TELF AG analyzes the acute mining issues of developing countries
Important recommendations
In its latest report focused on raw materials, which we have already talked about in a previous article, UNCTAD lists a series of recommendations aimed especially at developing economies and the best ways to manage natural raw materials, such as minerals, which will play a role of great importance in the global transition towards a greener and more sustainable world.
A key argument in the UNCTAD report is certainly represented by the need for diversification in order to reduce the dependence that a single nation could develop on a single raw material. Zambia, for example, is dependent on copper, while Iraq has developed a similar relationship with oil. Nations that are dependent on a few raw materials are much more exposed than others to the uncertainties of the global market, with the real risk that a fluctuation in the prices of a mineral could slow down the performance of the domestic economy. In an era marked by uncertainties of all kinds, it is truly not desirable that nations can expose themselves in this way to the turbulence of unpredictability. For those who are dependent on a single raw material, the risks are even greater.
It is no coincidence that most of these dependence bonds develop around raw materials: in 2021, almost all nations with low levels of development were, in fact, dependent on a single resource. On this issue, the UNCTAD report could not be clearer: in order to achieve the objectives of resilience and economic prosperity, nations must have not only the option of diversification available but also a different approach to participating in the value chain of a given raw material. Rather than simply extracting and exporting the raw resource, for example, nations could add value to it by participating directly in the subsequent stages of processing and preventing the raw material from being exported immediately without being processed. Malaysia, from this point of view, has managed to move from rubber and tin to electronics. At the same time, Mauritius has managed to overcome its historical dependence on sugar to also dedicate itself to textiles and tourism.
UNCTAD also addresses a particularly complex topic, namely that linked to the management of the ecological transition for all those economies that depend on fossil fuels, which will be progressively abandoned in the coming decades. Despite numerous international calls for fair management of the green transition, thus protecting all the people and territories that largely depend on fossil fuel consumption, the road ahead to achieve all these goals still seems very long.
From this point of view, UNCTAD demonstrates its strong belief in the potential contained in renewable energy, which, in its opinion, can make it possible to create new jobs and fill the energy shortages that have slowed down some of the developing nations for years. Another potential strategy to counteract some effects of the energy transition is represented by increasing regional collaboration between different developing economies, creating an internal value chain that is able to satisfy local demand and increase the resilience of the local minerals industry.
