Evaluating a small deposit next to an economically viable mine in West Africa from the points of view of the mining company, the government and the local community

Margaret Armstrong () and Aziz Ndiaye
Additional contact information
Margaret Armstrong: CERNA i3 - Centre d'économie industrielle i3 - Mines Paris - PSL (École nationale supérieure des mines de Paris) - PSL - Université Paris Sciences et Lettres - I3 - Institut interdisciplinaire de l’innovation - CNRS - Centre National de la Recherche Scientifique
Aziz Ndiaye: CERNA i3 - Centre d'économie industrielle i3 - Mines Paris - PSL (École nationale supérieure des mines de Paris) - PSL - Université Paris Sciences et Lettres - I3 - Institut interdisciplinaire de l’innovation - CNRS - Centre National de la Recherche Scientifique

Post-Print from HAL

Abstract: This paper addresses the question of evaluating how much the different stakeholders stand to gain from a mining project. By carefully analysing the breakdown of the cash-flows generated, we were able to estimate the amounts received by the local community and by the national community (outside the mining area), the taxes and royalties received by the government and the profits made by the mining company. A real options framework was used to take account of the inherent uncertainty on the commodity price and the reserves, and the operating flexibility (that is, the possibility for the company to stop mining if the commodity price drops and/or the reserves prove to be lower than that had been envisaged). A synthetic case-study of a gold mine in West Africa was used to illustrate how this procedure could be applied in practice. By using the real option framework we were able to envisage scenarios for developing an extension to a deposit as a function of future values of the commodity price. The procedure proposed should provide governments and NGOs with more objective data for making policy decisions.

Keywords: Resource curse; Corporate social responsibility; Real options; Commodity prices (search for similar items in EconPapers)
Date: 2013
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Published in Resources Policy, 2013, 38, pp.113-122

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-00869771

Access Statistics for this paper

More papers in Post-Print from HAL
Bibliographic data for series maintained by CCSD ().