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Mining

CASE 1: TNC’s, Extractive Industries and Development WIR 2007





By:

Chandra
Gunnar
Oskar

A. Overview
Introduction
Foreign Direct Investment has been a key economic driver for developing countries and TNC’s. TNC’s are investing abroad for many reasons such as ‘ to gain access to new markets, to defend positions in exisiting markets, to circumvent trade barriers, to diversify the firm’s production base, to reduce production costs, to gain access to specific assests and resources’ (Dicken, P, pp: 457).

In this report we concentrate on TNC’s which are investing abroad for gaining specific natural resources in extractive industries and this overview is based on World Investment Report 2007.

The following figure shows the division of Minerals in Extractive Industries.

Figure 1. Minerals and their use


Source: UNCTAD; PP 84

In Extractive Industries, Energy minerals such as Oil and gas and Metallic minerals such as Iron ore, Copper, Gold, Nickel, Zinc, Bauxite and others are the foremost important in this sector. Iron ore, Copper and Gold make big share of about 50% value of total metallic mineral production.The global production estimate for 2005 amounted to USD 2.3 trillion in crude oil and natural gas and USD 265 billion in Metallic minerals. There are five main stages of production in Metallic mineral industry such as exploration, development, mining, processing and mine closure and only minerals such as Gold and Platinum has almost 100% value at mining stage; and all other minerals have to go through processing stage to add value to the mineral for example Bauxite has least value at mining stage with 9% compared to other vital minerals. Energy Minerals such as Oil and gas does go through refining stage but the outcomes are decent in terms of chemicals with least wastage (P 85).

Geography
The Geography of production and consumption of extractive industries are uneven in the world and trends have been...