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NATIONAL MINERAL POLICY

In any nation having a developed or developing economy mineral policy comprises only one
element of the total national policy. Mineral policy must be such that it enables mineral exploitation to
contribute to overall national objectives. Indeed it is only in the light of national objectives that
mineral policy can be formulated (or modified) and implemented. In this contest the discipline of
mineral economics can provide an essential tool in the formulation, modification, implementation and
evaluation of mineral policy in relation to over-all national objectives.
All Governments are becoming increasingly politically motivated to develop their mineral
resources within their own domains or to retain minerals within their sphere of commercial influence
and control them by their nationals. Some countries are tightening their, grips on exploitation of their
mineral wealth by foreigners by bringing about legislative and suitable regulations. Other directly
controls the mineral industries by taking over both mineral ownership and operation. Nationalisation
of mineral industries partly or wholly is also being widely practiced.
Hence, mineral policies are complex in nature linked up with national prosperity and security,
financial stability, foreign policy and need to be adjusted with national requirements. While in
countries like U.S.A., Canada, Australia, the Government sets the stage for private enterprise for
mineral exploration and production, there are other countries like India, U.K., France, Sweden, etc.
where Government also participates in mineral development in some measure. In USSR and other East
European countries the Government wholly controls mineral exploration and development.
Some nations like Japan and Germany have achieved mighty industrialisation. Their main
objective is stockpiling, participation in other countries mineral resource development and use of
substitutes. These nations with little mineral raw material have achieved industrialisation by importing
low cost raw mineral supplies, processing such minerals and manufacturing goods for export in world
market.
Minerals are valuable foreign exchange earners needed for industrial development. A suitable
mineral policy for developing minerals for internal use and a balanced export promotion are vitally
needed for developing nations. The state of nation economic development has implication for mineral
policy. Consideration must be given to the level of sophistication of existing primary, secondary
industries and to the existence, quantity and distribution of infrastructure such as power plants, rail
roads, roads, harbors, financial institutions etc.
It is important to realise and accept that governmental activities in support of mineral resource
exploitation must complete for funds with activities that support other sectors of the economy. Budget
proposals for expenditures in support of mineral resource exploitation must therefore be prepared in
terms of the attainment of national objectives. It is at this critical level that the application of mineral
economics can play a key role.
Factors influencing the development of mineral resource objective
The development of national mineral resource objectives and of specific mineral policies to
attain these objectives should, therefore, reflect the analysis, evaluating and interrelationship of the
following:
a) General national policies and objectives.
b) The political, economic, social and physiographic character of the nation,
c) The known or potential mineral resource base.
d) The unique characteristics of mineral resources and the mineral industry.
The stability of government will have a profound effect on its mineral policy. Mineral resource
exploitation is risky capital intensive and in cases of most nations necessarily oriented towards
external markets. Generally there is insufficient capital for resource exploitation within the nation
itself and such capital as does exist is not oriented toward external markets.
The state of nations economic development has implications for mineral policy. Consideration
must be given to the level of sophistication of existing primary, secondary and tertiary industry and to
the existence, quantity and distribution of infrastructure such as power plants, railroads, roads, harbors,
communication facilities and financial institutions. The level of social development must be

considered also - in particular the aptitudes and attitudes of the population as they pertain to the level
of education and technical and managerial skills needed for mineral enterprises. The physiography of
the nation is an important consideration particularly in nations of large physical size.
Essential Characteristics of Mineral Resources:Mineral policy must also take into consideration the essential characteristics and problems of
mineral resources in many ways unique compared with other economic goods. Some of these
characteristics are:
a) Mineral deposits vary widely as to location, size, quality, complexity, and proximity to surface and
therefore economic potential.
b) Minerals are non-renewable resource. The aggregate supply of mineral resources can be
considered generally continuous through time as technology and capital utilization are allocated to
seek new deposits, mineral and non-mineral substitutes and more efficient exploitation and
utilization. However with disaggregation of analysis of individual industries, commodities and
producing regions, the known resources base is fixed and deplorable.
c) Mineral resources are unequally distributed among regions, countries and continents by types of
deposits and by economic usefulness. Depending on particular supply demand conditions minerals
vary in the extent to which they enter regional, national and international trade.
d) The long-term demand for minerals is expected to continue to grow at a rapid rate so that adequate
supplies will continue to remain a major challenge.
e) Change in conditions of demand and supply including such uncertain variables as new discoveries
and technological innovation, affect the competitive position and trade pattern of individual
establishments, regions, nations and continents. Such changes give rise to problems of cyclical
instability, dislocation by industry and region and mineral shortages for industry.
f) Since mineral resources occur in proximity to other natural resources, individual resources
developments should optimize the economic usefulness of all resources within areas of multiple
resource conflict.
g) Finally mineral resource exploitation activities can have socially undesirable environmental
effects.
In considering the traditional economic factors of production - land, labour and capital minerals are unique in that they comprise two of these factors - the land factor and the capital
factor in the sense of new wealth. Minerals are of little or no value to a nation lying in the ground.
Unexpolited they can be of great value in meeting national objective when exploited.
Elements of National Mineral Policy:The general objective of a nation's mineral policy could be expressed in the following terms:
"To develop and utilize the nations mineral resources to optimize through time their net
contribution to the attainment of national objectives." Individual components of mineral policy
must be formulated so that the policy, in total, is applicable or adaptable a wide range of specific
problems or classes of problems.
In terms of foregoing general mineral policy objective consideration could appropriately be
given to the following elements in the formulation of nations mineral policy.
a) To maintain an adequate domestic supply whether from domestic or imported sources of all
minerals at reasonable prices so that shortages or uneconomic prices do not impede
development of secondary industry.
b) To establish standards within which both the public and private sectors are expected to operate
with respect to land tenure, pricing and other marketing practices, operating and safety
practices, land conservation and reclamation and resource exploitation.
c) To encourage increasing degrees of domestic mineral processing and mineral based
manufacturing rather than exporting crude mineral products and to optimize return to the
nation from minerals exported.
d) To encourage and expand domestic ownership and control of mineral resource industries taking
appropriate account of the continuing need for foreign capital while optimizing benefits
derived from foreign capital invested in nations mineral industry.

e) To maintain and improve the nations international competitive position in world mineral
market.
f) To ensure that infrastructure necessary for national mineral exploitation is provided either by
Government or by industry. Infrastructure includes power, transportation and community
facilities, education, etc.
g) To ensure that requirements are met for technical and economic information systems, including
the development and dissemination of data such as geological maps and reports, statistics, etc.
h) To optimize any potential that mineral exploitation offers with respect to economic
development in disadvantaged regions and thus to alleviate regional economics disparities.
i) To forecast problems related to mineral depletion and declining regions in order that the
unfavorable impact on employment and local economic activities is minimized.
j) To conserve mineral resources in the sense of achieving optimum recovery from given deposits
and minimizing waste. Mineral policy should in appropriate instances provide for mineral
conservation measures.
k) To establish standards of environmental quality and to minimize costs external to the mineral
project itself proper environmental planning so that mineral policy can be made accordingly.
l) To minimize external or foreign discriminatory actions affecting the nations mineral trade such
as tariffs, non-tariff barriers and administrative procedures.
m) To ensure that mineral exploitation contributes an equitable share of the tax revenue of the
nation. It must assume its share of the domestic tax burden commensurate with the role it plays
in the overall economy of the nation.
n) To increase the development and use of domestic skills. One of the most valuable resources of
a nation is a cadre of persons possessing technical and managerial skills.
o) To ensure that mineral resources and mineral industry activities contribute to and reflect
general government social, economic, developmental, strategic and sovereignty policies and
goals.
Implementation of a National Mineral Policy
It is finally necessary to articulate and implement the nations mineral policy. There are four
principal avenues of implementation.
First, there is a considerable merit in the issuance of a statement by the head of state or minister
responsible for the minerals sector about nations general objective and mineral resource objective
along with a description of the principal elements which comprise the nations mineral policy.
Second, for some nations (at very early stage of mineral exploitation) the policy statement can
be translated into action in respect to specific projects by means of negotiated contract between the
government and party interested.
Third, for many, probably all, nations as their mineral economies nature the mineral policy
statement will be articulate into specific laws and regulations covering all the elements of nations
mineral policy.
Fourth, nation tax laws and tax regulations can be a powerful factor in the implementation of
mineral policy.
A last thought relates to concept of mineral resource management. This concept implies an
active, dynamic role on the part of Government in the evaluation, planning policy and Programme
development and implementation and direction of the nations mineral resource activities to ensure
that they meet national objectives and in so doing, bring optimum benefit to the nation.

Mineral Policies of Some important Countries:


Soviet mineral policy continues to be based on the principle of maximum self-sufficiency at
any price. Costs of production are not a prime factor in the selling price either on the domestic or
international market. The mining industry is considered as the main raw materials base of the
country's economy. The economic management is centered upon five branch ministries that
exercise control over petroleum and gas, coal, ferrous, non-ferrous and building materials.

Production management is based upon regional production associations. Through this system they
have achieved stable growth to make the industry one of the world's leaders.
The American system is based largely on the free market principle and private enterprise. In
recent Years State and Federal legislation for the protection of the environment has resulted in
much stricter control of land available for prospecting and mining.
The arguments for conservation and for the development of mineral policies have perhaps
advanced further in Canada than elsewhere. Canada sets out considerations of mineral policy to
obtain greater economic diversification and better financial returns. The Japanese have persued
their own active policies to secure supplies. Part of the published policy of their government is to
promote exploration and development of mineral resources at home and abroad and they have
established.