In 2003, 55 per cent of the economic contribution by Rio Tinto was value added, calculated as the sum of payments to employees, taxation, interests payments, dividends and retained profits (figure one). With allowances for depreciation, aggregating value added across all public and private enterprises in a country should equal the widely recognized measure of an economy's size, its GDP.

Mining is a high value added sector, which means that each mineworker adds larger amounts of value than most other industries, especially manufacturing. Conversely, high value added sectors are those requiring a relatively low value of supplies. For example, if we were analysing the car industry instead of mining, we would find that the pink side of the pie in figure one would probably account for over 70 per cent of the total.

In some industries, value added per worker is higher because inputs such as capital or skills are particularly prominent. In the case of mining, this is primarily because of the intensity of capital required to operate. For capital intensive industries to earn a normal return on large investments, they must charge prices that are larger in relation to labour costs than labour intensive industries.

This capital intensity is reflected in the second quarter of the pie, in items such as the interest payments for money previously borrowed, repayments to shareholders for their provision of capital, and money retained in the business to finance future investments and to allow for the replacement of depreciated assets.

However, because the best capital market conditions do not usually coincide with the remote and isolated places where mining often operates, it might be possible to assume that the capital component of value added will have a negligible effect at the local level.