Downstream Beneficiation of Extractive Resources

There is a growing sense among the ‘emerging’ natural resource-producing countries that the raw materials should be processed domestically rather than being exported in its unprocessed form. Downstream beneficiation is considered an opportunity to develop the domestic economy by creating jobs, enhancing skills and diversifying the economy. Large incentives are often offered to investors to build ‘first degree’ downstream industries such as steel plants, aluminum smelters or oil refineries. Yet little has been written about the prerequisites for such policies to succeed and the extent to which downstream beneficiation achieves the intended economic and social goals. This research project aims to fill this gap. The case studies of Australia, Oman, South Africa and Ukraine have been reviewed to assess the economic prerequisites and policy measures that have been used to attract investment in the steel industry. A policy paper summarizing the findings from these case studies will follow shortly, with particular attention being placed on whether having iron-ore has played an important role in these countries.

CCSI has started the same analysis in the context of the oil-refinery value chain. The first case study published is Nigeria. The second and third ones will be Saudi Arabia and Singapore.

Drawing on five case studies (Australia, Botswana, Indonesia, Nigeria and Singapore), CCSI provided the Inter-Governmental Forum with guidance on how to develop downstream policies. The result is incorporated into this broader guidance on local content, here.

CCSI is also researching other ways to leverage extractive industries to enhance the economic capability of the host countries. See our pages on Employment from Mining and Investments in Land for Agriculture, Fostering Knowledge and Technology Spillovers of Extractive Industries, Local Content Laws & Contractual Provisions, and Conceptualizing Economic Linkages to the Resource Sector. Also see our pages on the Mine of the Future to understand the future of linkages under automation, and the impact of trade and investment treaties constraining the policy space on linkage creation.