2002, F.T. Cawood, R.C.A. Minnitt / The Journal of The South African Institute of Mining and Metallurgy
Minerals development is essentially the process of converting non-renewable natural mineral resources into reproducible capital. During this process rents (or wealth) are produced. The rents are meant for the benefit of the stakeholders in mineral development but the distribution thereof may be perceived to be inequitable because of the different bargaining powers amongst stakeholders. The challenges facing those responsible for managing mineral wealth are many. For example, there is the possibility that the cost of mineral development exceeds the revenue received for production, in which case there will be no rents to distribute. There is also the possibility that stakeholders will be disappointed by the size of rents, resulting in an expectation gap—a potential source of conflict amongst them.
The size of this gap will depend on how well information is shared among stakeholders. A third challenge focuses on equity issues and the importance that each stakeholder recognizes the priority and hierarchy of claims to mineral rents. This means an acceptance among stakeholders that the larger the share of one stakeholder, the smaller the shares of others. A final consideration relates to equitable intergenerational distribution of mineral rents and issues relating to sustainable minerals development. This paper explains the possible rent-sharing ratios, which ratio-distribution is recommended as an alternative approach to the management of mineral wealth (MMSD, 2001). Historically, mineral development symbolized conflict between the various stakeholders because of self-interest. Sustainable development allows for early stakeholder identification and consensus on how the benefits must be shared, motivating stakeholders to work together in an attempt to maximize rents. This style of mineral development will firstly, minimize the expectation gap and secondly, maximize stakeholder benefits.
