Mapping the Bonanza: Geographies of Mining Investment in

an Era of Neoliberal Reform*

Gavin Bridge
Syracuse University
Geographic analyses of how national policies of economic liberalization influence global patterns of economic
activity often draw their conclusions from studies of the paradigmatic sectors of manufacturing and, to a lesser
extent, services. There is, by contrast, relatively little work examining how neoliberal policy reforms in the
developing world may be driving changes in the geography of primary sector (i.e., extractive) activities at
the global scale. This article presents and analyzes new data on direct investment in the international mining
industry. It reports methods and results from a research project to systematically map and evaluate changes in the
commodity mix and geographical spread of mining-related investment in the world economy since 1990. It
confirms and quantifies what was hitherto anecdotal evidence of a geographic shift in investment during the
1990s away from mature targets toward a small number of rising stars in the developing world, following the
adoption in many countries of neoliberal economic policies from the mid-1980s onward. However, the findings
challenge conventional interpretations of this shift as an investment bonanza in the periphery and highlight
how recent investment trends are highly specific in geographical scope, concentrated within a few commodities,
and how the allocation of investment between established and emerging targets is variable over both time and
space. Key Words: investment, mining, globalization, economic liberalization.

Introduction
uring the late 1980s and the 1990s many
states adoptedor ratcheted uppolicies
of economic liberalization. A prima facie case
can be made that such policies will reshape prevailing patterns of economic activity, by reducing barriers to the movement of capital and
goods and throwing into question prevailing
calculations of the relative risks and rewards of
investment. Neoliberal reforms can be expected
to drive the emergence of new geographies of
investment, production, and trade. To date,
however, geographic analyses of the effects of
economic liberalization on patterns of global
economic activity have typically drawn their
conclusions from studies of the paradigmatic
sectors of manufacturing and, to a lesser extent,
services (see, e.g., Kenney and Florida 1994;
Thrift and Leyshon 1994; Dicken 1998). By
contrast, relatively little work has addressed the
geographical restructuring of FDI in the primary sector.1 Yet resource extraction indus-

trieslike mining, oil and gas, forestry, and

commercial fishingare currently undergoing
a round of technological, organizational, and
regulatory shifts. Taken together, these shifts
are driving the emergence of new geographies
of resource extraction (Barham, Bunker, and
OHearn 1994; Carrere and Lohmann 1996;
Gedicks 2001; Evans, Goodman, and Lansbury
2002). This article makes a small contribution
toward redressing the neglect of the primary
sector by analyzing the geography of recent investment in the international mining industry.
Specifically, it reports methods and results of
research to map and systematically evaluate
changes in the commodity mix and geographical spread of mining investments during the
period 19902001.
A rapid increase in the intensity (volume) and
extensity (geographical scope) of FDI characterize the restructuring of the world economy
over the past two decades (Held et al. 1999).2
FDI flows have increased three times faster than
the rate of growth of international trade since

* A Junior Faculty Development Grant from the University of Oklahoma supported initial stages of this research. An NSF Research Experience for
Undergraduates (REU) Supplement Grant supported additional research assistance by April Rankin. I thank Julie Parker for her work developing and
mapping the pilot dataset, Gerardo Castillo and Todd Fagin for their assistance extracting data from MineSearch and producing maps, and Joe Stoll
for his help with graphics. Russell Carter, Graham Davis, Magnus Ericsson, Rob Krueger, and Gregory Theyel provided insightful discussion and/or
helpful comments on a much earlier version of this article. Special thanks to Bakes Mitchell at the Metals Economics Group for his interest in this
project and for continuing discussions on the geographies of mining investment. I would also like to thank three anonymous referees for their
comments. The usual disclaimers apply.

The Professional Geographer, 56(3) 2004, pages 406421 r Copyright 2004 by Association of American Geographers.
Initial submission, April 2002; revised submission, November 2002; final acceptance, February 2003.
Published by Blackwell Publishing, 350 Main Street, Malden, MA 02148, and 9600 Garsington Road, Oxford OX4 2DQ, U.K.

Mapping the Bonanza

the 1980s, suggesting that the internationalization of production is driving global economic
interdependence beyond that due to trade alone
(UNCTAD 1998, xvii). While FDI fell during
the early 1990s in response to an economic
slowdown in most major markets, it subsequently rebounded to a new high of over $1.4
trillion worldwide in 2000 (UNCTAD 2002).
The majority of FDI continues to be between
the industrialized countries of the Triad
(Western Europe, Japan, United States), yet
FDI flows have become increasingly significant
for many developing countries. FDI to developing countries increased 12-fold between 1980
and 1998, and, by the end of the 1990s, FDI represented approximately half of all capital flows
to developing countries (World Bank 1999).
Mining represents a small proportion of total
investment flows: mining and oil account for
around 4% of global FDI, compared to 47% in
services and 42% in manufacturing (UNCTAD
1999, 420). Natural resources may have declined in significance as a determinant of foreign
investment since the 1950s, yet primary commodities are often the only significant target for
foreign investment in the majority of developing countries that have been unable to attract
FDI in the manufacturing and service sectors
(UNCTAD 1998). For some developing and
transition economies, therefore, the mineral
sector may represent the primary vehicle for attracting FDI. For example, investments by Australian and Canadian gold mining concerns in
the late 1990s represented over 60% of total
FDI inflows to Tanzania (Bank of Tanzania
2001), while over two-thirds of recent foreign
direct investment in Angola and Kazakhstan
have been in oil and gas development. Although
mining investment represents only a small component of total investment flows worldwide,
change in the intensity, timing, and geographical distribution of these flows can have significant socioeconomic and environmental
consequences for developing countries.

Economic Liberalization: Opening

New Ground
In the period since 1985 more than 90 states
have adopted new mining laws or revised existing legal codes in an effort to increase (and in
some cases, initiate) foreign investment in the

407

mining sector of their economies (Otto 1997;

Warhurst and Bridge 1997; Naito, Remy, and
Williams 2001). The promulgation of a new
mining code is frequently but one part of a
broader package of neoliberal administrative
and fiscal reforms. Their combined effect, however, is to open up new opportunities for the
international mining industry in areas that were
formerly either closed de jure because of political restrictions, or closed de facto since politicaleconomic risk was sufficiently high to deter
prudent investment. National policies of macroeconomic stabilization, nondiscriminatory
treatment (between domestic and foreign firms),
and increased transparency in regulation are
likely to stimulate all economic sectors, yet
they are particularly significant for mining for
two reasons.
First, as extractors of nonrenewable resources,
mining firms necessarily consume their resource base during production so that, over
time, ore grades in established mining regions
become degraded. Acquiring the rights to new
land (for exploration) and to new resource deposits (for mine development) is one of the
principal means by which mining firms renew
their resource base and establish their competitive position. By increasing the supply of land
available for exploration and development, liberalization during the late 1980s and early 1990s
fueled a rush to identify, acquire the rights
to, and, in some cases, develop world class
(i.e., long-life, large-volume, relatively low-cost)
mineral deposits during the mid-1990s. Second, mining can be a highly capital-intensive
endeavor and typically requires the raising of
large volumes of capital for mine development.
The ability to raise such capital is dependent
on reliable access (via legally defined property
rights) to the target mineral resource. Legal
issues of land tenure therefore assume considerable significance. To the extent that liberalization clarifies land tenure and decreases the risks
associated with owning property (by, for example, providing market-based mechanisms for
accessing and transferring mineral rights), it
also addresses issues of fundamental concern to
mining investors.
The cumulative effect of the legal and fiscal
reforms adopted by many emerging markets has
been to change perceived risk/reward ratios for
investing in different geologically prospective
environments. As the perceived risk of investing

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Volume 56, Number 3, August 2004

in emerging markets like Peru, Papua New

Guinea, or Mongolia has declined, so the relative risk associated with traditional investment
targets (like North America or South Africa)
has increased.3 This repatterning of risk/reward ratios following liberalization has driven
firms to reevaluate the geographical location
(and diversity of locations) in which they invest.
For example, established Canadian, Australian,
European, and American mining firms have increasingly sought to internationalize production by investing outside the traditional home
region (Maponga and Maxwell 2000).
This geographical restructuring of capital
flows in the mining sector is fueling a dialogue
within industry, academia, and public policy
circles about the opportunities (e.g., for economic development, capacity building, and
technology transfer) and challenges (e.g., in
managing environmental and social impacts,
volatile revenue streams, and the return of resource colonialism to the global periphery)
raised by the liberalization of investment regimes for mining (see, e.g., Conservation International 1998; French 1998; Gedicks 2001;
Muradian and Martinez-Alier 2001; Evans,
Goodman, and Lansbury 2002; Starke 2003).
No systematic, comparative analysis of the intensity or extensity of mining investment has
been undertaken, despite the potential such a
geographical switching of investment has for
driving local and regional socioecological
change. Annual surveys of exploration activity
by commodity and region are available (e.g.,
Metals Economics Group 2001), but this mapping of upstream exploration expenditures has
not been accompanied by similar analyses of the
considerably greater capital investments in
mine development. And it is these larger, more
permanent investments in mine development
that are of particular interest to those seeking to
understand the role of mineral investment
in driving socioeconomic and environmental
change at local and regional scales (Bridge
2002). Existing research on the geography of
mine development typically takes the value
or volume of production as its primary metric
rather than the investment that enables
such increases in output (see, e.g., Porter
and Sheppard 1998; Odell 1988; Ericsson and
Campbell 1996; Rees 1990; Peck, Landsberg,
and Tilton 1992). This article describes efforts
to plug the analytical gap between upstream anal-

yses of exploration activity and downstream

analyses of mine output through the development of a robust dataset capable of determining
the extent to which mining capital has preferentially targeted new opportunities for investment in the global South.

Methodology
Determining the value, commodity mix, and
geographic spread of investment in mining
presents a methodological challenge that belies
its simplicity as a research question. The difficulty of obtaining compatible and comparable
data is widely acknowledged as a substantial
challenge to cross-country comparative research on foreign direct investment (UNCTAD
1994, iv). While many countries collect investment data at the national level, benchmark definitions of investment and the methods of
collection and accounting vary considerably between countries. One way to address this problem is to use data collected at the project level
(i.e., at the scale of the individual mine) rather
than at the national aggregate level. The capital
intensity of contemporary mining and the relatively small number of new projects commissioned each year make it feasible to collect data
for all new mineral developments on an annual
basis. Collecting project-level data substantially
increases the number of data points involved but
has two principal advantages over national-scale
statistics: first, to the extent that project level
data utilize standardized definitions of projects and capital expenditures, they avoid the
pitfalls of intercountry comparisons using national figures on foreign direct investment; and
second, they provide a much greater degree of
spatial resolution, enabling accurate location
and comparison of intracountry, as well as intercountry, variation in investment.
A preliminary scoping study located four
potential sources of project-level investment
data, each offering differing combinations of geographic spread, narrative description, temporal
coverage reliability, and accuracy.4 MineSearch,
a database compiled by an information and consulting company, Metals Economics Group,
based in Halifax, Nova Scotia, was selected as
the most appropriate for this study. Although
MineSearch typically is not used for comparing
investment flows over time or space, the organization of the database, the manner in

Mapping the Bonanza

which data are acquired, its geographic and
temporal coverage, and the narrative histories
accompanying each entry make it possible to
extract reliable information on capital expenditures for individual mines. MineSearch contains
over 7,500 records of mining projects at all
stages from initial exploration through production to closure. As indicated in Table 1, commodity coverage is broad and consists of 12
commodities that include base metals (copper,
nickel, zinc, lead, tin) and precious metals (gold,
silver, platinum, and palladium) as well as a small
number of specialized minerals (diamonds,
molybdenum, and cobalt).
Data from MineSearch were screened to extract only those mining projects that were either
inor had completedthe feasibility stage in
the period 19902001 (Table 1).5 The rationale
for utilizing the feasibility phase to conduct an
initial screening of the data is that the feasibility
stage represents a threshold in the rate and volume of capital inflow to a specific project. Prior
to feasibility, capital flows are relatively small
and are associated predominantly with exploration: preparation of a bankable feasibility study,
however, requires a substantial commitment of
resources to a specific project which, if given the
go-ahead, then initiates major capital expenditures in the preproduction and production
phases. As indicated in Table 1, the screening
process generated a dataset of 2,300 nonferrous
metals and precious mineral investments. These
data were transferred into commodity-specific
Excel files, which then could be manipulated,
analyzed, and linked to ArcView GIS to enable
Table 1 Data Summary

Mineral
Commodity

Number of Records per

Screened
Mineral as
Number of
Records
Percentage of
Records in
Used in
All Screened
MineSearch Analysis
Records

Cobalt
Copper
Diamonds
Gold
Lead
Molybdenum
Nickel
Platinum
and Palladium
Silver
Tin
Zinc

22
1,167
359
4,454
95
35
289
128

12
433
79
1,188
38
13
110
29

1
19
3
52
2
1
5
1

378
65
604

102
52
246

4
2
11

Total

7,596

2,303

100

409

mapping of investment flows at a range of spatial

scales (e.g., mine-by-mine, country, continent).
Capital expenditures, which are typically
recorded as a single capital cost figure in MineSearch (e.g., $550 million), were broken up
and allocated across a number of consecutive
years according to an approximately normal
distribution, depending on the size of the
project and the narrative work histories accompanying each entry.6 Expenditures reported
in alternate currencies (e.g., rand, rubles, or
Canadian dollars) were converted to U.S. dollars, and all expenditures were normalized for
the effect of inflation using a standard price
deflator. Extracted and modified data were then
independently checked against MineSearch to
ensure consistency.
Significance and Limitations of the Data
By extracting, assembling, and normalizing
project-level data on global mining investment
into a format that can be queried, analyzed, and
mapped, the dataset described here provides a
way of overcoming the analytical limitations of
existing data sources. The design of the primary
data source for this research (MineSearch)
nonetheless constrains the project in a couple
of specific ways. First, MineSearch is restricted
to the mining phase of mineral production and
therefore excludes investments in downstream
phases such as smelting and refining.7 Second,
since the main function of MineSearch is to
track exploration activity, the commodities it
covers are those of interest to the exploration
community. Table 1 indicates how this can produce some significant gaps in the databases
commodity coverage, most notably the absence
of iron ore or bauxite projects (as well as other
mineral commodities of interest such as oil
shales, coal, uranium, and oil). Neither iron ore
nor bauxite creates much excitement in the exploration community, yet both are major minerals (in terms of aggregate output and trade)
that annually receive significant investment.
Furthermore, the development of new iron
ore and bauxite deposits has the potential to
drive socioeconomic and environmental change
at the local and regional levels (e.g., Bunker
1985; Hall 1989; Howitt 1992; Roberts 1995;
Ciccantell 1999).
In summary, the investment values reported
here should be regarded as conservative estimates of investment activity. Since it was

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Volume 56, Number 3, August 2004

only possible to record investments that (a) had

identified capital costs and (b) that, from the
available information, could be verified as having been actually expended at the site, the investment figures reported below are best regarded
as minimum estimates. Actual amounts could be
higher, although verification of these figures
using other measures indicates that they are a
good approximation. The utility of these figures
lies chiefly in their capacity for making comparisons between the value of investment over
time, between different commodities, and across
different geographical units. With these qualifications in mind, the following analysis of the
commodity mix and geographical spread of
mining investment following economic liberalization is based on the best available comparative data.

Discussion of Results
The Intensity of Mining Investment:
Distribution of Investment over Time
The temporal profile of investment in the
mining sector during the period 19902001 confirms anecdotal assessments of a major investment boom during the mid-1990s (Figure 1).
Over $90 billion was invested over the period
19902001 with annual totals ranging from a
low of $3.9 billion to a high of $11.9 billion.
After declining gradually in the early 1990s, aggregate investment flows tripled in the four-year
period leading up to 1997 to peak at $11.9 billion. Equally clear is the short-lived nature of
this boom; investment flows shrank as quickly as

they rose in the four years after 1997, so that by

2001 investment had reached its lowest ebb for
the entire period. Investment data for individual
commodities largely replicate this trend. Figure
1 includes a curve for gold investment as an example. The temporal profile for gold, which
represents between 23% and 57% of aggregate
investment in any given year, substantially mirrors the boom-bust profile of the aggregate investment curve.
The volatility of mining investment is a response to not only the notorious volatility of
mineral markets, but also to the vagaries of the
market for finance capital. Thus the decline in
capital flows in the mining sector during the
early 1990s was a result of falling prices for
many minerals and the failure of many junior
mining firms to secure sufficient capital after the
equity market crash of 1987 (E&MJ 1987, 35;
E&MJ 1989, 25). A recession in major end-use
markets drove prices down further, aggressively
eroding profit margins for most producers.
This had a chilling effect on mining investment
activity at the start of the 1990s, and many
projects were either postponed or scaled back
in size. Reviewing activity over the previous
couple of years, the industry press reported in
1994 that the mining industry has seemingly imploded (E&MJ 1994, 25). Conversely,
the tripling of investment flows after 1994 is
associated with rising mineral prices, further
mining law reforms, and the strength of equity
markets and low domestic interest rates in core
economies. Together, these increased the relative attractiveness of mining as an investment

Figure 1 Global mining investment flows (19902001), aggregate trend versus gold.

Mapping the Bonanza

411

Figure 2 Regional investment flows as a percentage of global investment, 19902001.

target and fueled private capital flows into

the sector.
The Extensity of Mining Investment:
Continental Scale Shifts
Popular narratives of a global mining bonanza
notwithstanding, the spatial distribution of
mining investment is remarkably sticky.
Countries and regions with long histories of
mineral exploration and development (e.g.,
United States, Canada, Australia, South Africa)
continue to see significant investment activity.
While these established investment targets
remain strong in absolute terms, there was a
noticeable decrease in the proportion of investment flows going to these mature mining regions during the period 19902001. During the
boom years of the mid-1990s, investment was
preferentially channeled toward new targets in
the global South (Figures 2 and 3). As a result, a
small number of countries in the global South
have seen a mining investment boom. These
flows to nontraditional targets, however, are
concentrated in just a handful of countries and
are restricted to one or two commodities (specifically copper and gold). The spatial evolution
of investment, therefore, does not reflect a
gradual or uniform diffusion away from estab-

lished cores towards the periphery. Rather,

recent patterns of investment have actively contributed to a process of uneven development as
both existing spatial inequalities in investment
are consolidated and new patterns and scales of
inequality emerge.
At the continental scale, traditional targets
like North America and Australasia have seen
their share of investment decline during the
1990s (Figure 2), even while their absolute flows
have remained strong (Figure 3). Investment
flows to these two regions declined from more
than 50% of worldwide flows in the early 1990s
to around 25% by 2001. As Figure 2 indicates,
their relative decline is directly related to the
increase in flows to South America and, to a
lesser extent, South East Asia and Africa. South
America increased its share of worldwide investment from 18% to 39% between 1990 and
2001, while the late 1990s saw Africa increasing
its share from 12% to 28%. South East Asia
predominantly Indonesiaexperienced a bubble of growth in investment flows between 1996
and 1999 associated with the development of a
number of megaprojects (such as Newmonts
$2.0 billion copper-gold mine at Batu Hijau on
the island of Sumbawa and Freeports coppergold Grasberg mine in Irian Jaya). Europe,
whose dominance in global mining had been

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Volume 56, Number 3, August 2004

Figure 3 Global investment flows by world region.

largely eclipsed by North America and Australia

as early as the mid-19th century, remained relatively constant with less than 10% of investment
flows, although absolute flows doubled in the
mid-1990s with the development of a handful of
large mines in Spain (Los Frailes, lead/zinc),
Ireland (Lisheen, zinc), Kyrgyzstan (Kumtor,
gold) and Uzbekistan (Zarafshan, gold).8
Figures 2 and 3 provide evidence that spatial
switching of investment capital is taking place at
the continental scale. While traditional targets
remain strong in absolute terms, an increasing
proportion of the investment stream during the
boom was targeted at alternative destinations in
South America, Africa, and Southeast Asia. Of
the 25 largest single capital investments during
the period, 20 were outside the mature targets of
North America and Australia, with 12 in South
America alone (Table 2).
The Extensity of Mining Investment:
Country Scale Shifts
The geographical concentration of mining investment within a handful of countries is par-

ticularly apparent when investment is mapped

country by country. More than 90 countries
received mining-related investment during the
period 19902001, yet more than 80% of global
mining investment targeted just 10 countries
(Table 3). The leading four countriesChile
(18%), United States (13%), Australia (12%),
and South Africa (9%)serve as the destination for over half the total investment in the
period.
This concentration of investment within a
specific country (or group of countries) can be
even more extreme when individual commodities are considered. Table 4 summarizes the way
investment in the leading four commodities
(copper, gold, nickel, and zinc) is distributed
among the top five targets for each metal. Nickel and copper are the most concentrated, with
nearly 80% of investment within just five countries; in the case of nickel just two countries
(Australia and Canada) account for over 55% of
investment. Gold is among the least concentrated, with the top five investment targets
representing around 60%.

Mapping the Bonanza

413

Table 2 Top 25 Mine Investments by Value (19902001)

Rank
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25

Project
Antamina
Bingham Canyon
Batu Hijau
Grasberg
Collahuasi
Betze-Post
Escondida
Ok Tedi
Olympic Dam
Los Pelambres
Bajo de Alumbrera
El Abra
Porgera
Lihir
Candelaria
Murrin Murrin
Radomiro Tomic
Obuasi
Leeudorn
Los Bronces
Soroako
Zaldivar
Yanacocha
Morenci
Chuquicamata

Country
Peru
United States
Indonesia
Indonesia
Chile
United States
Chile
PNG
Australia
Chile
Argentina
Chile
PNG
PNG
Chile
Australia
Chile
Ghana
South Africa
Chile
Indonesia
Chile
Peru
United States
Chile

Figure 4 summarizes the geographical distribution of mining investment worldwide. It

indicates that a large and diverse group of countries received some level of mining investment
during the 1990s, but that the bulk of investment was targeted at a few countries in North
and South America, southern Africa, and Australasia. Fourteen countries received over $1
billion during the period. These leading targets
can be broken out into three categories or tiers
based on the absolute value of investment. In the
first tier are three countries that each received
over $10 billion (Chile, $15.9 billion; United
States, $11.4 billion; Australia, $10.9 billion).

Investment (19902001)
US$ millions

Target Metal

2,350
2,019
1,981
1,936
1,889
1,787
1,703
1,688
1,461
1,428
1,350
1,231
1,207
1,028
995
977
971
872
821
787
774
721
716
709
704

Copper
Copper
Copper
Copper
Copper
Gold
Copper
Copper
Copper
Copper
Copper
Copper
Gold
Gold
Copper
Nickel
Copper
Gold
Gold
Copper
Nickel
Copper
Gold
Copper
Copper

The mineralogically prospective and relatively

low-risk jurisdictions of the United States and
Australia are long-established targets for investment, but Chile, although a destination for
British and American mining capital from the
late 19th century until the nationalization of
Chilean mines by Salvador Allende in 1971,
only recently emerged as a contemporary investment target for multinational mining firms.
In 1990 Chile received less than $1 billion in
mineral investment, but by 1997 investment
had increased to nearly $3 billion, with Chiles
share of global mining investment rising from
less than 14% to more than 24%. Chiles high

Table 3 Top 10 Targets for Mining Investment by Value, 19902001

Rank
1
2
3
4
5
6
7
8
9
10

Country

Value of Investment
(US$ Billion, 19902001)

Chile
United States
Australia
South Africa
Canada
Peru
PNG
Ghana
Argentina
Mexico

15.9
11.4
10.9
7.8
6.8
5.8
4.0
1.8
1.7
1.6

17.6
12.6
12.1
8.6
7.5
6.4
4.4
2.0
1.9
1.8

17.6
30.2
42.3
50.9
58.4
64.8
69.2
71.2
73.1
74.9

TOTAL

90.2

100

100

Percentage

Cumulative Percentage

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Volume 56, Number 3, August 2004

Table 4 Distribution of Investment among Top Five Country Targets

Cumulative Percentages for Each Commodity
Rank
1
2
3
4
5

Copper
Chile
United States
Peru
Indonesia
Australia

Gold
38.9
49.6
60.3
71.0
79.9

United States
South Africa
Australia
Canada
Papua New Guinea

ranking is substantially due to its position as the

primary target for copper-related investment:
over 90% of investment in Chilean mining is in
copper, and Chile received 39% of worldwide
copper investment on average during the period
19902001 and up to 52% in the peak years of
the mid-1990s. The persistence of the United
States in this first tier reflects the gold boom
in Nevada that began in the 1980s and continued through the 1990s: the United States received a fifth of all gold investment worldwide,
while over half the mining investment in the
United States has been in gold with copper accounting for a further one-third.
In the second tier are countries like South
Africa, Canada, Peru, Indonesia, and Papua
New Guinea, which each account for between
$4 billion and $8 billion. Mining investments in
Peru, Indonesia, and Papua New Guinea are
focused almost exclusively on copper and gold

Nickel
18.9
32.7
42.6
52.3
59.5

Australia
Canada
Indonesia
China
Venezuela

Zinc
30.8
55.8
65.0
73.1
79.4

Australia
Canada
Spain
Ireland
United States

27.1
40.2
50.4
60.4
69.6

projects. These two metals account for 86% of

investment in the minerals studied in Indonesia,
91% in Peru, and 98% in Papua New Guinea.9
South African investments are equally concentrated, but chiefly target gold and platinumgroup elements, which together account for
over 90% of the mining investment flow. Investment in Canadian mining, however, has
been more diverse. Like South Africa, gold
is still the dominant target mineral (39%), but
other targets include nickel (27%), copper
(11%), diamonds (11%), and zinc (9%). Canada ranked number two in nickel and zinc
investment (Table 4), and number one ( principally as a result of successful exploration activity
in the Northwest Territories in the early 1990s)
as a destination for diamond investment ($839
million) during the period, receiving nearly
twice the value of investment to that of the
second ranked country, Botswana ($477 million).

Figure 4 Global mining investments by country, 19902001.

Mapping the Bonanza

415

Figure 5 Mature players and rising stars: Investment flows to selected countries.

In the third tier are a handful of countries with

between $1 and $2 billion in mining inflows
each year (Ghana, Argentina, Mexico, China,
Brazil, and Russia). Mining investment in these
countries typically consists of a relatively small
number of mid-to-large-size mining projects.
Nearly half of Ghanas $1.8 billion, for example,
is represented by Ashanti Goldfields Obuasi
mine, while over three-quarters of Argentinas
$1.7 billion was invested in the Bajo de la Alumbrera copper mine.
Comparing Leading Investment
Targets over Time
While countries in each of these tiers are broadly similar in the value of investment over the
time period, a dynamic analysis of investment
flows in countries within the first and second
tiers indicates very different trajectories over
time. Figure 5 presents the temporal profiles of
mining investment for six countries that were
leading targets for investment during the 1990s.
The profiles suggest two classes of country.
Shown in black are three newly liberalizing
economies (Chile, Peru, and Indonesia) that
experienced sharp increasesand subsequent
decreasesin investment (referred to here as
rising stars), while shown in gray are three
countries with long histories of being open to
foreign mining capital (referred to here as mature players) that had less dramatic fluctuations
in mining investment over the period. Consider,

for example, the different experiences of the

United States and Chile. Investment in the U.S.
mining sector was relatively steady during the
first half of the decade, but declined after 1996
(mainly as a result of a decrease in copper investment). In Chile, however, investment tripled in the early to mid-1990s, but underwent a
dramatic decline after 1997. Thus the absolute
value of investment in Chile and the United
Statesthat is, the area under the lines in Figure
5may be similar, but the temporal profile of
investment in the two countries is quite different. Similarly, Canada, South Africa, Peru, and
Indonesia hosted investments of similar value
between 19902001, but the trajectories of Peru
and Indonesia differ markedly from those of
Canada and South Africa (Figure 5). Investment
in Peruvian and Indonesian mining quintupled
during the mid-1990s (and, in the case of Indonesia, underwent an equally dramatic decline in
the post-Suharto era), compared to more consistent and less flashy responses in South
Africa and Canada.10

Explaining the Patterns: Is Geology

Destiny?
Geographies of mining are inescapably a function of the location of mineral reserves. Such
truisms, however, need to be interpreted with
care for two reasons. First, as generations of

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Volume 56, Number 3, August 2004

resource geographers (e.g., Zimmerman 1951)

have pointed out, definitions of mineral reserves
are dynamic. Changing societal demands can
create new reserves, while viable reserves can be
discovered as a result of changes in the market
price and/or costs of extraction. The size, location, and value of workable mineral reserves,
therefore, are not static products of geological
and mineralogical processes, but are dynamic
phenomena derived through continual socioeconomic appraisal of physical matter. Exploration activity and/or the introduction
of technologies that dramatically reduce costs
can create mineral reserves in places where, to
all practical purposes, none previously existed.
For example, exploration in Canadas Northwest Territories during the late 1980s produced
North Americas first large-scale diamond reserves, driving an investment boom during
the 1990s that continues today. Second, while the
location of mineral reserves shapes the overall
pattern of investment activity, the distribution
of investment among countries hosting mineral
resources is a function of perceptions about the
relative risks and rewards of investing in different jurisdictions.11 Such evaluations are partly a
function of the location, size, and quality of ore
deposits,12 but they are also determined by the
perceived risks (economic, political, and technological) of making investments in a given jurisdiction. At any one point in time, therefore,
there is no one-to-one mapping by which the
level of mining investment in a particular jurisdiction can be read off its geology alone. For
example, Uzbekistan hosts approximately 10%
of world gold reserves (and ranks number three
after South Africa and the United States),
yet in the last decade it has received only 1%
of global gold investment. Similarly Congo,
which hosts substantial, high-grade copper
reserves, receives less than one-tenth of 1% of
global copper investment.
Geographies of mining investment, therefore, may be structured in outline by geology
but are socially mediated in their details. As a
consequence, mining geographies are dynamic.
Investment flows to a given jurisdiction can be
induced, accelerated, retarded, or halted as the
result of changes that effect that jurisdictions
risk/reward ranking relative to other potential
targets for investment. National policies of
economic liberalization have attempted to do
precisely this: reposition countries as more at-

tractive targets for mining investment activity

by improving their risk/reward ratio relative to
other jurisdictions. The evidence presented
above suggests that the policies of economic
liberalization adopted by a small group of countries (chief among them Chile, Peru, and Indonesia) have been successful in attracting the
interest of multinational mining capital.
Investment/Reserve Quotients
How can one distinguish between those jurisdictions in which economic liberalization has
enabled a mineral-rich region to capitalize on its
geological potential and those where it has been
less successful at scaling up inflows of investment? One technique is to compare a countrys
share of global investment in a particular mineral with its share of global reserves of that
mineral. This produces a modified location
quotient, where the denominator is the countrys proportion of global reserves of a particular commodity:
Investment Reserve Quotient

Investment in Commodity X in Country Y

Investment in Commodity X worldwide
Reserves of Commodity X in Country Y
Reserves of Commodity X worldwide

Using this formula, an investment/reserve

quotient can be calculated for individual countries for particular commodities. The performance of individual countries can be compared
against each other or over time by plotting the
quotients on a schematic continuum centered
on a hypothetical value of 1. Figure 6 illustrates
investment/reserve quotients for copper for a
sample of countries. Those located to the right
of this hypothetical fulcrum (i.e., with investment/reserve quotients greater than 1) are
countries going above and beyond the constraints of basic geology by attracting a greater
proportion of investment than would be expected based on their share of global reserves.
Those located to the left of the fulcrum (i.e.,
with an investment/reserve quotient of less than
1) are underperforming in the sense that they
have failed to attract investment in proportion
to their geological reserves.
Figure 6 illustrates how Australia and Papua
New Guinea have been particularly successful
at attracting copper investments in relation to
their geological base, while countries like the
Democratic Republic of Congo, Russia, and

Mapping the Bonanza

417

Figure 6 Selected investment-reserve quotients for copper.

China have underperformed, based on what

would be expected from mineral reserves alone.
The gap (either positive or negative) between
mineralogical potential and investment performance is indicative of the way that investment flows are socially mediated and are not the
product of geology alone. Reasons for underperformance vary from country to country. In
the Democratic Republic of Congo, for example, a combination of macroeconomic instability, civil war, and political turmoil continue to
deter investment in its sizeable, relatively highgrade copper reserves. In China, by contrast,
foreign mining investment has been retarded
less by concerns over macroeconomic or political risk and more because of the difficulty of
obtaining transferable and secure title to lands
and resources, a necessary precondition for
mining investment.13

Bonanza Geographies
The geographical restructuring of mining
investment over the past decade is frequently interpreted as a process of globalization through
which mineral-rich (but otherwise very poor)
economies in the developing world are experiencing an investment bonanza (Webster 1995;
Burns 1996). The analysis presented here provides broad support for the emergence of new
geographies of mineral investment as a result of
economic liberalization but also suggests three
significant caveats to the optimism of the bonanza thesis. First, investment has been highly
concentrated within a relatively small number
of preferred targets and not all liberalizing,
mineral-rich countries saw inflows of investment during the boom years. Thus the mining
boom of the mid-1990s did not erase uneven
patterns of mining investment but contributed
to new patterns of differentiation. For example,
while Chile and the Democratic Republic of
Congo/Zaire share long mining histories and
were both leading copper-producing countries
during the 1980s, their different experiences

with liberalization in the 1990s (Figure 6) has

increasednot decreasedthe contrasts between them.
Second, investment flows to mature targets
may have declined in relative terms during the
boom, but absolute flows to these regions remained flat in comparison to flows to the rising
stars. In other words, there is little evidence
to suggest massive disinvestment from longestablished mining regions. The relative shift in
investment toward developing economies,
therefore, reflects the way new investment is
preferentially targeted toward newly liberalizing economies during boom periods. Figure 7
provides evidence for this preferential shift in
the context of copper by comparing the distribution of investment between developed
and developing economies.14 The proportion
of global copper investment flowing to each of
the two classes is plotted for each year in the
period 19902001, and trend lines have been
added to the data. These demonstrate increasing divergence over the period. Whereas global
copper investment was split approximately
50:50 between the two classes at the beginning
of the 1990s, its current distribution is closer to
75:25 in favor of developing economies. This
apparent shift to the global South reflects the
way investment during the boom years has preferentially targeted those nontraditional locations in the developing world made newly
accessible through economic liberalization.
Interpretations of the bonanza as a withdrawal
from established targets and a stampede to the
global South are, therefore, wide of the mark.
Absolute flows of investment to mature targets
are in practice quite sticky when compared
with flows to developing countries and show
relatively little change during either boom
or bust.
Third, the inflow of mining investment to
newly liberalizing economies appears to be conditional on rising flows of investment overall. By
contrast, mature jurisdictions appear to provide
a consistent base-load type target that, in

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Volume 56, Number 3, August 2004

Figure 7 Distribution of copper investment between developed and developing economies.

comparison to the rising stars, are relatively

unaltered by the boom period. Any bonanza in
the periphery, therefore, is not only geographically circumscribed but also is limited to periods of rising spending overall. A significant
finding of this research, then, is that newly liberalizing economies may act as swing targets
for investment. Such targets receive greater
proportions of investment at times when increases in mineral prices and/or the availability
of project financing allows greater levels of risk
to be tolerated, but are preferentially drained
when the availability of funds decreases. When
the boom years ended after 1996, the geography
of annual capital expenditures resumed a pattern that was broadly similar to that of the early
1990s. The cumulative effect of preferential
spending on mining projects in the global South
during the boom, however, has significantly
changed the geography of installed capacity.
The bulk of new mines commissioned over the
past decade are in the global South (see Table 2,
for example), and it is from these mines that the
bulk of future production will come.
Mapping recent patterns of investment in the
mining sector provides a basic, yet arguably very
significant, step toward informing public debate
over the socioeconomic and environmental impacts of mining investment in emerging markets by indicating how policies of economic

liberalization have modified established geographies of investment. This study finds that the
number of mines and the value of investment
increased rapidly during the 1990s in mineralrich regions within a handful of emerging markets, notably Peru, Chile, and Indonesia. This
strongly suggests that the scale and intensity
of mining-related environmental impacts may
have increased substantially in these investment
hotspots.
It is not possible from the data presented
here, however, to determine what the specific
environmental effects of such fluctuations in the
value of investment will be. This is more than
simply a modest disclaimer and is intended to
highlight an important methodological point:
local and regional environmental change cannot
simply be read off the frequency and magnitude
of investment. The environmental consequences of mine development are not solely a scale
effect attributable to the value/volume of investment alone (Frederickson 1999). An investment of $500 million in an open-pit copper
sulphide ore deposit in forested highlands of
Papua New Guinea, for example, will have quite
different socioecological effects to an investment of similar value in the copper oxide deposits of the Chilean Atacama. The political
economy of civic involvement, the mineralogy
of the ore body, the choice of processing

Mapping the Bonanza

technology, prevailing land uses and environmental conditions, and the extent and effectiveness of local environmental governance all have
a hand in determining local and regional environmental effects (see Bridge 2002 for further
discussion of this point).
The data presented here demonstrate how
the adoption of policies of economic liberalization during the 1980s and 1990s increased the
extensity of mining investment (by opening up a
broad range of countries to mining capital) and
significantly increased the intensity of mineral
investment in a small number of developing
countries (by increasing the annual value of
mining investment and, in some cases, the
number of new mines). The paper challenges
conventional interpretations of this process of
geographical restructuring as a hemorrhaging
of investment from the North and a concomitant bonanza in the global South. It shows
how recent investment trends are highly specific
in geographical scope and concentrated within a
few commodities and that the allocation of investment between established and emerging
targets is variable over both time and space.
Mapping these bonanza geographies provides
a necessary first step toward understanding the
socioeconomic and environmental implications
of changes in the direction, structure, and timing of investment flows.

Notes
1

Not all components of the primary sector have been

overlooked. There is now a rich geographical literature on the restructuring of the global agrofood complex (see, e.g., Arce and Marsden 1993;
McMichael 1994; Goodman and Watts 1997).
2
FDI refers to equity investments made by a firm
resident in one national economy in enterprises located in another national economy, where a purpose
of investment is to gain an effective voice in the
management of the enterprise (UNCTAD 1994).
3
Lest the inclusion of Mongolia be considered hyperbole, it is worth noting that Mongolia has becomein mining circles at leastthe Chile of
Asia by adopting in 1997 what is widely regarded as
a progressive investment regime ( from the point
of view of inwardly investing mining firms). This
provides a market-based mechanism for access to,
and maintenance of, mineral rights similar to that
found in the leading Latin American jurisdictions
(Naito, Remy, and Williams 2001, 14).

419

These were InfoMine (http://www.infomine.com),

Raw Materials Group (http://www.rmg.se), Engineering and Mining Journal Annual Surveys, and
Metals Economics Groups Mine Search (http://
www.metalseconomics.com).
5
The MineSearch database classifies projects into
seven categories of project status, ranging from
Raw Prospect to Production. Data analyzed
here were drawn from the top three categories
feasibility, preproduction, and productionbecause it is in these stages that significant capital expenditure occurs.
6
The decision to expense costs across a number of
years, rather than allocate them to a single year,
recognizes that large capital sums are rarely expended in a single year but are distributed throughout the development and commissioning phase of
a mine project. A large greenfield copper mine, for
example, may have capital costs in the region of
$500 million to $1 billion and take between three
and four years to develop into a working mine (the
narrative histories in MineSearch enable a determination, for each project, of the time period between
capital first being expended and project commissioning). In nearly all cases, capital flow was distributed normally; for a four-year project, the
largest capital flows were assumed to be in years 2
and 3, with relatively smaller flows in years 1 and 4.
Discussion with analysts familiar with the industry
validated this decision to distribute costs.
7
Many of these downstream phases have their own
geography. For example, the geography of alumina
smelting (the most energy-intensive phase of aluminum production) is shaped by the availability of
low-cost energy supplies.
8
The category Europe here also includes the former
Soviet Union.
9
Of the two metals, copper dominates in Indonesia
(70%) and Peru (68%), but is subsumed to gold in
Papua New Guinea (42% versus 56%).
10
The profile for Australia (not shown) is an exception. It demonstrates a response much more like
that of Chile and Peru, with investment flows tripling throughout the 1990s, followed by a slump in
investment in the post-1999 period. In part this reflects the broad commodity mix of mining investment in Australia, but it is also reflective of policy
initiatives adopted by the Australian government to
attract overseas investment into the mining sector.
In this regard, Australia has behaved less like the
United States and Canada and much more like an
emerging market country in seeking investment in
its natural resource sectors.
11
It is no surprise to find that the geography of investment activity for specific mineral commodities
is unevenly distributed at the global scale. Only a
small proportion of countries around the world
have significant reserves of copper or nickel, for

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Volume 56, Number 3, August 2004

example, so the number of potential targets for investment is limited by basic geology. It is considerably more interesting, however, to find that the
geography of investment for specific mineral commodities is unevenly distributed even among those
countries with significant reserves of those commodities. Gini coefficientswhich calculate the
gap between a hypothetical equal distribution of
investment and the actual distribution and are expressed as an index between 0 and 1, where 0
indicates perfect equality and 1 indicates perfect
inequalityprovide one way of measuring this
inequality. When calculated for all 207 countries
worldwide, the Gini coefficient for copper is 0.96,
reflecting investments high degree of concentration in just a small fraction of these countries, most
of which have no prospect of receiving investment.
More meaningful measures are Gini coefficients
calculated using only those 30 countries that actually received investment in copper (0.72) or using
only those countries that rank among the top 10 in
terms of copper reserves and represent 75% of global copper reserves (0.66).
12
These apparently physical criteria are also social
products since they derive from earlier exploration
activity and processes of knowledge accumulation.
13
It is also possible to use investment-reserve quotients for different time periods to identify how
policies of liberalization have enabled individual
countries to shift their relative position up or
down over time. Space considerations prevent
demonstration of this here.
14
Membership of the Organization for Economic
Cooperation and Development (OECD) was used
as a proxy for developed. Membership of the
OECD evolved during the 1990s to include
Mexico (1994), the Czech Republic (1995), Korea
(1996), Hungary (1996), and Poland (1996)countries that throw into sharp relief the limitations
of binary classifications such as developed and
developing. For a complete listing of OECD
countries, see the OECD web-site at http://www.
oecd.org.

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GAVIN BRIDGE is an associate professor of geography at Syracuse University, Syracuse, NY 13244. Email: gbridge@maxwell.syr.edu. His research explores
how economic and political institutions of commodity
production shape the ecology and society of resource
producing regions. He focuses on the mining and energy sectors and examines the implications for the
environment of the competitive restructuring strategies pursued by the minerals industry at scales from
the local to the global.