The newsLINK Group - Balancing Mining, Farming, and Manufacturing

Editorial Library Category: Mining Topics: Mining, Farming, and Manufacturing Title: Balancing Mining, Farming, and Manufacturing Author: newsLINK Staff Synopsis: Mining is an essential part of modern life. But it doesn’t exist by itself. Mining is interconnected with farming and the manufacturing industry; to reflect that fact, some people are beginning to modify the way mines, farms, and manufacturers work so that they can better support each other. Editorial: Balancing Mining, Farming, and Manufacturing 4064 South Highland Drive, Millcreek, Utah 84124 │ thenewslinkgroup.com │ (v) 801.676.9722 │ (tf) 855.747.4003 │ (f) 801.742.5803 Editorial Library | © The newsLINK Group LLC 1 Mining is an essential part of modern life. But it doesn’t exist by itself. Mining is interconnected with farming and the manufacturing industry; to reflect that fact, some people are beginning to modify the way mines, farms, and manufacturers work so that they can better support each other. Those who are involved in mining, farming, and manufacturing in Utah can all benefit from the efforts being made in other places. Australia and Africa, two countries with a large number of successful mines, are at the forefront of trying out new ideas that make it possible to balance mining and farming with each other. This is necessary in part because when the balance between the three industries is lost, problems can develop. During a Cape Town conference in South Africa that was held in February 2013, Dr. Mamphela Ramphele identified what has been happening in mineral-rich South Africa as something she called the Dutch disease. She noted that South Africa has relied on plentiful labor for the mines, but has also seen deindustrialization and reduced agricultural activity when local currencies have been strengthened in contrast to U.S. dollars. Who is Dr. Ramphele? She is qualified to talk specifically about mining because she knows and understands the mining industry. Listed by Forbes in 2011 as one of Africa’s ten richest women, Dr. Ramphele was a successful senior mining industry executive and former chairperson for Gold Fields who has also spent time as the Managing Director of the World Bank; incidentally, she recently completed a short- lived political effort that ended in July 2014 after she lost a presidential bid in the election held there on May 7, 2014. However, she continues to have an interest in any work that will foster a civil society. What was Dr. Ramphele talking about when she mentioned Dutch disease? The term was not something she invented, but she was referring to what happens when a resource- based industry causes a large increase in wealth that inadvertently hurts non-resource industries. The name was coined after a crisis in the 1960s that took place in the Netherlands. When large natural gas deposits were found in the North Sea, those deposits meant a sudden influx of wealth for the Netherlands. As a direct result, the value of the Dutch guilder rose and exports of all non-oil products were suddenly less competitive. The Dutch disease happened again in 1970s Britain. The price of oil had quadrupled, which meant it suddenly made economic sense to drill for North Sea oil off the Scottish coastline. By the end of the decade, Britain was exporting more oil than it imported. The pound went up, exports were not competitive, British workers wanted higher wages, and Britain fell into a recession. The Dutch disease has two main effects: 1. Price competitiveness drops, which affects a country’s ability to export its own manufactured goods. 2. Imports increase. In the past, the response to the Dutch disease has been to move manufacturing efforts to other countries because labor was cheaper. However, that ends up hurting the manufacturing companies that stay; a country cannot export what it doesn’t make, and the result is less growth than would have occurred otherwise. Sometimes it is a lot less. So, what’s a country to do if it wants to prevent the Dutch disease? Dr. Ramphele suggested that one answer is to change the mining model and to deliberately cluster mining efforts with agriculture and manufacturing concerns. Doing so creates a sustainable foundation, so that local economies will not stall once a mine has been exhausted. New models are being used in Africa. They are also being used in Australia.

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