planning. It can encourage fiscal discipline and long-term planning about how much of the resource wealth to consume and how much to save or invest.5 The challenge for governments is to take the finiteness of presently identified resources into account in their domestic planning and in their dealings with foreign investors, rather than to prepare for some kind of unlikely “resource apocalypse” when exhaustion occurs. Prominent political profile
Long viewed as strategic because of their pervasive influence on the economy and the scale of the revenues they generate, the petroleum and mining sectors have always attracted political attention. In certain circumstances, this attention can frustrate, or at least increase the difficulty of introducing, good sector management practices (van der Ploeg and Venables 2009). Transparency may present challenges to both governments and investors but helps diminish the risk of rumor and speculation among citizens about resource wealth management.
Enclave status
The production of minerals and hydrocarbons is often done in economic areas that are small in scale and geographically limited, with relatively few linkages to the rest of the economy. For offshore petroleum (both oil and gas), the remoteness from centers of population is even more evident. There is generally agreement now that the challenge for governments and investors is to ensure that such investments are designed or shaped to trigger wider developmental impacts. Lack of location mobility
In contrast to many other economic sectors, the extractives industries have few choices about locations. They have to locate where the resource is, increasing the prospects for conflict. This feature underlines the importance of community and local engagement if a project is to enjoy a sustainable relationship in the long term. Innovation
Both hydrocarbons and mining industries are characterized by a high degree of innovation. In the former, for example, the introduction of hydraulic fracturing, or “fracking,” on a commercial scale has made their extraction more similar
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to conventional mining. By contrast, most innovation in mining comes in the form of low-key incremental improvements in existing processes. Disruptive technologies are uncommon. The development of solvent-extraction electro-winning in copper production stands out as an exception. It has increased processing efficiency significantly, and, as a result, production has continued to increase in spite of a decline in the quality of grades of ore mined. Mining does however show a trend toward becoming higher tech: in Western Australia iron ore mines make extensive use of driverless trucks, and more and more underground mining is being carried out remotely. The greatest challenge to governments lies in the unexpected implications of innovation for policy design. For example, unconventional oil and gas discoveries on a large scale in the United States have implications for coal use in Asia and for the prospects for new gas discoveries in East Africa. 3.3 KEY DIFFERENCES OF THE INDUSTRIES Differences within the extractives sectors
It is a mistake to assume too much homogeneity within each of the main extractives sectors. Within the hydrocarbons sector, there are significant differences between oil and natural gas and between conventional and unconventional hydrocarbons. Within mining, diversity is significant. In the small-volume, high-value category there are gemstones, gold, and the platinum group of metals. In the high-volume, low-value category are the industrial minerals such as coal, iron ore, copper, nickel, tin, bauxite, and soda ash, for example. There are also construction materials such as sands, gravels, granite, and dimension stone. Part II of the Sourcebook makes every effort to note these distinctions and explain their significance. The many differences ensure that very few one-size-fits-all prescriptions or options are feasible. Differences of degree
Some of the differences among the EI sectors are matters of degree rather than of quality. For example, all of the EI sectors will leave environmental and social footprints, but some will be larger than others. Historically, the mining sector has been the most contentious in this regard, because its operations are entirely land based, often involve moving large masses of land, and affect local communities living or working in the area, sometimes over very long periods. However, there are exceptions, with environmental degradation from oil spills in sensitive
