Mining in the Asia-Pacific: Risks, Challenges and Opportunities (The Political Economy of the Asia Pacific)

Annotation This book provides the most comprehensive survey of mining activity and the principal challenges confronting the resources industry in the Asia-Pacific region today, and presents new theoretical and practical insights into the political and business risks faced by mining companies operating in the region from both academic and corporate perspectives. It focuses on the exploration, production and trade of the principal commodities coal, iron ore, uranium, oil and gas, and gold, as well as the emerging commodities unconventional gas and rare earth minerals, provides the reader with a valuable understanding of resource activity in the region. In addition, it also integrates and draws attention to eight key issue areas which have the potential to pose significant risks, challenges and opportunities for the industry going forward, which include sustainable development, resource governance and economic contributions, declining ore grades and territorial expansion, community aspects of mining, mining and indigenous peoples, climate change, and impact assessment. The contributors to this volume are experts in their respective fields, and the diversity of voices makes this book a must read for scholars, industry participants, investors and policy-makers with an interest in mining in the Asia-Pacific Dedication 6 Acknowledgements 7 Abbreviations 11 Contents 9 List of Figures 16 List of Tables 18 Chapter 1: Introduction 20 Challenges 24 The Challenge of Resource Nationalism 24 The Challenge of the Environment 25 The Challenge of Social Activism 26 The Challenge of Non-Western Mining Companies in Matters of Social and Environmental Corporate Policy 28 The Challenge of Reputation Risk 29 Opportunities 31 The Sections of the Book 32 A Word on Nomenclature and the Book’s Scope 32 References 33 Part I: Theorising Risk in the Mining Industry 35 Chapter 2: Determinants of Foreign Direct Investment in the Mining Industry 36 Introduction 37 Geology 39 Political Stability 40 Investment Promotion 41 Regulatory Regime 42 Fiscal Regime 43 Financial Conditions 44 Environmental and Social Regulation 45 Operational Environment 46 Potential Profitability 46 Conclusion 47 References 48 Chapter 3: Regulatory Regimes, Foreign Mining Investment, and Risk in the Asia-Pacific Region: Comparative Evaluation and Policy Implications 51 Introduction 52 Regulatory Regimes, Governance Infrastructure, and Foreign Direct Investment 53 Analysing the Performance of Regulatory Regimes 54 Conclusions and Policy Implications 58 Conclusion 61 References 62 Chapter 4: Property, Politics, and Power: Theorising Political Risk in the Mining Industry 65 Introduction 65 Political Risk Research: A Dead End? 66 Where Did the Research Go Astray? 67 The Three Pillars of Political Risk 69 Property 69 Politics 70 Politics: An ‘Unstructured’ Approach 71 Politics as Structured Governance 72 Power 73 The Corporation as a Political Actor: Powers, Advantages, and Vulnerabilities 75 Conclusion 78 References 79 Chapter 5: Social Risk and Business Risk in Mining Projects 81 Introduction 81 Risk in the Literature 82 Social Risk 85 Business Risk 89 Theorising the Relationship Between Social Risk and Business Risk Associated with Mining Projects 92 Problems with Conflation 94 Conclusion 96 References 96 Chapter 6: Security of Resource Supply and the Obsolescing Bargain 100 Introduction 101 RN and Its Consequences in International Political Economy 103 Security of Supply and the Obsolescing Bargain Model in the Region 106 The Contemporary Obsolescing Bargain Model in the Asia-­Pacific Region 110 Strengthening the Bargaining Power of Mining Companies Using Industry Clusters in the Region 114 Conclusion 114 References 115 Chapter 7: Mining and Human Rights 120 Introduction 121 The Mining Industry and CCD 123 Human Rights and CCD 124 The Capability Approach and CCD 127 Conclusion 131 References 132 Chapter 8: Mergers and Acquisitions: The Politics of Megadeals in the Mining Industry 135 Introduction 136 Trends in M&A Activity in the Mining and Energy Sectors 137 Global Activity 137 Future Trends 139 Explanations for the Success or Failure of Mergers and Acquisitions from the Literature 140 The Market Structure Explanation 141 The Firm Influence Explanation 141 The Resource Nationalism Explanation 142 M&A Megadeals in the Mining Industry in the Asia-Pacific Region 143 Conclusion 149 References 149 Part II: The Major Resources 153 Chapter 9: Iron Ore 154 Introduction 155 The US Surge 156 Japan: Quantity Plus Quality 157 China: Quantity Minus Quality 160 The Crisis Within the Opportunity: The Re-Emergence of Risk 162 References 165 Chapter 10: Coal 167 Introduction 168 Primary Energy Supplies 169 Coal’s Contribution to Primary Energy Usage 170 Types of Coal used in the Asia-Pacific Region 173 Coke Ovens and the Iron and Steel Industry 174 Other Non-Power Generating Uses 176 Electrical Power Generation 177 Sources of Coal 181 Coal Prices 184 Conclusion 186 References 187 Chapter 11: Rare Earth Elements 188 Introduction 188 Why Focus on Rare Earth Elements Now? 189 Rare Earth Elements a Driver of New Technologies 191 The Rare Earths Supply Chain 191 International Disputes Over Rare Earths and Rising Nationalist Sentiment in China 192 Commercial Considerations 195 Conclusion 197 References 197 Chapter 12: Natural Gas 199 Introduction 200 Natural Gas Trade in Asia: Institutional Setting 203 Japan as a Case Study 208 Japan’s Challenge to Oil-Indexation 211 Oil-Indexation in the Asia-Pacific Region? 214 Challenges 215 Conclusion 219 References 221 Chapter 13: Copper 226 Introduction 227 The Uses of Copper 227 Semi-Manufactured Copper Products 228 Usage of Refined Copper 229 Underlying Influences on the Usage of Refined Copper 231 Future Trends in Usage 234 The Supply of Refined Copper 235 Sources of Copper Raw Materials 239 Constraints on Copper Mining 241 Conclusion 243 References 245 Chapter 14: Coal Seam Gas 246 Introduction 247 The Growth of the Coal Seam Gas Industry in Australia 248 Coal Seam Gas, Water, Air Pollution and Communities 250 Regulating the Coal Seam Gas Industry 253 Conclusion 256 References 257 Part III: The Major Issues 260 Chapter 15: Mining and Sustainable Development 261 Introduction 262 Short History of Sustainable Development in the Mining Industry 263 Sustainable Development Principles and Frameworks 264 Social Licence to Operate 267 Implementing Sustainable Development 268 Measuring Sustainable Development 271 Mining, Sustainable Development and The Philippines: A Short Case Study 271 Conclusion 274 References 274 Chapter 16: Artisanal and Small-Scale Mining 278 Introduction 279 Describing ASM 279 A Positive Influence on Local Economies 281 The Negative Environmental Impact Caused by Unsafe Mining Practices 282 Health and Safety Concerns Among Artisanal Miners and Small-Scale Miners and Their Local Communities 284 Threats to the Security of Miners in the ASM Industry 286 Conclusion 288 References 289 Chapter 17: Mining, Corporate Social Responsibility, and Corporate Reputation 291 Introduction 292 Why Do Companies Adopt CSR Policies? 294 Why Is CSR So Challenging for the Mining Industry? 295 The Intersection of CSR, Corporate Reputation, and Political Risk 297 The ICMM and the Development Partnerships Concept: Beyond CSR? 299 Arnstein’s Ladder of Citizen Participation and Extractive Development Partnerships 302 Conclusion 304 References 305 Chapter 18: Mining and Climate Change 307 Introduction 308 Implications of a Changing Climate for Business and the Economy 309 Mining and Climate Sensitivity: Lessons Past and Current 311 Central Queensland, Australia 312 Mongolia 315 Where to Next? Future Prospects for Resource Development in a Changing Climate 318 Recognise the Complexity and Inter-Linkages that Underline Climate Change 320 Recognise Climate as a Relative, Instead of an Absolute Risk 320 Effective Leadership 320 Flexible, Open Institutions 320 Knowledge Repository 321 Conclusion 321 References 322 Chapter 19: Mining and Infrastructure 327 Introduction 328 Mining Infrastructure Projects and Risk in the Asia-Pacific Region 331 Future Infrastructure Challenges for Mining Companies in the Asia-Pacific Region 333 Conclusion 334 References 334 Chapter 20: Legacy Issues and Abandoned Mines 338 Introduction 339 Problems with Closure Planning 340 Global Initiatives on Mining Legacies 344 Mining Legacies in Australia 350 Learning from Legacies 352 Responsibility for Abandoned Mines in Australia 354 National Policy and Progress 355 Increased Awareness of Liabilities and Regulatory Black Holes 358 Case Study: Mount Morgan 360 Leading Practices from Successful Case Studies 362 The Maturity Model Applied to the Strategic Framework 363 Conclusion and Future Developments 364 References 369 Part IV: Mitigating Risk 375 Chapter 21: Investment Decision-Making Tools for the Mining, Oil, Gas, and Infrastructure Sectors 376 Mining Company Investment Decision-Making Tool 377 Oil and Gas Company Investment Decision-Making Tool 382 Infrastructure Investment Decision-Making Tool 387 Front Matter ....Pages i-xx Introduction (Terry O’Callaghan, Geordan Graetz)....Pages 1-15 Front Matter ....Pages 17-17 Determinants of Foreign Direct Investment in the Mining Industry (Vlado Vivoda)....Pages 19-33 Regulatory Regimes, Foreign Mining Investment, and Risk in the Asia-Pacific Region: Comparative Evaluation and Policy Implications (Terry O’Callaghan, Vlado Vivoda)....Pages 35-48 Property, Politics, and Power: Theorising Political Risk in the Mining Industry (Daniel Feher)....Pages 49-64 Social Risk and Business Risk in Mining Projects (Geordan Graetz, Daniel M. Franks)....Pages 65-83 Security of Resource Supply and the Obsolescing Bargain (Tom Johnson)....Pages 85-104 Mining and Human Rights (Eboni Tiller)....Pages 105-119 Mergers and Acquisitions: The Politics of Megadeals in the Mining Industry (Vlado Vivoda, Geordan Graetz)....Pages 121-138 Front Matter ....Pages 139-139 Iron Ore (Richard Leaver)....Pages 141-153 Coal (Philip Crowson)....Pages 155-175 Rare Earth Elements (Ming Hwa Ting)....Pages 177-187 Natural Gas (Vlado Vivoda)....Pages 189-215 Copper (Philip Crowson)....Pages 217-236 Coal Seam Gas (Cristelle Maurin)....Pages 237-250 Front Matter ....Pages 251-251 Mining and Sustainable Development (Glen Corder)....Pages 253-269 Artisanal and Small-Scale Mining (Tamsin Scholz)....Pages 271-283 Mining, Corporate Social Responsibility, and Corporate Reputation (Terry O’Callaghan, Belinda Spagnoletti)....Pages 285-300 Mining and Climate Change (Vigya Sharma)....Pages 301-320 Mining and Infrastructure (Tom Johnson)....Pages 321-331 Legacy Issues and Abandoned Mines (Corinne Unger)....Pages 333-369 Front Matter ....Pages 371-371 Investment Decision-Making Tools for the Mining, Oil, Gas, and Infrastructure Sectors (Terry O’Callaghan, Vlado Vivoda)....Pages 373-387