To achieve our objectives it is critical that we better understand the means by which a depleting mineral resource is converted into a sustainable source of human wellbeing.

In 2003 we completed a series of pilot studies aimed at achieving a deeper level of understanding of the linkages between mining activities and the economies in which they take place. The pilot studies took place at Comalco Weipa, in Western Cape York, Queensland, Australia; Rössing Uranium Ltd, in the Namibian region of Erongo; and at Rio Paracatu Mineracao, in Paracatu, Brazil. The analyses explored the interface between the operations and the wider economy, focusing in particular on the regional and local levels, while linking these to key lessons from modern growth theory.

The work identified six critical areas on which attention should be focused, in conjunction with local actors, to advance local economic development.

These are:

• Poverty alleviation and income distribution. Mining has being blamed in the past for not being sufficiently responsive to the issue of poverty alleviation. More recently, the industry has started to move from social expenditure initiatives to income generating activities. The position of these studies is that contributions to poverty alleviation should increasingly aim at maximising the unemployment reduction effects that would follow well designed enterprise generation programmes.
• The local institutional base, towards the consolidation of a broader, more inclusive system of local economic governance. This is perhaps the most critical aspect of the economic development agenda, as it constitutes the pivotal element around which a comprehensive development strategy can be conceived and implemented. Given that most aspects of the new agenda represent issues that have been traditionally outside Rio Tinto's area of accountability and authority and are, in fact, primarily a public sector responsibility, the consolidation of a more participatory institutional framework may hold strategic importance.
• Broader regional economic strategies. This is closely related to the previous point in that it identifies the need for a more integrated approach to economic development rather than simply relying on the direct wealth generated by the mine. In essence, it refers to the necessity of developing regional economic plans that aim at developing mining activities jointly with other complementary economic activities. As mining offers the capital necessary to trigger the growth process, the other sectors can provide the basis for diversified sustainable development beyond the mine's life.
• The supply chain and the expansion of backward linkages. Backward linkages are of particular significance to developing economies because they provide opportunities for production and employment in mining related sectors by domestic suppliers, and constitute a direct channel for knowledge diffusion, with spillover effects to the rest of the economy. As the levels of linkages vary largely from case to case, any move in this direction should build on a deep knowledge of both company requirements and the local productive structure in order to identify opportunities for substituting local imports.
• Business generation and SME support, as the key strategy against local unemployment, poverty and social exclusion. This refers to the net creation of enterprises not necessarily related to mining, and the expansion of legitimate income generating activities in the local economy. Policies in this regard include a wide variety of financial and non financial instruments which can be influenced by multi-actor involvement through the channels provided by an expanded institutional base.
• The local financial intermediation and community finance initiatives. This involves understanding the local financial system and its critical implications for business development. Proactive initiatives in this respect aim at both a) providing the means for widening economic opportunities for marginalized entrepreneurs, and b) providing the catalytic capital resources or means of risk reduction to secure the involvement of mainstream finance in enterprise development.

For details on the studies contact Nicolas Di Boscio (nicolas.diboscio@riotinto.com)