• Do Foreign-Owned Mines Create Local Jobs?

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    Foreign-owned mines create local jobs in mining directly by employing local workers, and indirectly by purchasing local goods and services. Recent case studies confirm that the majority of workers at foreign-owned mines are local and not expatriates. However, mine employment can be cyclical and subject to boom and busts, creating challenges for mine workers and communities.

    Canadian mining around the globe

    The Canadian mining industry is internationally active, with nearly 1,000 exploration companies and more than 4,300 mineral projects in various states of development in more than 100 countries around the world. [1, p. 68] Canadian exploration companies listed on the Toronto Stock Exchange (TSX) are investing in projects in Canada (52%), the U.S. (13%), South America (11%), Africa (8%) and Mexico (6%), Asia (4%), Oceania (4%) and Europe (3%).[1, p.36] Gold is the target of most Canadian exploration, followed by base metals (including iron, nickel, zinc and copper), uranium, and diamonds.[2]

    Canadian-owned mine operations abroad provide significant benefits to the local communities in which they operate, as well as providing a return on investment for mine owners and shareholders. For these reasons, foreign mining investment has a positive impact on economic growth in these communities.[3]

    Direct Job Creation

    One of the benefits of foreign-owned mines on communities comes from the creation of local jobs. Although it is true that modern industrial mining operations rely increasingly on technology and equipment, case studies have found that the absolute number of local people employed, both in jobs in mining and in other directly or indirectly related fields, remains substantial.[4]

    For example, the Obuasi mine in Ghana employs 5,955 workers and 718 contractors; almost the entire economy of the town of 150,000-200,000 is dependent on the mines.[4, p.34] Total employment levels have also risen in the Tanzanian mining sector—from less than 1,000 workers in 1997 to more than 8,000 in 2004.[5, p.62]

    The total employment generated will vary from site to site, however, and depend on the type of mining, stage of development, and geology. For example, an in-depth study of employment generated by the Yanacocha mine in Peru found that employment at the mine increased 10-fold between 1995 and 2005.[6, p.17]

    Foreign Owned Mines Benefit Local Workers

    In addition, case studies of foreign owned mines have found that most employees are domestic hires rather than foreign workers. The percentage of domestic employees was 97.7% in Ghana, 82.9% in Tanzania, 92% in Peru, and 99% in Chile in the mines studied.[4, p. 34] Case studies from Latin America have also found that the majority of the hires there were local, with 80% of jobs filled by locals in large mines studied.[7, p.6] While the total number of local employees of Canadian-owned mining firms is unknown, 273 mining companies based in Canada employed more than 169,000i workers in Canada and abroad in 2011.[8]

    The wages that large mining firms pay are often much higher than the general local wages .[7, p.6] Also, International Council on Mining & Metals (ICMM) case study interviews found that “employment in the mine is regarded as a relatively attractive form of employment as it is better paid and offers better fringe benefits (e.g., housing, education, and health care)”.[4, p. 35]

    Indirect Job Creation and Business and Skills Training

    In addition to creating jobs in mining directly, mines also create jobs in communities indirectly. Many businesses provide services for mining companies such as transportation, meals, accommodation, and construction. A new mine or an increase in mining activity increases demand for many of these services. Job creation, either direct or indirect, also means that locals have more money to spend on local goods and services, further extending job creation opportunities.

    An increasing number of studies show that the effect of indirect job creation is typically much larger than the number of jobs directly created by a mine. For example, a 2007 study by the ICMM examining the effects of the Antamina mine in Peru found that mine-generated indirect job creation was 10 times higher than the direct employment.[9] At the Yanacocha mine in Peru it was even higher, with 2002 World Bank estimates suggesting that for every job created by the mine, 14 jobs were created for people providing services and goods to the mine.[7]

    Indirect job creation can vary greatly and is influenced by the local purchasing and outsourcing done by mining companies.[4] The value of this procurement can be significant and case studies in Ghana, Tanzania, Peru and Chile found that it ranged from US$110 million to US$483 million per year.[4, p. 35]

    Cyclical nature of employment

    While mining can provide substantial employment opportunities, both directly and indirectly, the cyclical nature of the mining industry can also create challenges for workers in this sector and for their communities. Changes in global demand and supply of metals and minerals can cause the price of these commodities to vary significantly, leading to expansions and contractions in the mining sector.

    During economic booms, mining employment increases and competition for skilled labour may increase and exceed supply. [10] Competition for workers increases pressure on employers to pay higher wages and can attract an influx of workers to an area. This increased economic activity can lead to higher prices for food and housing as there is more demand and competition for these products. [6] Such booms can also strain communities as the arrival of new workers can place higher pressure on health and other public services. [11] Social tensions and disturbances may result.

    By contrast, during economic downturns the employment demand declines and has historically resulted in layoffs, downsizing, and hiring freezes in the mining sector. [10] The loss of jobs can be a challenge for individual workers who may seek employment in other locations or industries. It can also provide challenges for their communities which may face a decline in employment opportunities and tax revenues. Even outside cyclical variations, the non-renewable nature of mineral resources means eventual closure for individual mines as mineral resources are depleted. The life of an individual mine may range from a few years to several decades and the discovery and development of new deposits may extend mining in a region.

    While job losses may be unavoidable at particular stages, developing and implementing plans for downsizing can lead to better outcomes for the communities and workers involved. [12] Best practices include widespread consultation, early and open communication, and ensuring that the selection process for worker dismissal is fair and transparent. [12] In Canada, the Mining Industry Human Resources Council has developed a set of resources to assist employers to provide support for workers during mine closures and downsizing. These tools have been developed specifically for the mining industry to minimize the socio-economic impacts associated with workforce transitions.


    iCalculated using the total number of employees in the industry categories “Metal Mines,” “Non-Base Metal Mining,” ”Other Mines,” and ”Precious Metals” from the Globe and Mail’s 2011 Rankings of Canada’s Top 1000 Public Companies by Profit.



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    References

    1The Mining Association of Canada, A Report on the State of the Canadian Mining Industry: Facts + Figures 2010, 2010.

    2Canada, Natural Resources Canada [NRC]. Mineral Exploration Information Bulletin, February 2011. 2011 [cited 2011 October 31]; Available from: http://www.nrcan.gc.ca/minerals-metals/publications-reports/3850.

    3World Bank and International Finance Corporation, Treasure or Trouble? Mining in Developing Countries, World Bank Group's Mining Department, Editor 2002, International Finance Corporation.

    4International Council on Mining & Metals, UNCTAD, and World Bank, Synthesis of four Country Case Studies, in The Challenge of Mineral Wealth:using resource endowments to foster sustainable development 2006, International Council on Mining & Metals [ICCM].

    5Mitchell, P., Mining and economic growth: The case for Ghana and Tanzania. South African Journal of International Affairs, 2006. 13(2): p. 55-67.

    6Apoyo Consultoria, Study of the Yanacocha Mine's Economic Impacts: Final Report, 2009, Prepared for the International Financial Corporation.

    7World Bank and International Finance Corporation, Large Mines and Local Communities: Forging Partnerships, Building Sustainability, World Bank Group's Mining Department, Editor 2002, International Finance Corporation.

    8The Globe and Mail, 2011 Rankings of Canada's top 1000 public companies by profit, 2011.

    9International Council on Mining & Metals [ICMM], Peru: Country Case Study, in The Challenge of Mineral Wealth: Using resource endowments to foster sustainable development 2007.

    10Mining Industry Human Resources Council [MiHR], 2013: Canadian Mining Industry Employment, Hiring Requirements and Available Talent 10-year Outlook, 2013, MiHR. Available from: http://www.mihr.ca/en/resources/Hiring_Requirements_Available_Talent_10_year.pdf.

    11Mining, Minerals, and Sustainable Development Project [MMSD], 9. Local Communities and Mines, in Breaking New Ground: The Report of the Mining, Minerals, and Sustainable Development Project 2002, Earthscan for IIED and WBCSD. p. 198-230.

    12International Finance Corporation [IFC], Good Practice Note: Managing Retrenchment, 2005. Available from: http://www.ifc.org/wps/wcm/connect/8b14b6004885555db65cf66a6515bb18/Retrenchment.pdf?MOD=AJPERES.

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