Contribution Of Mining In The

Global Economy

Pratyush Kumar Katiyar 13155061IIT(BHU) Mining Engineering(pkumar.katiyar.min13@itbhu.ac.in)7753863532

World Bank Data(Contribution of mining )

Year - GDP Growth rate ( GDP US$)

1970 - 4.29% (2.95 trillion US$)1980- 0.5% (11.15 trillion US$)1995- 2.96% ( 30.65 trillion US$)2005 - 3.82% (47.14 trillion US$)2010- 4.35% (65.6 trillion US$)2015 - 2.6% ( 73.43 trillion US$)

Year – Income from renting natural resources , %of GDP ( Comparison)

1970- 1.18% of GDP (0.035 trillion US$)1980- 7% of GDP (0.78 trillion US$)1995- 1.81% of GDP (0.55 trillion US$)2005- 4.49% of GDP (2.12 trillion US$)2010- 4.71% of GDP (3.09 trillion US$)2015- 3.92% of GDP (2.88 trillion US$)

Three sectors of Global economy

1. Industry- 30.3% of world’s GDP2. Services – 63.7% of world’s GDP3. Agriculture - 6% of world’s GDP JOHANNESBURG MINING REPORT

by MARK CUTIFANI : Mining directly and indirectly

contributes to 45% of world economy through its contribution in all 3 sectors mentioned above.

Industry- Contribution of mining

Case Study: Direct Economic Impact of Gold

Core Sector Industries There are 8 core sector industries in India:1. Coal - coal mining2. Crude oil - mining3. Natural Gas - mining4. Fertilizers – Main components are nitrogen, phosphorus and

potassium. Phosphorus and potassium are mined.5. Electricity – Coal, natural gas and petroleum(67.4% ) plus renewable

sources6. Iron and Steel – iron ore mining7. Cement – Limestone and clay mining8. Oil refinery - An oil refinery or petroleum refinery is an industrial

process plant where crude oil is processed and refined into more useful products such as petroleum naphtha, gasoline, diesel fuel, asphalt base, heating oil, kerosene, and liquefied petroleum gas.

Electricity Production :

According to World Bank data, percentage of electricity generated by coal globally is increasing continuously from 1975 to 2013 despite the recent efforts of the world to shift to non renewable sources of energy. Reasons- Cheap , good supply in global market,easier handling.

Coal (41.3%) + Natural Gas (21.7%) + Oil(4.4%) = 67.4% of electricity needs mining operations.

Alternative Sources cannot exist without mining

Solar Energy

Wind Turbines

Atrracts Foreign Direct Investment (FDI)

Mining FDI often dominates the total flow of FDI , specially in those economies which are not developed enough to attract foreign capital in other sectors. Example –

Ghana is Africa’s second-largest gold producer after South Africa, producing approximately 4 percent of the world’s gold. The mineral sector has attracted over U$2 billion investment in the form of FDI representing over 56%, total FDI to Ghana .

FDI Policy for mining in India(Under Make in India Policy) :

• FDI up to 100% is allowed in exploration, mining, minerals processing and metallurgy under the automatic route for all non-fuel and non-atomic minerals including diamonds and precious stones.

• Mining and mineral separation of titanium-bearing minerals and ores, its value addition and integrated activities fall under the government route of foreign direct investment up to 100%.

• FDI in coal mining is allowed for captive consumption only.FDI by China

FDI directly effects industrial growth in developing economies

Mining contribution in infrastructure

industrial and consumer goods industries

Iron – Primarily used in making steel which is used in machine parts, building structures, manufacturing machine tools etc.

Copper- Wiring ,motors , construction industrial machinery etc.Aluminium- automobiles, Packaging , Construction etc.Zinc- Galvanise other metals, such as iron; batteries etc.Petroleum - Gasoline, jet fuel, diesel fuel, tar ,lubricating oil etcLimestone – cement Coal - EnergyGold , silver, diamond – jewellery , cutting tools , decoration etc.Sulphur - gunpowder, matches etc. Industries cannot exist without minerals , therefore entire industrial sector

is dependent on mining , without mining, there will be no industries.

Hard to find an object around us without contribution of mining !!

Macro level Contributions of Mining All these aspects directly effect industrial growth

GHANA (gold) – 56% FDI for mining

Service sector - Contribution of mining

Employment Generation : Geneva Based International Labour Organisation Report –Developed nations – 1.5 million people in mining sectorDeveloping nations – 2.2 million people in mining sectorSmall Scale mining – 25 million peopleIndirect employment(Equipment production, maintenance ,

food ,transportation and other services including contractors and suppliers)- 150million people

All industries create this kind of spillover effect known as multipliers but mining sector generally creates higher multiplier effect than other sectors.

Provides greatest avenue for unskilled labour employment. Those who work in mining enjoy the highest wages and salaries of all

industrial sectors .Example- Mining Association of Canada states-Mining sector average annual pay exceeding $100,000 surpassed the

average earnings of workers in forestry, manufacturing, finance and construction by a range of $21,000 to $33,000 for those sectors.

Mine development leads to expansion of transportation :

Road Transport - Dumpers, trams, and trucks move minerals around mines . Rail Transport Trains transport nearly 70% of mineral deliveries in the

United States for at least part of the way from mines to consumers. Water Transport Barges transport mineral on rivers and lakes. Ships transport coal on the Great Lakes and the oceans to consumers in the

United States and other countries. Pipeline Transport Slurry pipelines move mixtures of crushed coal and

water. This method is not currently in use in the United States.

Example –The Indian Express- In 2014–2015 Indian Railways had

revenues of US$24 billion which consists of US$16 billion from freight, US$6.0 billion from passengers tickets and US$2 billion from sundry earnings . In fiscal year 2014-15, coal constituted 50% of the freight loading , so 33% revenue of Indian railways comes from coal transportation.

Similar is the case with USA , Association of American Railroads – “No single commodity is more important to America’s railroads than coal , which accounted for 38.8% of rail tonnage and 19% of rail revenue in 2014.”

Services required by mining sector

Agriculture – Contribution by mining

PROVIDES FERTILIZERS :Plants rely on three essential nutrients –

nitrogen , potassium and phosphorus.Potassium and phosphorus are mined and

applied through fertilizers .(China is the largest producer of phosphate and

Canada is the largest producer of potash)

Corporate Social Responsibility projects :Newmont Mining Corporation’s AGGI program( Ahfo Agribusiness Growth

Initiative) : Provided training to 1,368 farmers to increase agricultural productivity and farm

business skills. Bulga Coal Mine , Australia Initiative : Promoting viticulture and water resources . Such corporate social responsibility projects with farming friendly initiatives may

contribute significantly in the development of agriculture sector. Mishra and Pujari :Case Study in State of Odhisa(2008)

: Effect of mining on the life of the surrounding villages showed

improvement in the livelihood of farmers with increased per capita income.

Improves infrastructure and rural connectivity : Peru Mining Study report illustrated that new roads constructed for the Yanacocha Peru mining operation decreased the time it took for farmers to reach markets as well as decreasing their transport costs

Allegations against mining by farmers Mainly due to acquisition of land for mining operation and

pollution of water by mining.Land used for mining

USA – 0.1 % Canada- 0.01 % Peru – 0.08 % Australia- 0.26%

Similar is the case with water resources.(USA -1% of total water consumed and Australia – 2-3% of total water consumed)

Mining uses very less land and water resource of a nation. But still , Resettlement and rehabilitation of people is a matter of primary concern . Water treatment plants should be properly monitored and required attention for water quality management should be given.

Besides this , the contribution of mining to agriculture is significant as explained in the previous slides.

Mineral Education Coalition Report 2015

Minerals are so basic to human need , just after food that life without mining is difficult to imagine in today’s world