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Economic and Financial Toll
Economists have shown that heavy reliance on mining is not a good long-term national economic strategy. For the most part, mineral-rich developing countries have some of the slowest growth rates in the world, and the highest poverty rates-a phenomenon economists call "the resource curse." Harvard economists Jeffrey Sachs and Andrew Warner studied 95 developing countries that were minerals exporters for the period 1970 to 1990. They found that the higher the dependence on natural resource exports, the slower the per capita growth.
A woman pastures her sheep on reduced lands since the arrival of the gold and copper mine in her community of Tintaya, Peru. Credit: Ingrid Macdonald/Oxfam CAA | The fast, easy revenues brought in to countries through gold mining frequently crowd out investment for other, more diverse and labor-intensive sectors such as agriculture and manufacturing. And with many countries simply exporting the raw metals, they lose out on opportunity to add value by creating finished products, which would provide more jobs and revenue.
Yet another shortcoming is the industry's employment record. Mining is no longer a strong generator of jobs. The formal sector employs just 2.75 million people-just 0.09 percent of the global workforce-and that number is in rapid decline.
Minerals are a nonrenewable resource, which means they can only be taken out of the ground one time. Once mineral deposits have been depleted, the aftermath of a large-scale mining operation is typically a landscape of devastation: Thousands of hectares of poisoned, rubble-strewn land drained by acidic streams that will likely remain polluted for thousands of years to come.
In many developing countries, the companies that have enriched themselves through this destruction are not held accountable for mitigating it. Some wealthier countries such as the United States attempt to avoid this end game by requiring (at least on paper) that the mining company set aside a certain amount of money upfront to cover these inevitable expenses for water treatment, reinforcing liners for tailings holding ponds, and other measures. Thus far, however, such financial insurance policies have fallen woefully short of what it costs to begin to reclaim these mine sites, some of which are among the world's most contaminated places. Mining companies in the United States have underestimated the costs of closing their operations by as much as $12 billion, according to a 2003 estimate by the Mineral Policy Center. When that happens, taxpayers have to step in to pick up the tab.
Here are some notable cases of mishandled mine reclamation:
Galactic Resources, Inc., a Canadian mining company, stuck U.S. taxpayers with a $200-million bill when it declared bankruptcy and walked away from its Summitville gold mine in Colorado in 1992. The 1,400 acre mine had been leaking cyanide into the Alamosa River watershed since its first week in operation and by the time it closed, had destroyed 25 kilometers (15.5 miles) of the river. When Galactic left, it had mined $130 million worth of metals at Summitville-a sum that wouldn't even begin to cover the costs of trying to mop up the mess left behind, nor justify the mining in the first place.
Fish killed from cyanide spill at Baia Mare, Romania. Credit: Tibor Kocsis | In January 2000, a tailings dam at the Baia Mare mine in Romania split open, releasing more than 100,000 tons of wastewater laden with cyanide and heavy metals into the Tisza river, and eventually into the Danube, killing 1,240 tons of fish and contaminating the drinking water supplies of 2.5 million people. Faced with skyrocketing cleanup costs and only partially covered by its insurance, Esmeralda Exploration Ltd., the Australian company that held the principal interest in the mine, went into a form of bankruptcy to protect its shareholders. Unfortunately, the citizens of the countries affected received no such protection.
For more information:
Metals and the Wealth of Nations. A section of Dirty Metals: Mining, Communities and the Environment.
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