO2 emissions from electricity production is higher in mining regions due to greater use of fossil fuels. In many of these places, urgent action is needed to reduce CO2 emissions by switching to hydrogen or renewable energy sources.
Good policies for well-being in mining communities
Analysis of well-being dimensions allows us to identify the policy priorities needed to improve attractiveness and well-being in mining communities. Across the OECD, there are some policy examples of how mining regions are addressing well-being priorities. In Western Australia, electrifying mine operations with renewable or hydrogen sources decarbonise mining value chains and bring positive health effects. In Norrbotten, Sweden initiatives are enhancing female participation in the mining workforce by leveraging mining automation to unlock new job opportunities.
“National plans and policies alone will not bring well-being gains to mining communities“.
Andres Sanabria and Ian Wood
When it comes to diversification, some mining regions are upscaling suppliers and promoting entrepreneurship linked to carbon-free mining processes (Antofagasta, Chile and Andalusia, Spain). Moreover, some regions have adopted practices to enhance benefit-sharing and involve local communities. In British Columbia, Canada programmes are in place that promote indigenous business participation in energy projects.
Smart, local policies can help maximise benefits and tackle the challenges faced by mining communities. They can help ensure mining activities link to the natural environment, involve local people and firms and support economic growth and diversification.
By prioritising selected policies down the line, better mining can be a driver of better lives.
For more information, visit the OECD Mining Regions and Cities Initiative
Andres Sanabria is a policy analyst at the Centre for Entrepreneurship, SMEs, Regions and Cities at the OECD where he leads the Mining Regions and Cities Initiative. He has conducted economic and policy analysis for urban and regional studies, co-ordinated rural country reviews and supported the development of the OECD rural policy framework. Andres is also an invited lecturer on rural development in Paris-Dauphine University and Sciences Po, Paris. Prior the OECD, Andres worked as a principal economist in the financial and oil industry. He holds a Master’s degree on Public Affairs from London School of Economics and Sciences Po.
Ian Wood currently serves as Executive Director of Strategic Initiatives for the City of Greater Sudbury in Ontario, Canada. He has held senior leadership roles at the City since 2011, primarily as Director of Economic Development. Over the past decade, Ian has actively promoted international connections to build on Sudbury’s role as one of the world’s most important centres for mining and mining technology. He is active in many regional initiatives in Northern Ontario and has worked with OECD on the Mining Regions and Cities initiative since its inception in 2017.