International Mining Industry

Part of the debate – in the House of Commons at 8:29 pm on 8 September 2014.

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Photo of Eric Joyce Eric Joyce Labour, Falkirk 8:29, 8 September 2014

We go from one important debate on a primary industry—farming—to another. I want to say a few words for the next short while on mining, a subject that gets too little attention in the UK. Like the shipping industry, we rely on mining for pretty much everything we use daily, but it is invisible to most of our constituents and most consumers. We do not mine that much in the UK, although it is still an important industry to an extent in parts of the country; we still have aggregates on the go and there is still quarrying, but mining is something that happens abroad. Like other primary industries, it can be more important in developing economies than it is in the UK.

I want to emphasise the UK’s contribution to international mining, which primarily comes through trading in the City of London. Most large mining companies, or certainly many, choose to be listed in the UK for the prestige and the convenience, and because they can raise capital here, and many that are not primarily listed in the UK are present in a large way. The large mining companies are listed here—smaller ones are on the AIM, the alternative investment market—and UK industries such as financial and legal services service the mining industry. Arguably London, along with Toronto, is at the forefront of the international mining industry, but much like shipping, we often do not realise that, because most of the mining goes on abroad.

In developed states, the things that we think of and speak of most and that dominate our daily lives are the services that we consume—the constant flow of ever more astonishing inventions, technologies and concepts that make our lives easier, more fulfilling or, often, simply better. People’s creativity often seems boundless. That ability and instinct to improve design means that new, astonishing things appear almost daily. The acceleration of ideas and technologically intelligent advances seem to be on a near-constant upward convex curve.

As an eight-year-old, I remember very well—I checked on Google to see whether it was a false memory—my dad getting me out of bed at 4 or 5 o’clock in the morning to watch Neil Armstrong and Buzz Aldrin landing on the moon. They played a bit of golf and turned the moon into a fairway for a brief period. That seemed like the apex of technological advancement for a very long time, but when we look back, we can see that technological advances have continued on a remarkable upward curve. The moon landing seems a very long time ago in technological terms. It is almost a bore to reflect on how things have changed. One thinks about computers in the period since then; the technology involved in that amazing scientific advance and historical event is very far behind where we are today.

We tend to reflect on what affects our daily lives and our services at the expense of the primary industries that facilitate them. In fact, mining uses many technological advances. One sometimes makes a false dichotomy between complexity and cleverness and the services we use daily. We sometimes forget that the primary industries on which the service industries rely are very sophisticated.

One reason why technology dominates our daily discourse is that we quickly adapt to new ideas, come to rely on them and want yet more. We adapt using our intelligence, and that is fabulous—we expect fabulous things and see them every day on the internet. The internet itself is a fabulous thing. Not everything that evolves through it is the best, but much of it is.

I am not complaining about new technologies dominating our daily lives, but they often challenge us to think about what values lie at the heart of the way we live. We have to consider whether certain new developments are advantageous, such as the potential meeting of the internet, DNA and new insurance products. We have to decide whether to allow them to happen and to go with the flow. We have to make a value judgment: perhaps we will know more about our futures and our own likely means of death if we choose to allow such things. That might or might not be desirable, but technology makes us make such value judgments. I guess that that is why these things are often at the forefront of minds in the developed world.

What is often at the forefront of people’s minds in the developing world is that the mining industry is potentially the only way of getting early money other than aid into the economy. Aid is very nice, but it is on a relatively small scale and can only ever be a sticking plaster. Often, the international mining industry comes along and has a transformative effect on the economy in the developing world, although not always. People talk about the resource curse, but we never think of calling oil and gas in Scotland a curse. We think, in a rather superior fashion, that it is okay if we have it, but that perhaps it is a curse to people in the developing world.

Of course, the result is not simply a function of the mining industry. It is usually a function of local governance and the capacity of a country to benefit from the exploitation of its natural resources. Sometimes other variables have to be fixed. Expectations can be high, and mining is very capital-intensive—it takes many years before the money is won back in profits, which is when populations start to benefit. Another variable is that people are sometimes moved out of other necessary parts of the economy, such as agriculture, into mining; there is a drag factor that takes people away from essential parts of the economy, often primary industries themselves. However, there are places in the world where it has been got right—in Africa I think of Zambia, and elsewhere I think particularly of Brazil. In many places, developing economies are being pulled out of low income into middle income and potentially, in the future, even into high income. I think even of Rwanda, where mining is not a large industry but a significant one all the same and makes a very important contribution.

I wrote down a few ideas for this speech last week having spent a month in Cornwall, as I do every year. I was in a very beautiful part of Cornwall—I should say that I informed Andrew George that I was going to mention his constituency. I was staying in a cottage with my partner, and I looked out at what appears to be a memorial standing on the edge of a promontory, sticking out over a point where two seas join, which I discovered when I was down there is called Cape Cornwall. It is quite a remarkable sight—it looks like a memorial, but it is actually a chimney stack on the very edge of the promontory. Underneath the chimney, out to sea in the cape itself, is a set of rocks called the Brisons, where the mining industry pulled tin out of the ground, as it did right across Cornwall, effectively starting the industrial revolution. Hayle, the local port, was involved right at the start of the industrial revolution.

In due course, Cornwall’s mining industry had its time and then declined, which was largely to do with world tin prices. It was cheaper to extract it elsewhere in the world, and we became a different type of economy. As I said earlier, the service industry and new technologies came along, and other countries took over tin production. I will not bore the House with where tin extraction takes place now, but it is concentrated in a small number of countries, as is the extraction of things such as bauxite, which potentially will be concentrated in Guinea. That development is very much led by Rio Tinto, a UK company based and listed in London. The ground has already been broken for the initial infrastructure work, and when that development takes place, it will lead to the employment of thousands of people, and in many years to come—hopefully not too many years’ time—that will lead to substantial tax receipts for a country that currently has very few. It will also lead to infrastructure, because a railway will need to be built to export the bauxite from the site.

It is easy for us to forget the benefits of mining. I well understand why many good people I have known over the years through my involvement with the mining industry and the non-governmental organisations that are interested in it are often very negative. In this place, I hear more negative things being said about the international mining industry than I hear positive ones. To some degree, without wishing to be critical of people per se—certainly not Members of this House—there is a lack of awareness. Among our constituencies and our constituents, very few have a direct or immediate interest in this sort of mining—unlike with oil and gas—and their experience of mining is modest.

My constituency is just outside a next-door-neighbour refinery, so everybody understands the oil and gas industry. Everybody in the UK consumes oil and gas, and everybody sticks petrol and diesel into their cars as well as use gas in their homes. In the end, while there is much discussion and debate about the consumption of energy, I think people get a balanced perspective. The NGOs and the environmental bodies will lobby for good reason and encourage us to consume less and look for other ways of fuelling our lives. People also understand that we rely heavily on fossil fuels as well—and will do for some time to come. I often think, however, that when it comes to the mining industry, the public understanding is not there.

I am glad to see here on this occasion a Minister from the Department for Business, Innovation and Skills and not one from the Department for International Development. It tends to be the case that we view mining as an international development issue when it is, in fact, very much a BIS issue. It is about UK businesses, and UK-listed businesses generating revenue for the UK and for overseas states. It is about helping with all sorts of areas of technological training within the UK and in the United States, contributing tax dollars or tax pounds. It is something we hear very little of.

People tend to hear the message that mining has had a chequered history. We all recognise and know about the many legacy issues throughout mining. For a period, and particularly in Africa—I know this very well—many deals and sales of assets were made that were very dubious. Mining companies bought assets off middle men, and 20 years ago, many questions were asked about mining companies. Now things are really quite different. The mining industry, including very large operators, as well as middle-sized and small operators, are very aware of public scrutiny of what they do, and they have very high standards of governance. That is sometimes not reflected in this place. It sometimes seems very hard to get a balanced debate or a balanced sense of what the mining industry is about.

When I engaged with the Government in the past, I tended to find myself having conversations with DFID. I understand why the matter will not be a top priority for all BIS Ministers, because this is not big industry as such for our constituents, but in the end, I think the UK is probably in the leading position when it comes to this industry.

The Minister will probably be aware that I sit on the UK EITI—extractive industries transparency initiative—multi-stakeholder group. People might say that the UK does not need to sign up to the EITI. The initial concept was that it was for the developing world. Then Brazil and other countries such as India said, “If it is just for us, we are not going to sign up to it.” The UK sensibly decided to sign up, and we are going through the process now. So is the US, which is moving a bit faster, I suspect, because it has pretty much unlimited resources.

At the same time, legislation involving transparency and accounting directives to which we are signing up has by and large gone through with the consent of the whole House and in the context of Europe. Britain has been at the forefront of those standards. In terms of who benefits, beneficial ownership from shares in large operators will pretty much be a feature of an open book as well. That is not to say, however, that the legacy issues do not exist. They certainly do, but sensible, well-governed mining operations need an opportunity to present their case to the public, so that we can understand the benefits, as many of the people they employ understand.

I will conclude on that point. No doubt the Minister will have a number of things to say about the support that his Department gives the mining industry in the United Kingdom, but I wonder whether he would consider meeting me, along with representatives of the mining industry, to discuss what the Government and the industry can do together to give people a much clearer understanding of the benefits that the industry brings, in balance with the important nature of governance under the control of the NGOs that we all know and love.