Socioeconomic development
Mining and mineral operations can provide a strong base for the economic growth of a local area, a region, or a nation. Rio Tinto focuses on the ways in which it can bring sustainable socio-economic benefits to the areas in which it operates.
Our direct economic contributions are measured by the sum of payments to suppliers and the value that they add. However, our true contribution is far greater than this figure when the secondary or "multiplier" effects of the contributions are included. This is because local and regional economies enjoy additional benefits when workers spend their wages, when governments spend revenues from taxes, and when local communities make use of infrastructure that we create for our operations.
- Economic contributions
- Community contributions
- Tax & royalty
- Procurement
Building strong regional economies and maximising community benefit requires more than just financial investments. Mitigating impacts and addressing existing disadvantage is also important. Our businesses manage many socio-economic programmes, covering activities such as health, education, business development, housing, environment, and agriculture.
These programmes allow us to work directly with communities and governments in varying capacities. Our aim is that such assistance will far exceed our primary economic contributions. Ultimately, we aim to ensure that our economic contributions will help to build flourishing local communities whose economic viability will continue long after our mines close down.
Investments in non OECD countries
Our operations in non OECD countries have the potential to raise gross domestic product considerably. In some cases, they can greatly increase the size of the national economy. Our economic contributions can play a role in alleviating poverty and creating jobs, as well as stimulating economic activity. Our projects and operations in non OECD countries include La Granja (Peru), QMM (Madagascar), Oyu Tolgoi (Mongolia), and iron ore projects in Simandou, Guinea and Orissa, India.
We are also aware that increased wealth in areas where there was previously little can have an adverse effect on inflation of goods and services. We implement inflation mitigation measures in these communities. At our QMM project in Madagascar, for instance, we developed an inflation minimisation strategy that included a rice purchasing plan; diversifying the local market by improving regional transport; awarding catering contracts to local community gardens; and building a boarding house and temporary camp to alleviate rental inflation.
Tangible economic benefits
The production of minerals can generate incomes; it can produce foreign exchange; it can stimulate local economies through the purchase of local supplies and other inputs; and it can lead to downstream processing and manufacturing activities.
Mining companies employ people from local and regional areas, and they, in turn, earn salaries and wages that they can spend on local goods and services, leading to successive rounds of business activity. Governments earn revenues from taxes paid by mining companies, and they can use these to fund education, health facilities, roads, power supplies, and other forms of infrastructure.
The towns of Weipa and Napranum, around our bauxite operation in Cape York, Australia, are good examples of how a growing local economy attracts increased government spending. As Weipa's bauxite operations expanded the local population and local salaries also rose.
This led to an increase in local service delivery and contracting opportunities. A number of local aboriginal businesses emerged including tourist operations, earthmoving and cultural heritage management. The increased population required enhanced medical services. A new medical precinct, including a hospital, was identified as a key need for the growing community. Rio Tinto committed A$2 million, traditional owners contributed land for the site, and the state and federal governments contributed over A$20 million towards the new hospital.