The Socio-Economic Impacts of Mining on Local Communities: the Case

The Extractive Industries and Society 3 (2016) 494–507 Contents lists available at ScienceDirect The Extractive Industries and Society journal homepage: www.elsevier.com/locate/exis Original article The socio-economic impacts of mining on local communities: The case of Jordan a, b a Rami Al Rawashdeh *, Gary Campbell , Awwad Titi a Mining Engineering Program, College of Engineering, Al-Hussein Bin Talal University, P.O. Box 20, Ma’an, Jordan b School of Business and Economics, Michigan Technological University, Houghton, MI 49931, USA A R T I C L E I N F O A B S T R A C T Article history: This paper compares selected socioeconomic indicators (e.g. unemployment, Human Development Received 30 October 2015 Index, poverty, education, health and environment) in the Southern Region of Jordan with those of its Received in revised form 3 February 2016 northern and central parts, with the aim of exploring what impact mining has had on local communities. Accepted 3 February 2016 According to the development indicators examined, the South Region of Jordan lags behind, Available online 23 February 2016 developmentally, the rest of the country as a whole, and that there appears to be a correlation between mining activities in the country and lower-than-average performance, as measured by development Keywords: indicators. However, this correlation may not be causation and could be due to other factors at work, Socio-economic impact mining communities may be better off than they would have been otherwise. Before and after mining Mining comparisons of socioeconomic indicators for the locality of Ma’an provide no indication of faster Economic development Jordan development relative to the rest of the country for the same time period. Mining activities in Jordan Ma’an appear to largely fail to benefit local communities beyond what is happening in the country as a whole. Policies and rules need to be developed for redistributing part of the Jordanian mining companies' wealth to local communities and in order to offset the local cost of mining. ã 2016 Elsevier Ltd. All rights reserved. 1. Introduction revenues. The Kingdom’s largest sources of phosphate are located near Ma’an, the largest city located in the South. The majority of the The mining sector has been a major source of revenue for the potash reserves are found near the Southern city of Karak. Government of Jordan since the establishment of Jordanian As Al Rawashdeh and Maxwell (2013) reported, because of Phosphate Mines Company (JPMC) and Arab Potash Company Jordan’s geographical proximity to major oil-producing states, (APC) in 1953 and 1956, respectively. During this period, the significant capital inflows from the oil economies during the 1970s Jordanian industrial sector has been composed mainly of the enabled development of key sectors of the economy, including “mining and quarrying” and related “manufacturing” sub-sectors. mining and some manufacturing while enhancing the nation’s The most important phosphate-finished fertiliser products are Di- infrastructure. However, declining real oil prices and falling worker Ammonium Phosphate (DAP), mono-ammonium phosphate and remittances during the 1980s led to painful readjustments and triple superphosphate. The principal activity of APC is the adversely impacted on Jordan’s economic development. The oil production of potash, which is also one of the main constituents price boom in 2008 had a smaller impact on economic growth for of N-P-K fertilisers. By 2013, mining contributed 3.3% of Gross Jordan as Jordan did not enjoy as many spillover benefits as Domestic Product (GDP) but in combination with its related compared to the oil price boom in the seventies. There was less aid manufactured products (e.g. fertilizers), its contribution reached available from oil-rich countries, fewer job opportunities for Arab 9% (Natural Resources Authority, 2014). workers in the Gulf, and less money flowing from oil rich countries Though Jordan has some metallic and non-metallic minerals to resource-poor countries. Consequently the Government of distributed in the Northern and Central Regions of the country, Jordan had a budget deficit of JD1.5 billion in 2011. Nevertheless, most of the mining revenues are generated in the Southern Region, The direct and indirect benefits of minerals and energy extraction where the main potash and phosphate mines are located. These at home and in nearby nations played a role in placing Jordan in the mines contribute more than 95% of the country’s total mining high human development category—positioning the country 77th out of 187 countries and territories (World Bank, 2014). There are many peer-reviewed studies that have examined the impact of mining operations on local communities within the * Corresponding author. Fax: +962 3 2179050. E-mail address: [email protected] (R. Al Rawashdeh). academic literature (examples include: Badera and Kocan, 2015; http://dx.doi.org/10.1016/j.exis.2016.02.001 2214-790X/ã 2016 Elsevier Ltd. All rights reserved. R. Al Rawashdeh et al. / The Extractive Industries and Society 3 (2016) 494–507 495 Bin et al., 2015; Moffet and Zhang, 2014; Campbell and Roberts, Regions of the country with those of the non-mining Northern and 2010). Beyond the jobs and income generated by mining Central Regions to study what impact mining may have had on the operations, one of the concerns identified is the impact of mining Southern communities. The following section of the paper will on the overall wellbeing of the local community. The opening of a discuss the socio-economic situation of Jordan and the significance large mine has economic, environmental and social consequences of the mining sector to the Jordanian economy. The next section of at the national, state and provincial/local levels. Large mines can the paper will review the literature on the impact of mining on generate foreign exchange earnings and tax revenues and create local communities. This section is followed by a detailed employment directly and indirectly that benefit the country as a comparison of socio-economics factors of the main cities in the whole. However, local communities have become more and more regions of Jordan and how mining activity may correlate with the concerned that they shoulder most of the negative impacts of results. Then the socio-economic changes of the Ma’an region in mining but do not receive enough of the benefits. This is a response to increased mining activity will be focused on. The paper particular problem for capital-intensive large mining operations concludes with a discussion of the results and what has been because they may generate only a relatively small number of local learned. jobs as compared to more labor-intensive industries. While the local community bears most of the environmental 2. Jordan and other social costs of mining, much of the profits or rents realized may flow elsewhere given the national and international Jordan is a small Middle Eastern country with a developing nature of mining. Has mining been beneficial or a negative factor economy. With a population of about 6.5 million in 2014, its for the local communities in South Jordan? What needs to be done estimated Gross Domestic Product was just over $US 33.3 billion to improve the benefits to the local community of the mining? This for a GDP per capita at Purchasing Power Parity (PPP) of a modest paper will explore the correlation between mining and local $US 6100 per annum. Life expectancy had reached 74.1 years with community wellbeing with comparisons across a range of an adult literacy rate of 99.1%. socioeconomic and health characteristics for the three main Jordan has 12 governorates which are located in one of three regions of Jordan. The paper will compare socioeconomic regions: the North Region which includes Irbid, Jerash, Mafraq and indicators (e.g. unemployment, Human Development Index, Ajlune, the Central Region which includes Amman, Zarqa, Madaba poverty, education, health and environment) in the Southern and Balqa and the Southern Region which includes Karak, Tafila, Fig. 1. Jordan Map. 496 R. Al Rawashdeh et al. / The Extractive Industries and Society 3 (2016) 494–507 Table 1 Major development indicators in the Jordanian economy from 1970 to 2013. Year Human Development GDP per capita (at constant 2005 prices, Population below poverty line Life expectancy at Infant Adult literacy rate Index USD) (%) birth mortality (per 1000 lives) 1970 – 1221 – 60.2 65.4 – 1980 0.59 2109 – 66.2 43.3 – 1990 0.62 1799 30 69.9 30.0 90.5 2000 0.71 1926 16 71.6 23.3 98.9 2010 0.74 2817 14 73.4 17.5 98.8 2013 0.75 2855 14 74.1 16.0 99.1 Source: World Bank (2014). Ma'an and Aqaba. These three geographical regions are based on phosphate and potash reserve base is 1.3 billion and 40 million area geographical connectivity and distance among the population tonnes, respectively. The economic exploitation of these minerals centers (see Fig.1). The largest provinces by area are Ma’an, Mafraq, helped laying the foundation for Jordanian private and public and Amman. The largest provinces by population is Amman, which investments, modernization of its infrastructure, and the expan- holds the national capital and the largest city that is home to over sion of public services sector such as education and health. In 2013, 2.2 million people, followed by Irbid, Zarqa, and Balqa with the service sector made the highest contribution to GDP— populations of 1.1, 0.91 and 0.41 million respectively. approximately 73%. Jordan has approached development from a holistic perspec- As shown in Fig. 3, the contribution of mining to total exports tive, realizing that poverty, illiteracy and health form a triangle that revenues reached its highest percentage, about 51% of total export, must be addressed together.

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