Mapping the Bonanza: Geographies of Mining Investment in an Era of Neoliberal Reform*

Gavin Bridge Syracuse University

Geographic analyses of how national policies of economic liberalization inuence global patterns of economic activity often draw their conclusions from studies of the paradigmatic sectors of manufacturing and, to a lesser extent, services. There is, by contrast, relatively little work examining how neoliberal policy reforms in the developing world may be driving changes in the geography of primary sector (i.e., extractive) activities at the global scale. This article presents and analyzes new data on direct investment in the international mining industry. It reports methods and results from a research project to systematically map and evaluate changes in the commodity mix and geographical spread of mining-related investment in the world economy since 1990. It conrms and quanties what was hitherto anecdotal evidence of a geographic shift in investment during the 1990s away from mature targets toward a small number of rising stars in the developing world, following the adoption in many countries of neoliberal economic policies from the mid-1980s onward. However, the ndings challenge conventional interpretations of this shift as an investment bonanza in the periphery and highlight how recent investment trends are highly specific in geographical scope, concentrated within a few commodities, and how the allocation of investment between established and emerging targets is variable over both time and space. Key Words: investment, mining, globalization, economic liberalization.

Introduction

uring the late 1980s and the 1990s many states adoptedor ratcheted uppolicies of economic liberalization. A prima facie case can be made that such policies will reshape prevailing patterns of economic activity, by reducing barriers to the movement of capital and goods and throwing into question prevailing calculations of the relative risks and rewards of investment. Neoliberal reforms can be expected to drive the emergence of new geographies of investment, production, and trade. To date, however, geographic analyses of the effects of economic liberalization on patterns of global economic activity have typically drawn their conclusions from studies of the paradigmatic sectors of manufacturing and, to a lesser extent, services (see, e.g., Kenney and Florida 1994; Thrift and Leyshon 1994; Dicken 1998). By contrast, relatively little work has addressed the geographical restructuring of FDI in the primary sector.1 Yet resource extraction indus-

trieslike mining, oil and gas, forestry, and commercial shingare currently undergoing a round of technological, organizational, and regulatory shifts. Taken together, these shifts are driving the emergence of new geographies of resource extraction (Barham, Bunker, and OHearn 1994; Carrere and Lohmann 1996; Gedicks 2001; Evans, Goodman, and Lansbury 2002). This article makes a small contribution toward redressing the neglect of the primary sector by analyzing the geography of recent investment in the international mining industry. Specifically, it reports methods and results of research to map and systematically evaluate changes in the commodity mix and geographical spread of mining investments during the period 19902001. A rapid increase in the intensity (volume) and extensity (geographical scope) of FDI characterize the restructuring of the world economy over the past two decades (Held et al. 1999).2 FDI ows have increased three times faster than the rate of growth of international trade since

* A Junior Faculty Development Grant from the University of Oklahoma supported initial stages of this research. An NSF Research Experience for Undergraduates (REU) Supplement Grant supported additional research assistance by April Rankin. I thank Julie Parker for her work developing and mapping the pilot dataset, Gerardo Castillo and Todd Fagin for their assistance extracting data from MineSearch and producing maps, and Joe Stoll for his help with graphics. Russell Carter, Graham Davis, Magnus Ericsson, Rob Krueger, and Gregory Theyel provided insightful discussion and/or helpful comments on a much earlier version of this article. Special thanks to Bakes Mitchell at the Metals Economics Group for his interest in this project and for continuing discussions on the geographies of mining investment. I would also like to thank three anonymous referees for their comments. The usual disclaimers apply.

The Professional Geographer, 56(3) 2004, pages 406421 r Copyright 2004 by Association of American Geographers. Initial submission, April 2002; revised submission, November 2002; nal acceptance, February 2003. Published by Blackwell Publishing, 350 Main Street, Malden, MA 02148, and 9600 Garsington Road, Oxford OX4 2DQ, U.K.

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the 1980s, suggesting that the internationalization of production is driving global economic interdependence beyond that due to trade alone (UNCTAD 1998, xvii). While FDI fell during the early 1990s in response to an economic slowdown in most major markets, it subsequently rebounded to a new high of over $1.4 trillion worldwide in 2000 (UNCTAD 2002). The majority of FDI continues to be between the industrialized countries of the Triad (Western Europe, Japan, United States), yet FDI ows have become increasingly significant for many developing countries. FDI to developing countries increased 12-fold between 1980 and 1998, and, by the end of the 1990s, FDI represented approximately half of all capital ows to developing countries (World Bank 1999). Mining represents a small proportion of total investment ows: mining and oil account for around 4% of global FDI, compared to 47% in services and 42% in manufacturing (UNCTAD 1999, 420). Natural resources may have declined in significance as a determinant of foreign investment since the 1950s, yet primary commodities are often the only significant target for foreign investment in the majority of developing countries that have been unable to attract FDI in the manufacturing and service sectors (UNCTAD 1998). For some developing and transition economies, therefore, the mineral sector may represent the primary vehicle for attracting FDI. For example, investments by Australian and Canadian gold mining concerns in the late 1990s represented over 60% of total FDI inows to Tanzania (Bank of Tanzania 2001), while over two-thirds of recent foreign direct investment in Angola and Kazakhstan have been in oil and gas development. Although mining investment represents only a small component of total investment ows worldwide, change in the intensity, timing, and geographical distribution of these ows can have significant socioeconomic and environmental consequences for developing countries.

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Economic Liberalization: Opening New Ground

In the period since 1985 more than 90 states have adopted new mining laws or revised existing legal codes in an effort to increase (and in some cases, initiate) foreign investment in the

mining sector of their economies (Otto 1997; Warhurst and Bridge 1997; Naito, Remy, and Williams 2001). The promulgation of a new mining code is frequently but one part of a broader package of neoliberal administrative and scal reforms. Their combined effect, however, is to open up new opportunities for the international mining industry in areas that were formerly either closed de jure because of political restrictions, or closed de facto since politicaleconomic risk was sufciently high to deter prudent investment. National policies of macroeconomic stabilization, nondiscriminatory treatment (between domestic and foreign rms), and increased transparency in regulation are likely to stimulate all economic sectors, yet they are particularly significant for mining for two reasons. First, as extractors of nonrenewable resources, mining rms necessarily consume their resource base during production so that, over time, ore grades in established mining regions become degraded. Acquiring the rights to new land (for exploration) and to new resource deposits (for mine development) is one of the principal means by which mining rms renew their resource base and establish their competitive position. By increasing the supply of land available for exploration and development, liberalization during the late 1980s and early 1990s fueled a rush to identify, acquire the rights to, and, in some cases, develop world class (i.e., long-life, large-volume, relatively low-cost) mineral deposits during the mid-1990s. Second, mining can be a highly capital-intensive endeavor and typically requires the raising of large volumes of capital for mine development. The ability to raise such capital is dependent on reliable access (via legally dened property rights) to the target mineral resource. Legal issues of land tenure therefore assume considerable significance. To the extent that liberalization claries land tenure and decreases the risks associated with owning property (by, for example, providing market-based mechanisms for accessing and transferring mineral rights), it also addresses issues of fundamental concern to mining investors. The cumulative effect of the legal and scal reforms adopted by many emerging markets has been to change perceived risk/reward ratios for investing in different geologically prospective environments. As the perceived risk of investing

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yses of exploration activity and downstream analyses of mine output through the development of a robust dataset capable of determining the extent to which mining capital has preferentially targeted new opportunities for investment in the global South.

in emerging markets like Peru, Papua New Guinea, or Mongolia has declined, so the relative risk associated with traditional investment targets (like North America or South Africa) has increased.3 This repatterning of risk/reward ratios following liberalization has driven rms to reevaluate the geographical location (and diversity of locations) in which they invest. For example, established Canadian, Australian, European, and American mining rms have increasingly sought to internationalize production by investing outside the traditional home region (Maponga and Maxwell 2000). This geographical restructuring of capital ows in the mining sector is fueling a dialogue within industry, academia, and public policy circles about the opportunities (e.g., for economic development, capacity building, and technology transfer) and challenges (e.g., in managing environmental and social impacts, volatile revenue streams, and the return of resource colonialism to the global periphery) raised by the liberalization of investment regimes for mining (see, e.g., Conservation International 1998; French 1998; Gedicks 2001; Muradian and Martinez-Alier 2001; Evans, Goodman, and Lansbury 2002; Starke 2003). No systematic, comparative analysis of the intensity or extensity of mining investment has been undertaken, despite the potential such a geographical switching of investment has for driving local and regional socioecological change. Annual surveys of exploration activity by commodity and region are available (e.g., Metals Economics Group 2001), but this mapping of upstream exploration expenditures has not been accompanied by similar analyses of the considerably greater capital investments in mine development. And it is these larger, more permanent investments in mine development that are of particular interest to those seeking to understand the role of mineral investment in driving socioeconomic and environmental change at local and regional scales (Bridge 2002). Existing research on the geography of mine development typically takes the value or volume of production as its primary metric rather than the investment that enables such increases in output (see, e.g., Porter and Sheppard 1998; Odell 1988; Ericsson and Campbell 1996; Rees 1990; Peck, Landsberg, and Tilton 1992). This article describes efforts to plug the analytical gap between upstream anal-

Methodology
Determining the value, commodity mix, and geographic spread of investment in mining presents a methodological challenge that belies its simplicity as a research question. The difculty of obtaining compatible and comparable data is widely acknowledged as a substantial challenge to cross-country comparative research on foreign direct investment (UNCTAD 1994, iv). While many countries collect investment data at the national level, benchmark definitions of investment and the methods of collection and accounting vary considerably between countries. One way to address this problem is to use data collected at the project level (i.e., at the scale of the individual mine) rather than at the national aggregate level. The capital intensity of contemporary mining and the relatively small number of new projects commissioned each year make it feasible to collect data for all new mineral developments on an annual basis. Collecting project-level data substantially increases the number of data points involved but has two principal advantages over national-scale statistics: rst, to the extent that project level data utilize standardized definitions of projects and capital expenditures, they avoid the pitfalls of intercountry comparisons using national gures on foreign direct investment; and second, they provide a much greater degree of spatial resolution, enabling accurate location and comparison of intracountry, as well as intercountry, variation in investment. A preliminary scoping study located four potential sources of project-level investment data, each offering differing combinations of geographic spread, narrative description, temporal coverage reliability, and accuracy.4 MineSearch, a database compiled by an information and consulting company, Metals Economics Group, based in Halifax, Nova Scotia, was selected as the most appropriate for this study. Although MineSearch typically is not used for comparing investment ows over time or space, the organization of the database, the manner in

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which data are acquired, its geographic and temporal coverage, and the narrative histories accompanying each entry make it possible to extract reliable information on capital expenditures for individual mines. MineSearch contains over 7,500 records of mining projects at all stages from initial exploration through production to closure. As indicated in Table 1, commodity coverage is broad and consists of 12 commodities that include base metals (copper, nickel, zinc, lead, tin) and precious metals (gold, silver, platinum, and palladium) as well as a small number of specialized minerals (diamonds, molybdenum, and cobalt). Data from MineSearch were screened to extract only those mining projects that were either inor had completedthe feasibility stage in the period 19902001 (Table 1).5 The rationale for utilizing the feasibility phase to conduct an initial screening of the data is that the feasibility stage represents a threshold in the rate and volume of capital inow to a specific project. Prior to feasibility, capital ows are relatively small and are associated predominantly with exploration: preparation of a bankable feasibility study, however, requires a substantial commitment of resources to a specific project which, if given the go-ahead, then initiates major capital expenditures in the preproduction and production phases. As indicated in Table 1, the screening process generated a dataset of 2,300 nonferrous metals and precious mineral investments. These data were transferred into commodity-specific Excel les, which then could be manipulated, analyzed, and linked to ArcView GIS to enable
Table 1 Data Summary
Number of Records per Screened Mineral as Number of Records Percentage of Records in Used in All Screened MineSearch Analysis Records 22 1,167 359 4,454 95 35 289 128 378 65 604 7,596 12 433 79 1,188 38 13 110 29 102 52 246 2,303 1 19 3 52 2 1 5 1 4 2 11 100

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mapping of investment ows at a range of spatial scales (e.g., mine-by-mine, country, continent). Capital expenditures, which are typically recorded as a single capital cost gure in MineSearch (e.g., $550 million), were broken up and allocated across a number of consecutive years according to an approximately normal distribution, depending on the size of the project and the narrative work histories accompanying each entry.6 Expenditures reported in alternate currencies (e.g., rand, rubles, or Canadian dollars) were converted to U.S. dollars, and all expenditures were normalized for the effect of ination using a standard price deator. Extracted and modied data were then independently checked against MineSearch to ensure consistency. Significance and Limitations of the Data By extracting, assembling, and normalizing project-level data on global mining investment into a format that can be queried, analyzed, and mapped, the dataset described here provides a way of overcoming the analytical limitations of existing data sources. The design of the primary data source for this research (MineSearch) nonetheless constrains the project in a couple of specific ways. First, MineSearch is restricted to the mining phase of mineral production and therefore excludes investments in downstream phases such as smelting and rening.7 Second, since the main function of MineSearch is to track exploration activity, the commodities it covers are those of interest to the exploration community. Table 1 indicates how this can produce some significant gaps in the databases commodity coverage, most notably the absence of iron ore or bauxite projects (as well as other mineral commodities of interest such as oil shales, coal, uranium, and oil). Neither iron ore nor bauxite creates much excitement in the exploration community, yet both are major minerals (in terms of aggregate output and trade) that annually receive significant investment. Furthermore, the development of new iron ore and bauxite deposits has the potential to drive socioeconomic and environmental change at the local and regional levels (e.g., Bunker 1985; Hall 1989; Howitt 1992; Roberts 1995; Ciccantell 1999). In summary, the investment values reported here should be regarded as conservative estimates of investment activity. Since it was

Mineral Commodity Cobalt Copper Diamonds Gold Lead Molybdenum Nickel Platinum and Palladium Silver Tin Zinc Total

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they rose in the four years after 1997, so that by 2001 investment had reached its lowest ebb for the entire period. Investment data for individual commodities largely replicate this trend. Figure 1 includes a curve for gold investment as an example. The temporal prole for gold, which represents between 23% and 57% of aggregate investment in any given year, substantially mirrors the boom-bust prole of the aggregate investment curve. The volatility of mining investment is a response to not only the notorious volatility of mineral markets, but also to the vagaries of the market for nance capital. Thus the decline in capital ows in the mining sector during the early 1990s was a result of falling prices for many minerals and the failure of many junior mining rms to secure sufcient capital after the equity market crash of 1987 (E&MJ 1987, 35; E&MJ 1989, 25). A recession in major end-use markets drove prices down further, aggressively eroding profit margins for most producers. This had a chilling effect on mining investment activity at the start of the 1990s, and many projects were either postponed or scaled back in size. Reviewing activity over the previous couple of years, the industry press reported in 1994 that the mining industry has seemingly imploded (E&MJ 1994, 25). Conversely, the tripling of investment ows after 1994 is associated with rising mineral prices, further mining law reforms, and the strength of equity markets and low domestic interest rates in core economies. Together, these increased the relative attractiveness of mining as an investment

only possible to record investments that (a) had identied capital costs and (b) that, from the available information, could be veried as having been actually expended at the site, the investment gures reported below are best regarded as minimum estimates. Actual amounts could be higher, although verication of these gures using other measures indicates that they are a good approximation. The utility of these gures lies chiefly in their capacity for making comparisons between the value of investment over time, between different commodities, and across different geographical units. With these qualications in mind, the following analysis of the commodity mix and geographical spread of mining investment following economic liberalization is based on the best available comparative data.

Discussion of Results
The Intensity of Mining Investment: Distribution of Investment over Time The temporal prole of investment in the mining sector during the period 19902001 conrms anecdotal assessments of a major investment boom during the mid-1990s (Figure 1). Over $90 billion was invested over the period 19902001 with annual totals ranging from a low of $3.9 billion to a high of $11.9 billion. After declining gradually in the early 1990s, aggregate investment ows tripled in the four-year period leading up to 1997 to peak at $11.9 billion. Equally clear is the short-lived nature of this boom; investment ows shrank as quickly as

Figure 1 Global mining investment ows (19902001), aggregate trend versus gold.

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Figure 2 Regional investment ows as a percentage of global investment, 19902001.

target and fueled private capital ows into the sector. The Extensity of Mining Investment: Continental Scale Shifts Popular narratives of a global mining bonanza notwithstanding, the spatial distribution of mining investment is remarkably sticky. Countries and regions with long histories of mineral exploration and development (e.g., United States, Canada, Australia, South Africa) continue to see significant investment activity. While these established investment targets remain strong in absolute terms, there was a noticeable decrease in the proportion of investment ows going to these mature mining regions during the period 19902001. During the boom years of the mid-1990s, investment was preferentially channeled toward new targets in the global South (Figures 2 and 3). As a result, a small number of countries in the global South have seen a mining investment boom. These ows to nontraditional targets, however, are concentrated in just a handful of countries and are restricted to one or two commodities (specifically copper and gold). The spatial evolution of investment, therefore, does not reect a gradual or uniform diffusion away from estab-

lished cores towards the periphery. Rather, recent patterns of investment have actively contributed to a process of uneven development as both existing spatial inequalities in investment are consolidated and new patterns and scales of inequality emerge. At the continental scale, traditional targets like North America and Australasia have seen their share of investment decline during the 1990s (Figure 2), even while their absolute ows have remained strong (Figure 3). Investment ows to these two regions declined from more than 50% of worldwide ows in the early 1990s to around 25% by 2001. As Figure 2 indicates, their relative decline is directly related to the increase in ows to South America and, to a lesser extent, South East Asia and Africa. South America increased its share of worldwide investment from 18% to 39% between 1990 and 2001, while the late 1990s saw Africa increasing its share from 12% to 28%. South East Asia predominantly Indonesiaexperienced a bubble of growth in investment ows between 1996 and 1999 associated with the development of a number of megaprojects (such as Newmonts $2.0 billion copper-gold mine at Batu Hijau on the island of Sumbawa and Freeports coppergold Grasberg mine in Irian Jaya). Europe, whose dominance in global mining had been

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Figure 3 Global investment ows by world region.

largely eclipsed by North America and Australia as early as the mid-19th century, remained relatively constant with less than 10% of investment ows, although absolute ows doubled in the mid-1990s with the development of a handful of large mines in Spain (Los Frailes, lead/zinc), Ireland (Lisheen, zinc), Kyrgyzstan (Kumtor, gold) and Uzbekistan (Zarafshan, gold).8 Figures 2 and 3 provide evidence that spatial switching of investment capital is taking place at the continental scale. While traditional targets remain strong in absolute terms, an increasing proportion of the investment stream during the boom was targeted at alternative destinations in South America, Africa, and Southeast Asia. Of the 25 largest single capital investments during the period, 20 were outside the mature targets of North America and Australia, with 12 in South America alone (Table 2). The Extensity of Mining Investment: Country Scale Shifts The geographical concentration of mining investment within a handful of countries is par-

ticularly apparent when investment is mapped country by country. More than 90 countries received mining-related investment during the period 19902001, yet more than 80% of global mining investment targeted just 10 countries (Table 3). The leading four countriesChile (18%), United States (13%), Australia (12%), and South Africa (9%)serve as the destination for over half the total investment in the period. This concentration of investment within a specific country (or group of countries) can be even more extreme when individual commodities are considered. Table 4 summarizes the way investment in the leading four commodities (copper, gold, nickel, and zinc) is distributed among the top ve targets for each metal. Nickel and copper are the most concentrated, with nearly 80% of investment within just ve countries; in the case of nickel just two countries (Australia and Canada) account for over 55% of investment. Gold is among the least concentrated, with the top ve investment targets representing around 60%.

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Table 2 Top 25 Mine Investments by Value (19902001)
Rank 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Project Antamina Bingham Canyon Batu Hijau Grasberg Collahuasi Betze-Post Escondida Ok Tedi Olympic Dam Los Pelambres Bajo de Alumbrera El Abra Porgera Lihir Candelaria Murrin Murrin Radomiro Tomic Obuasi Leeudorn Los Bronces Soroako Zaldivar Yanacocha Morenci Chuquicamata Country Peru United States Indonesia Indonesia Chile United States Chile PNG Australia Chile Argentina Chile PNG PNG Chile Australia Chile Ghana South Africa Chile Indonesia Chile Peru United States Chile Investment (19902001) US$ millions 2,350 2,019 1,981 1,936 1,889 1,787 1,703 1,688 1,461 1,428 1,350 1,231 1,207 1,028 995 977 971 872 821 787 774 721 716 709 704

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Target Metal Copper Copper Copper Copper Copper Gold Copper Copper Copper Copper Copper Copper Gold Gold Copper Nickel Copper Gold Gold Copper Nickel Copper Gold Copper Copper

Figure 4 summarizes the geographical distribution of mining investment worldwide. It indicates that a large and diverse group of countries received some level of mining investment during the 1990s, but that the bulk of investment was targeted at a few countries in North and South America, southern Africa, and Australasia. Fourteen countries received over $1 billion during the period. These leading targets can be broken out into three categories or tiers based on the absolute value of investment. In the rst tier are three countries that each received over $10 billion (Chile, $15.9 billion; United States, $11.4 billion; Australia, $10.9 billion).

The mineralogically prospective and relatively low-risk jurisdictions of the United States and Australia are long-established targets for investment, but Chile, although a destination for British and American mining capital from the late 19th century until the nationalization of Chilean mines by Salvador Allende in 1971, only recently emerged as a contemporary investment target for multinational mining rms. In 1990 Chile received less than $1 billion in mineral investment, but by 1997 investment had increased to nearly $3 billion, with Chiles share of global mining investment rising from less than 14% to more than 24%. Chiles high

Table 3 Top 10 Targets for Mining Investment by Value, 19902001

Rank 1 2 3 4 5 6 7 8 9 10 Country Chile United States Australia South Africa Canada Peru PNG Ghana Argentina Mexico TOTAL Value of Investment (US$ Billion, 19902001) 15.9 11.4 10.9 7.8 6.8 5.8 4.0 1.8 1.7 1.6 90.2 Percentage 17.6 12.6 12.1 8.6 7.5 6.4 4.4 2.0 1.9 1.8 100 Cumulative Percentage 17.6 30.2 42.3 50.9 58.4 64.8 69.2 71.2 73.1 74.9 100

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Table 4 Distribution of Investment among Top Five Country Targets

Cumulative Percentages for Each Commodity Rank 1 2 3 4 5 Copper Chile United States Peru Indonesia Australia 38.9 49.6 60.3 71.0 79.9 Gold United States South Africa Australia Canada Papua New Guinea 18.9 32.7 42.6 52.3 59.5 Nickel Australia Canada Indonesia China Venezuela 30.8 55.8 65.0 73.1 79.4 Zinc Australia Canada Spain Ireland United States 27.1 40.2 50.4 60.4 69.6

ranking is substantially due to its position as the primary target for copper-related investment: over 90% of investment in Chilean mining is in copper, and Chile received 39% of worldwide copper investment on average during the period 19902001 and up to 52% in the peak years of the mid-1990s. The persistence of the United States in this rst tier reects the gold boom in Nevada that began in the 1980s and continued through the 1990s: the United States received a fth of all gold investment worldwide, while over half the mining investment in the United States has been in gold with copper accounting for a further one-third. In the second tier are countries like South Africa, Canada, Peru, Indonesia, and Papua New Guinea, which each account for between $4 billion and $8 billion. Mining investments in Peru, Indonesia, and Papua New Guinea are focused almost exclusively on copper and gold

projects. These two metals account for 86% of investment in the minerals studied in Indonesia, 91% in Peru, and 98% in Papua New Guinea.9 South African investments are equally concentrated, but chiefly target gold and platinumgroup elements, which together account for over 90% of the mining investment ow. Investment in Canadian mining, however, has been more diverse. Like South Africa, gold is still the dominant target mineral (39%), but other targets include nickel (27%), copper (11%), diamonds (11%), and zinc (9%). Canada ranked number two in nickel and zinc investment (Table 4), and number one ( principally as a result of successful exploration activity in the Northwest Territories in the early 1990s) as a destination for diamond investment ($839 million) during the period, receiving nearly twice the value of investment to that of the second ranked country, Botswana ($477 million).

Figure 4 Global mining investments by country, 19902001.

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Figure 5 Mature players and rising stars: Investment ows to selected countries.

In the third tier are a handful of countries with between $1 and $2 billion in mining inows each year (Ghana, Argentina, Mexico, China, Brazil, and Russia). Mining investment in these countries typically consists of a relatively small number of mid-to-large-size mining projects. Nearly half of Ghanas $1.8 billion, for example, is represented by Ashanti Goldelds Obuasi mine, while over three-quarters of Argentinas $1.7 billion was invested in the Bajo de la Alumbrera copper mine. Comparing Leading Investment Targets over Time While countries in each of these tiers are broadly similar in the value of investment over the time period, a dynamic analysis of investment ows in countries within the rst and second tiers indicates very different trajectories over time. Figure 5 presents the temporal proles of mining investment for six countries that were leading targets for investment during the 1990s. The proles suggest two classes of country. Shown in black are three newly liberalizing economies (Chile, Peru, and Indonesia) that experienced sharp increasesand subsequent decreasesin investment (referred to here as rising stars), while shown in gray are three countries with long histories of being open to foreign mining capital (referred to here as mature players) that had less dramatic uctuations in mining investment over the period. Consider,

for example, the different experiences of the United States and Chile. Investment in the U.S. mining sector was relatively steady during the rst half of the decade, but declined after 1996 (mainly as a result of a decrease in copper investment). In Chile, however, investment tripled in the early to mid-1990s, but underwent a dramatic decline after 1997. Thus the absolute value of investment in Chile and the United Statesthat is, the area under the lines in Figure 5may be similar, but the temporal prole of investment in the two countries is quite different. Similarly, Canada, South Africa, Peru, and Indonesia hosted investments of similar value between 19902001, but the trajectories of Peru and Indonesia differ markedly from those of Canada and South Africa (Figure 5). Investment in Peruvian and Indonesian mining quintupled during the mid-1990s (and, in the case of Indonesia, underwent an equally dramatic decline in the post-Suharto era), compared to more consistent and less ashy responses in South Africa and Canada.10

Explaining the Patterns: Is Geology Destiny?

Geographies of mining are inescapably a function of the location of mineral reserves. Such truisms, however, need to be interpreted with care for two reasons. First, as generations of

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tractive targets for mining investment activity by improving their risk/reward ratio relative to other jurisdictions. The evidence presented above suggests that the policies of economic liberalization adopted by a small group of countries (chief among them Chile, Peru, and Indonesia) have been successful in attracting the interest of multinational mining capital. Investment/Reserve Quotients How can one distinguish between those jurisdictions in which economic liberalization has enabled a mineral-rich region to capitalize on its geological potential and those where it has been less successful at scaling up inows of investment? One technique is to compare a countrys share of global investment in a particular mineral with its share of global reserves of that mineral. This produces a modied location quotient, where the denominator is the countrys proportion of global reserves of a particular commodity: Investment Reserve Quotient
Investment in Commodity X in Country Y Investment in Commodity X worldwide Reserves of Commodity X in Country Y Reserves of Commodity X worldwide

resource geographers (e.g., Zimmerman 1951) have pointed out, definitions of mineral reserves are dynamic. Changing societal demands can create new reserves, while viable reserves can be discovered as a result of changes in the market price and/or costs of extraction. The size, location, and value of workable mineral reserves, therefore, are not static products of geological and mineralogical processes, but are dynamic phenomena derived through continual socioeconomic appraisal of physical matter. Exploration activity and/or the introduction of technologies that dramatically reduce costs can create mineral reserves in places where, to all practical purposes, none previously existed. For example, exploration in Canadas Northwest Territories during the late 1980s produced North Americas rst large-scale diamond reserves, driving an investment boom during the 1990s that continues today. Second, while the location of mineral reserves shapes the overall pattern of investment activity, the distribution of investment among countries hosting mineral resources is a function of perceptions about the relative risks and rewards of investing in different jurisdictions.11 Such evaluations are partly a function of the location, size, and quality of ore deposits,12 but they are also determined by the perceived risks (economic, political, and technological) of making investments in a given jurisdiction. At any one point in time, therefore, there is no one-to-one mapping by which the level of mining investment in a particular jurisdiction can be read off its geology alone. For example, Uzbekistan hosts approximately 10% of world gold reserves (and ranks number three after South Africa and the United States), yet in the last decade it has received only 1% of global gold investment. Similarly Congo, which hosts substantial, high-grade copper reserves, receives less than one-tenth of 1% of global copper investment. Geographies of mining investment, therefore, may be structured in outline by geology but are socially mediated in their details. As a consequence, mining geographies are dynamic. Investment ows to a given jurisdiction can be induced, accelerated, retarded, or halted as the result of changes that effect that jurisdictions risk/reward ranking relative to other potential targets for investment. National policies of economic liberalization have attempted to do precisely this: reposition countries as more at-

Using this formula, an investment/reserve quotient can be calculated for individual countries for particular commodities. The performance of individual countries can be compared against each other or over time by plotting the quotients on a schematic continuum centered on a hypothetical value of 1. Figure 6 illustrates investment/reserve quotients for copper for a sample of countries. Those located to the right of this hypothetical fulcrum (i.e., with investment/reserve quotients greater than 1) are countries going above and beyond the constraints of basic geology by attracting a greater proportion of investment than would be expected based on their share of global reserves. Those located to the left of the fulcrum (i.e., with an investment/reserve quotient of less than 1) are underperforming in the sense that they have failed to attract investment in proportion to their geological reserves. Figure 6 illustrates how Australia and Papua New Guinea have been particularly successful at attracting copper investments in relation to their geological base, while countries like the Democratic Republic of Congo, Russia, and

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Figure 6 Selected investment-reserve quotients for copper.

China have underperformed, based on what would be expected from mineral reserves alone. The gap (either positive or negative) between mineralogical potential and investment performance is indicative of the way that investment ows are socially mediated and are not the product of geology alone. Reasons for underperformance vary from country to country. In the Democratic Republic of Congo, for example, a combination of macroeconomic instability, civil war, and political turmoil continue to deter investment in its sizeable, relatively highgrade copper reserves. In China, by contrast, foreign mining investment has been retarded less by concerns over macroeconomic or political risk and more because of the difculty of obtaining transferable and secure title to lands and resources, a necessary precondition for mining investment.13

Bonanza Geographies
The geographical restructuring of mining investment over the past decade is frequently interpreted as a process of globalization through which mineral-rich (but otherwise very poor) economies in the developing world are experiencing an investment bonanza (Webster 1995; Burns 1996). The analysis presented here provides broad support for the emergence of new geographies of mineral investment as a result of economic liberalization but also suggests three significant caveats to the optimism of the bonanza thesis. First, investment has been highly concentrated within a relatively small number of preferred targets and not all liberalizing, mineral-rich countries saw inows of investment during the boom years. Thus the mining boom of the mid-1990s did not erase uneven patterns of mining investment but contributed to new patterns of differentiation. For example, while Chile and the Democratic Republic of Congo/Zaire share long mining histories and were both leading copper-producing countries during the 1980s, their different experiences

with liberalization in the 1990s (Figure 6) has increasednot decreasedthe contrasts between them. Second, investment ows to mature targets may have declined in relative terms during the boom, but absolute ows to these regions remained at in comparison to ows to the rising stars. In other words, there is little evidence to suggest massive disinvestment from longestablished mining regions. The relative shift in investment toward developing economies, therefore, reects the way new investment is preferentially targeted toward newly liberalizing economies during boom periods. Figure 7 provides evidence for this preferential shift in the context of copper by comparing the distribution of investment between developed and developing economies.14 The proportion of global copper investment owing to each of the two classes is plotted for each year in the period 19902001, and trend lines have been added to the data. These demonstrate increasing divergence over the period. Whereas global copper investment was split approximately 50:50 between the two classes at the beginning of the 1990s, its current distribution is closer to 75:25 in favor of developing economies. This apparent shift to the global South reects the way investment during the boom years has preferentially targeted those nontraditional locations in the developing world made newly accessible through economic liberalization. Interpretations of the bonanza as a withdrawal from established targets and a stampede to the global South are, therefore, wide of the mark. Absolute ows of investment to mature targets are in practice quite sticky when compared with ows to developing countries and show relatively little change during either boom or bust. Third, the inow of mining investment to newly liberalizing economies appears to be conditional on rising ows of investment overall. By contrast, mature jurisdictions appear to provide a consistent base-load type target that, in

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Figure 7 Distribution of copper investment between developed and developing economies.

comparison to the rising stars, are relatively unaltered by the boom period. Any bonanza in the periphery, therefore, is not only geographically circumscribed but also is limited to periods of rising spending overall. A significant nding of this research, then, is that newly liberalizing economies may act as swing targets for investment. Such targets receive greater proportions of investment at times when increases in mineral prices and/or the availability of project nancing allows greater levels of risk to be tolerated, but are preferentially drained when the availability of funds decreases. When the boom years ended after 1996, the geography of annual capital expenditures resumed a pattern that was broadly similar to that of the early 1990s. The cumulative effect of preferential spending on mining projects in the global South during the boom, however, has significantly changed the geography of installed capacity. The bulk of new mines commissioned over the past decade are in the global South (see Table 2, for example), and it is from these mines that the bulk of future production will come. Mapping recent patterns of investment in the mining sector provides a basic, yet arguably very significant, step toward informing public debate over the socioeconomic and environmental impacts of mining investment in emerging markets by indicating how policies of economic

liberalization have modied established geographies of investment. This study nds that the number of mines and the value of investment increased rapidly during the 1990s in mineralrich regions within a handful of emerging markets, notably Peru, Chile, and Indonesia. This strongly suggests that the scale and intensity of mining-related environmental impacts may have increased substantially in these investment hotspots. It is not possible from the data presented here, however, to determine what the specific environmental effects of such uctuations in the value of investment will be. This is more than simply a modest disclaimer and is intended to highlight an important methodological point: local and regional environmental change cannot simply be read off the frequency and magnitude of investment. The environmental consequences of mine development are not solely a scale effect attributable to the value/volume of investment alone (Frederickson 1999). An investment of $500 million in an open-pit copper sulphide ore deposit in forested highlands of Papua New Guinea, for example, will have quite different socioecological effects to an investment of similar value in the copper oxide deposits of the Chilean Atacama. The political economy of civic involvement, the mineralogy of the ore body, the choice of processing

Mapping the Bonanza

technology, prevailing land uses and environmental conditions, and the extent and effectiveness of local environmental governance all have a hand in determining local and regional environmental effects (see Bridge 2002 for further discussion of this point). The data presented here demonstrate how the adoption of policies of economic liberalization during the 1980s and 1990s increased the extensity of mining investment (by opening up a broad range of countries to mining capital) and significantly increased the intensity of mineral investment in a small number of developing countries (by increasing the annual value of mining investment and, in some cases, the number of new mines). The paper challenges conventional interpretations of this process of geographical restructuring as a hemorrhaging of investment from the North and a concomitant bonanza in the global South. It shows how recent investment trends are highly specific in geographical scope and concentrated within a few commodities and that the allocation of investment between established and emerging targets is variable over both time and space. Mapping these bonanza geographies provides a necessary rst step toward understanding the socioeconomic and environmental implications of changes in the direction, structure, and timing of investment ows.
4

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Notes
1

Not all components of the primary sector have been overlooked. There is now a rich geographical literature on the restructuring of the global agrofood complex (see, e.g., Arce and Marsden 1993; McMichael 1994; Goodman and Watts 1997). 2 FDI refers to equity investments made by a rm resident in one national economy in enterprises located in another national economy, where a purpose of investment is to gain an effective voice in the management of the enterprise (UNCTAD 1994). 3 Lest the inclusion of Mongolia be considered hyperbole, it is worth noting that Mongolia has becomein mining circles at leastthe Chile of Asia by adopting in 1997 what is widely regarded as a progressive investment regime ( from the point of view of inwardly investing mining rms). This provides a market-based mechanism for access to, and maintenance of, mineral rights similar to that found in the leading Latin American jurisdictions (Naito, Remy, and Williams 2001, 14).

These were InfoMine (http://www.infomine.com), Raw Materials Group (http://www.rmg.se), Engineering and Mining Journal Annual Surveys, and Metals Economics Groups Mine Search (http:// www.metalseconomics.com). 5 The MineSearch database classies projects into seven categories of project status, ranging from Raw Prospect to Production. Data analyzed here were drawn from the top three categories feasibility, preproduction, and productionbecause it is in these stages that significant capital expenditure occurs. 6 The decision to expense costs across a number of years, rather than allocate them to a single year, recognizes that large capital sums are rarely expended in a single year but are distributed throughout the development and commissioning phase of a mine project. A large greeneld copper mine, for example, may have capital costs in the region of $500 million to $1 billion and take between three and four years to develop into a working mine (the narrative histories in MineSearch enable a determination, for each project, of the time period between capital rst being expended and project commissioning). In nearly all cases, capital ow was distributed normally; for a four-year project, the largest capital ows were assumed to be in years 2 and 3, with relatively smaller ows in years 1 and 4. Discussion with analysts familiar with the industry validated this decision to distribute costs. 7 Many of these downstream phases have their own geography. For example, the geography of alumina smelting (the most energy-intensive phase of aluminum production) is shaped by the availability of low-cost energy supplies. 8 The category Europe here also includes the former Soviet Union. 9 Of the two metals, copper dominates in Indonesia (70%) and Peru (68%), but is subsumed to gold in Papua New Guinea (42% versus 56%). 10 The prole for Australia (not shown) is an exception. It demonstrates a response much more like that of Chile and Peru, with investment ows tripling throughout the 1990s, followed by a slump in investment in the post-1999 period. In part this reects the broad commodity mix of mining investment in Australia, but it is also reective of policy initiatives adopted by the Australian government to attract overseas investment into the mining sector. In this regard, Australia has behaved less like the United States and Canada and much more like an emerging market country in seeking investment in its natural resource sectors. 11 It is no surprise to nd that the geography of investment activity for specific mineral commodities is unevenly distributed at the global scale. Only a small proportion of countries around the world have significant reserves of copper or nickel, for

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of aluminum. Madison: University of Wisconsin Press. Bridge, G. 2002. Grounding globalization: The prospects and perils of linking economic processes of globalization to environmental outcomes. Economic Geography 78 (3):36186. Bunker, S. 1985. Underdeveloping the Amazon: Extraction, unequal exchange and the failure of the modern state. Urbana: University of Illinois Press. Burns, E. 1996. Hey, Over here! Mining Voice, March/ April 2227. National Mining Association: Washington, DC. Carrere, R., and L. Lohmann. 1996. Pulping the South: Industrial tree plantations and the world paper economy. Atlantic Highlands, NJ: Zed Books. Ciccantell, P. 1999. Making aluminum in the rainforest: The socio-economic impact of globalization in the Brazilian Amazon. The Journal of Developing Areas 33:17598. Conservation International. 1998. Natural resource extraction in the Latin American tropics: A recent wave of investment poses new challenges for biodiversity conservation. CI Policy Briefs 1, Spring. Washington, DC: Conservation International. Dicken, P. 1998. Global shift: Industrial change in a turbulent world. New York: Guilford Press. Engineering and Mining Journal [E&MJ]. 1987. Mining Investment 1987. Engineering and Mining Journal, January. . 1989. Project Survey 1989. Engineering and Mining Journal, January. . 1994. Annual Project Survey 1994. Engineering and Mining Journal, January. Ericsson, M., and B. Campbell. 1996. Restructuring in global aluminum. London: Mining Journal Books. Evans, G., J. Goodman, and N. Lansbury. 2002. Moving mountains: Communities confront mining and globalization. London: Zed Books. Excel. 2000. Redmond, WA: Microsoft. Frederickson, P. 1999. Trade, global policy, and the environment: New evidence and issues. In Trade global policy and the environment, ed. P. Frederickson, 111. Washington, DC: World Bank. French, H. 1998. Investing in the future: Harnessing private capital ows for environmentally sustainable development, World Watch Paper 139. Washington, DC: World Watch Institute. Gedicks, A. 2001. Resource Rebels: Native challenges to mining and oil corporations. Boston: South End Press. Goodman, D., and M. Watts. 1997. Globalising food: Agrarian questions and global restructuring. London: Routledge. Hall, A. 1989. Developing Amazonia: Deforestation and s social conict in Brazils Caraja programme. Manchester, U.K.: Manchester University Press. Held, D., A. McGrew, D. Goldblatt, and J. Perraton. 1999. Global transformations: Politics, economics, and culture. Stanford, CA: Stanford University Press.

example, so the number of potential targets for investment is limited by basic geology. It is considerably more interesting, however, to nd that the geography of investment for specific mineral commodities is unevenly distributed even among those countries with significant reserves of those commodities. Gini coefcientswhich calculate the gap between a hypothetical equal distribution of investment and the actual distribution and are expressed as an index between 0 and 1, where 0 indicates perfect equality and 1 indicates perfect inequalityprovide one way of measuring this inequality. When calculated for all 207 countries worldwide, the Gini coefcient for copper is 0.96, reecting investments high degree of concentration in just a small fraction of these countries, most of which have no prospect of receiving investment. More meaningful measures are Gini coefcients calculated using only those 30 countries that actually received investment in copper (0.72) or using only those countries that rank among the top 10 in terms of copper reserves and represent 75% of global copper reserves (0.66). 12 These apparently physical criteria are also social products since they derive from earlier exploration activity and processes of knowledge accumulation. 13 It is also possible to use investment-reserve quotients for different time periods to identify how policies of liberalization have enabled individual countries to shift their relative position up or down over time. Space considerations prevent demonstration of this here. 14 Membership of the Organization for Economic Cooperation and Development (OECD) was used as a proxy for developed. Membership of the OECD evolved during the 1990s to include Mexico (1994), the Czech Republic (1995), Korea (1996), Hungary (1996), and Poland (1996)countries that throw into sharp relief the limitations of binary classications such as developed and developing. For a complete listing of OECD countries, see the OECD web-site at http://www. oecd.org.

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