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Enduring Community Value
From Mining: Tracking and
Mapping The Flow of Money
from Mines
Dr Boyd D Blackwell
Post-doctorial Research Fellow
BEPP, UNE and CRC REP
Why a CRC for Remote Economic Participation
Source: http://crc-rep.com/research Accessed
Research?
17 May 2012
Why a CRC for Remote Economic Participation
Research?
85% of area
BUT 4% of
population
(Chany 2008)
Why a CRC for Remote Economic Participation
Research?
Mineral Deposits and Operating Mines, Australia
Mineral Deposits and Operating Mines, Australia
Nth of Tropic of Capricorn 5% of Australian
population produces 50% of nation’s GDP (with
only 12 representatives in Canberra) (Young C
2012, pers. comms, CEO NTCoC, Darwin)
CRC REP Research Programs and subprograms
3 Key research programs:
1. Regional Economies
2. Enterprise Development
3. Investing in People
Why a Regional Economies program?
Source: http://crc-rep.com/research Accessed
17 May 2012
• Goal – build robust regional economies in remote Australia by providing:
• Sustainable employment
• Enterprise opportunities
• Will use partners in government, industry and communities:
• Rio Tinto
• Newmont Asia Pacific
• CSIRO (Minerals Futures)
• State and Territory Governments for Western Australia, South
Australia and Northern Territory
• Minerals Council of Australia
• Communities engaged through individual projects
CRC REP Research Programs and Subprograms
3 Key research programs:
1. Regional Economies
2. Enterprise Development
3. Investing in People
3 sub-programs within Regional Economies:
1. Population Mobility and Labour Markets
2. Enduring Community Value from Mining and
3. Climate Change Adaptation and Energy Futures
Enduring Community Value from Mining
1. PhD – Impact of mine lifecycle on communities and regions and building
resilience in mining cycles – Mine Lifecycle Planning
• Supervision
• Assoc. Prof. Neil Argent – Geography, UNE
2. PhD – Corporate Social Responsibility Strategies
• Prof. Guy Robinson, UniSA
3. PhD – Mining royalties, taxes and State Agreements for resource
communities in remote locations.
• Western Australian Royalties for Regions
4. Post-doc – Track and map economic impact of mine operation
expenditure
5. Principal Research Leader - Long distance commuting and automated
mine sites
• Compares socio-economic costs and benefits of different workforce
arrangements
6. Synthesis
Background to CRC REP and UNE relationship
• 5 year post-doctoral research project,
• began Nov 11
• Arrived with family in Armidale Jan 12
• CRC REP pays my salary and UNE pays my on-costs
• Based in BEPP, UNE
• Report to:
• Prof. Brian Dollery – BEPP, UNE, Armidale
• Prof. Fiona Haslam McKenzie - CU, Perth
• Prof. Murray McGregor – Head CRC REP Research, CU, Perth
• Fiona leads Regional Economies Program
My Project – Background – Goals and Objectives
• Goals and objectives:
• track and map the economic impact of mine operation expenditure
• demonstrate how money flows from mine operations and
• demonstrate whether current public policy and community
investments around mines reap the anticipated benefits
• Examine
• who benefits from mine operation expenditure
• the community costs associated with a mine
• the spending patterns of mine workers
• local leakage and how that impacts on the long-term viability of
a community
• public investment in mining communities and
• whether enduring benefit is a consideration
• the local capacity for increased local expenditure..
My Project & the Goals of Regional Economies Program?
Source: http://crc-rep.com/research Accessed
17 May 2012
• Will use partners in government, industry and communities:
• My project is based in the Newmont Tanami mine
• Met with Head of Corporate Social Responsibility Asia Pacific
and site manager in April
• Last week met with NT government
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Department of Resources
Treasury
Business and Development
Mining Council of Australia
Chamber of Commerce
Inpex
Economic
Participation?
• Closest communities are around 350kms from the mine:
•
•
Yuendumu to the South-South East
Kalkarindji to the North
Methodology – primary study site and communities NT
Tanami
Newmont
Mine
Yuendumu
Community
Source: NT
Government 2012, p.
118
Methodology
• An input-output model will be developed
• to estimate regional economic accounts to gain an insight to the
functioning of a regional economy.
• Actual expenditure will also be mapped using GIS
• to provide a graphic income flow generated from the mine operations
and assessment of regional leakages and loss of multiplier
potential.
• Face-to-face interviews will be conducted with mine workers at Tanami
• to develop an understanding of their spending patterns, both where
they spend and what they spend on.
• to provide an indication of the willingness to invest for the
future and hence the enduring value derived from the
expenditure
• Strong possibility and case for a comparator site
• Tanami ‘first cab off the rank’
Findings so far – 1 Input-Output
• Can not simply scale down National ABS accounts to NT and
regional level
•
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•
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not be sufficient (NT Treasury)
see major gaps, missing data and errors
NT economy small and highly volatile
NT Treasury use a micro-based growth model for their
growth forecasts
• Small population in a relatively large area
• Theoretically confirmed by regional and geographical economists
• Means including surveys as part of methodology is critical
• ACILTasmin (2009) and Ivanova and Rolfe (2011)
• Examples at NT and regional level
• Ivanova and Rolf in regional Qld (not remote)
• Denniss (2012) also highlights pros and cons of I-O versus
Computable General Equilibrium (CGE)
• I-O – multipliers over exaggerated
• CGE – reverts to LR equilibrium
Findings So Far –
2 Royalties in NT
•Gold production = $331.4m
•2.33%”*$331.4m = $7.62m
•ACIL Tasman (2009, p. B2)
Granites Gold from Newmont
is on of four major producers
•Assume most of this
Royalty is paid by Newmont
•Other producers are for:
2009-10 NT:
• Produced $3.5 billion AUD of minerals
• Gov’t Collected $146.6m in mineral royalties
= 2.33’ %
• Manganese
•Lead-Zinc and
•Bauxite
•Accounting Profit based
royalty system (Guj 2012)
•Efficient and equitable from
production viewpoint
•BUT Administrative burden
Source: Guj 2012, p. 11
Findings so far – 3 Market and cultural incongruence
• Hannah Bell (1998) Men’s Business, Women’s Business
• Aboriginal culture in NW WA
• Cultural heavily connected from birth with the physical
environment;
• Rhyme and reason for various cultural traditions e.g.
predetermined marriage, men taken away from women in
adolescence etc.
• ‘Pattern thinking’
What does this mean
• Sharing – e.g., Humbug
for I-O modeling?
• Western culture juxtaposed:
• Distinction between men and women’s business blurred;
• Extensive freedoms
• Market and materialism – self interest paramount
• Physically disconnected from natural environment from birth
• ‘Pyramid thinking’
• Clash of cultures and the need for ‘two way thinking’
• Empathy
• Bush University, Caulfield Grammar exchange
Findings so far – 4 Difficulties faced in Remote Australia
• Tyranny of distance
Forget economic modeling,
• Poor resources
more basic requirements?
• Limited human capital (?)
• Limited essential services (health, water, power, roads etc.)
• Disconnected socially, economically (REP), institutionally
• Poor information and communication
• In many and large tracts of Australia NO local government
• Blackwell (In-print) – idea of Prof. Dollery
• Indigenous remote communities difficulties compounded and complex:
• Illiteracy (re: QuickSmart program run from Prof. Pegg UNE)
• Poor Health (NT MCA 2012, pers. Comms)
• Cultural ‘dislocation’
• Cultural clash – pyramid versus pattern thinking -> ‘two way thinking’
• Informal or ‘grey’ economy (DBE 2012, pers. Comms):
• Gambling through card games (very popular)
• Alcohol (prohibition) and other drugs
• Others?
Findings – 5 Sui Generis: Unincorporated Australia
Blackwell (In-print) – idea of Prof. Dollery
• One group of a particular kind: in a class of its own
• Unincorporated Australia
= not incorporated into the jurisdiction of a local government
• Usually managed by the state/territory or a hybrid version of
management
• Likely to have a high proportion of Aboriginal people
• Local land councils
• Non-members
• No locally democratically elected and accountable representatives
• Other interests
Forget economic modeling,
more fundamental ethical
requirement?
Findings – 7 Assessment Approaches
Blackwell (In-print)
• Given difficulties and hurdles for remote Australia
• Limited resources, limited information, tyranny of distance
• Given no local government – what’s the solution
• NT incorporated into local government large areas of unincorporated
territory
• State of play, socially, economically, environmentally?
• Range of assessment methods with pros and cons:
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Strategic Environmental Assessment (early)
Cumulative Impacts Assessment (synergistic, complex)
Integrated Assessment (trans-multidisciplinary)
Social, Economic, Environmental Impact Assessment (disciplinary)
Cost benefit analysis (project versus social, $ unit of measure)
Cost effectiveness analysis (not max net benefits, but easier)
Multi-Criteria Assessment (depends on criteria and weightings)
Risk Assessment (institutionally hamstrung)
Citizen Juries (democratic – expertise?)
Remote sensing and GIS (can physical layers tell social story?)
Conclusion and future activities
Summary
• Input-output not simple and needs to account for:
• Informal market economy in community
• Significant leakages captured through survey micro based approach
• Incongruence between aboriginal culture and market based
philosophy
• Sui Generis of remote Australia
• NT is a unique culturally, socially, economically, environmentally,
institutionally and politically – and this needs to be accounted for the
approach – remote NT even more so.
Next steps
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NT I-O model and scale down
Build funding case for second case study location
Survey design
Ethics approval (drafted)
Into Field
Supplemented scaled down model from field work
Apply model to answer policy questions
References
ACIL Tasman (2009) Economic Impact Study of ERA’s Operations in the Northern Territory.
Prepared for Energy Resources Australia. ACIL Tasman, Darwin.
ACIL Tasman (2006) The Spiritual Role of Gender in the World’s Oldest Culture. Inner Traditions,
Rochester, Vermont.
Bell HR (1998) Men’s Business, Women’s Business: The Spiritual Role of Gender in the World’s
Oldest Culture. Inner Traditions, Rochester, Vermont.
Blackwell BD. In-print. Local government in remote and unincorporated Australia: Sui Generis?
Public Policy. Special Issue: Local Government and Regional Governance.
Chany F (2008) Addressing Australia’s Disconnectedness. Recorded presentation. Thursday 25
September 2008, EDU, Joondalup Campus. Accessed 17 May 2012
http://www.ecu.edu.au/about-ecu/vice-chancellor/distinguished-orator/addressing-australiasdisconnections
Dennis R (2012) The Use and Abuse of Economic Modelling in Australia: Users’ Guide to Tricks of
the Trade. Technical Paper No. 12, The Australia Institute, Canberra.
Guj, P (2012) Mineral Royalties and Other Specific Taxes, International Mining for Development
Centre, Perth, pp. 11-12.
Ivanova G and J Rolfe (2011) Using input output analysis to estimate the impact of a coal industry
expansion on regional and local economies. Impact Assessment and Project Appraisal 29(4):
277-288.
NT Government (2012) Northern Territory Economy - Mining and Manufacturing. NT Budget
Papers 2012-113. NT Government, Darwin.