What this lesson teaches
I can explain the impacts of extractive industries and evaluate how they are managed.
Syllabus 9173, Topic 1.1, 3. Managing Resources. How do we manage the extraction of non-renewable resources by the extractive industries?
Make a guess
A country earns billions exporting copper from one mine. Will the region around the mine become rich?
- Yes, because mines employ many local people.
- No, because mines benefit few people.
- No, not necessarily. Many gains can go elsewhere.
- Yes, because export earnings stay where they are made.
Show the answer
No, not necessarily. Many gains can go elsewhere.
Imported equipment, profits sent abroad and few local jobs can limit local gains, while pollution and displacement stay local.
Mining and drilling can bring money to one place while leaving the environmental and social costs in another.
Extractive industries remove non-renewable materials from the ground. They are the first step in many production networks. The syllabus groups them into energy minerals, like oil and coal; metallic minerals, like iron ore; and non-metallic minerals, like limestone. A mine must go where the deposit is. Firms can choose between deposits, but geology limits their choice.
Exploring, drilling, processing and transporting minerals need huge investment and advanced technology. These costly, risky, long projects favour large private or state-owned companies. Small and informal miners also exist.
Economic benefits include wages, contracts for local suppliers, export earnings and government taxes. Local gains are bigger when firms buy locally and train local workers. But imported equipment, profits sent abroad and swinging prices can limit gains. A high-tech mine may export a lot but employ few people.
Environmental costs include cleared habitats, heavy water use, polluted drainage and mining waste. Social effects include new services, but also displacement, health risks and land conflicts. National income does not prove local communities benefit fairly. How severe these costs are depends on the deposit, the mining method and the safeguards, and they can reach places downstream.
- Three mineral groups
- Energy, metallic and non-metallic.
- Capital-intensive
- Needs huge investment and technology; favours big firms.
- Uneven impacts
- Benefits and costs fall on different places and groups.
Step by step
Explain the location
Start with the deposit and the money and technology needed.
Separate groups
Workers, residents, suppliers and government.
Trace a benefit and a cost
Explain why they fall on different people.
Real examples to use
Brumadinho, Brazil, 2019
A mining waste dam collapsed, releasing a flood of mud that killed about 270 people.
Grasberg mine, Indonesia
This huge copper and gold mine in Papua has released large amounts of waste rock and tailings into local rivers.
Cobalt mining, DR Congo
DR Congo produced about 73% of the world's mined cobalt in 2025 (USGS), mostly for batteries. Large industrial mines, many owned by Chinese and Swiss firms, sit beside small hand-dug mines. Amnesty International reported in 2016 that children worked in some of these hand-dug mines. Export earnings rise, but miners and nearby towns carry the health and safety risks.
Worked example: A mining enclave
A remote mine imports its equipment and skilled staff, and exports raw ore. National export earnings rise, but nearby villages sell it little. Training and local supplier support could spread the benefits, if skills and reliable firms exist.
Watch out for this
Big export earnings mean big local income gains.
Much export money leaves the area. Ownership, costs, taxes and local links decide who gains.
Check your understanding
What most directly increases a mine's local economic benefits?
- Building local suppliers and training people for jobs.
- Importing inputs and skilled workers to keep costs down.
- Reporting the mine's export value each year, without costs.
Show the answer
Building local suppliers and training people for jobs.
Yes. This keeps more money and work local.