This paper discusses the relationship that exists between national governments and the mining sector which is determined by mining laws, heath and safety regulations, environmental regulations, the fiscal regime, the related institutional framework, as well as government services provided to the mining industry. The paper also discusses the external factors that influence this relationship, including commodity price fluctuations, exchange rates, natural disasters, and cost of capital, and makes suggestions on how mineral wealth can be used for sustainable economic, social and environmental development. It is found that while declining commodity prices negatively affect mining operations of all scales, capital-intensive large-scale mining companies are more vulnerable than ASM operators with negligible fixed costs.
Bannock Consulting Ltd. Vulnerability of Artisanal and Small Scale Mining to Commodity Price Fluctuation. PAPER 4: An examination of the relationship between the mining sector (large-scale, small-scale and artisanal) and national governments and how external shocks impact that relationship. (2005) 35 pp.