Source: CNN.com                Date: 20 October, 2010

As the last of 33 trapped miners were pulled to the surface in Chile, a group of bankers, government officials and mining company executives were gathered in Hong Kong to talk about the coming minerals explosion in Mongolia. "We are following the economic model of Chile," said Mr. D. Zorigt, Mongolia's minister of mineral resources and energy. "There are a lot of lessons we can learn from the mine accident."

The celebrations on the Atacama Desert in Chile, the toxic sludge coursing through the streets of Devecser, Hungary, and the economic hopes of the people on the steppes of Mongolia share a common link -- the world's growing hunger for dwindling resources plumbed from the ground.

"Safety has always been an issue ... it almost goes without saying," said Mr. Chris Hinde, editorial director for Aspermont UK, publisher of Mining Journal and other mining industry publications. "How to mine without polluting, ruining lifestyles, fitting in with the existing community are the real challenges."

As mining commodities enjoy boom times, pressure is growing to build the world's supply of coal, bauxite and rare earth metals in increasingly difficult locales. As safety and environmental risks rise, so does the allure for developing economies like Mongolia to harness the world's growing minerals appetite. "We expect to be one of the top-performing economies in the next few years, and this is mainly due to mining," Mr. Zorigt said. Mongolia's economic output is projected to nearly quadruple to USD23 billion by 2013, and Mr. Zorigt projects the nation's per capita income -- which now stands about USD3,200 a year -- will grow to USD5,000 by 2015 and USD12,000 by 2021.

But a commodities boom in developing nations is often beset by the "Dutch disease" -- a lopsided influx of capital that causes currency and prices in the country to inflate without trickling through to the rest of the economy. “The socio-economic challenges when mining transforms an economy are enormous and there's a tremendous amount of risk associated with that," said Mr. Nigel Finch, senior lecturer at the University of Sydney's school of business and economics. "But when they plow that back into their own nation to do the right sort of things that one would imagine -- building roads, hospitals and all the rest of it -- they bring home so much cash in one go it has this enormous splash effect on the economy," he said.

Often it's not the obvious socio-economic impacts that are hardest for mining companies, said Mr. Hinde. "For example, if you build a mine in some parts of Africa, you obviously want to employ local people. The problem is that in the structure of a lot of African tribes seniority comes with age," he said. "Mining at a stroke destroys centuries of culture, because the young men are the men who have salaries and making good money -- how on earth do you stop that, because they're the ones driving the trucks and equipment? But then they effectively almost take control of the tribe, because they've got the money."

The Chilean economy was built on copper mining, but avoided becoming a victim of Dutch disease. "Copper transformed the Chilean economy and Chile has had enormous social benefit from mining ... there's enormous wealth that's being created there and that's fed back into the economy," Mr. Finch said.

The rescue in Chile illustrates the safety issues in mining and the market pressures driving operators to get minerals out of the ground while prices are high. The small-time operation at the heart of the Chile accident was mining copper and gold, both of which have hit record prices in recent weeks.

"All mining is dangerous: It's enormous equipment, it's explosives and it's unskilled or semi-skilled labor," Mr. Finch said. "There's obviously going to be some occupational safety hazards. Where you've got a workforce that's desperate to make a dollar, the enforcement is going to be more lax. China is an example of that."