Geopolitics (AQA A-Level Geography): Revision Notes
Geopolitics
Understanding geopolitics of mineral ores
The geopolitical landscape of mineral ores involves complex international relationships shaped by the global trade of raw materials. Multiple issues arise from this trade, creating tensions and dependencies between nations.
Six key geopolitical issues affect mineral ores:
- International trade interdependency - countries rely heavily on each other for mineral resources, creating complex global supply chains
- Potential for trade conflicts - price fluctuations in different minerals can spark disputes between trading nations
- Future conflicts over resource access - competition for 'common' resources that multiple countries claim may intensify
- Environmental and socio-economic concerns - mine development brings significant impacts on local environments and communities
- Transnational corporation dominance - large mining companies wield considerable power in the global minerals industry
- China's growing influence - China plays an increasingly central role in worldwide mining and metals production
Factors affecting mineral ore trade
The global trade in mineral ores faces pressure from various supply and demand factors.
Understanding both demand-side and supply-side factors is essential for comprehending the complexities of global mineral ore markets. These factors interact to create the dynamic conditions that shape international trade patterns.
Demand-side factors include:
- Demand for certain minerals remains relatively stable regardless of price changes, determined largely by whether substitute materials exist for specific uses
- Economic downturns and reduced manufacturing activity cause falling demand and lower prices
- Advances in technology have enabled companies to reduce extraction costs, increasing supply
- Environmental concerns discourage new exploration and extraction whilst encouraging recycling and the use of alternative materials
Supply-side factors include:
- Mining firms show hesitation in committing to new investments when prices are falling
- Technological improvements have made previously inaccessible deposits in remote, less developed regions viable for extraction
- The development of large ocean-going vessels enables the transport of bulk mineral commodities such as iron ore and bauxite in greater quantities
Trade patterns and development impacts
Mineral ore trade flows predominantly in one direction - from developing countries to developed nations. This pattern raises important questions about who truly benefits from international resource trade.
It may appear straightforward to assume that foreign investment brings economic and social advantages to developing countries. When resources are managed effectively by the developing country's government, they can indeed create greater prosperity. However, many resource-rich, low-income countries experience a phenomenon called the resource curse (sometimes termed the "paradox of plenty").
Indonesian Example: Maximizing Benefits from Mineral Wealth
Indonesia provides a clear example of how developing countries can respond to maximise benefits from their mineral wealth. The Indonesian government took decisive action by:
- Prohibiting the export of unprocessed bauxite and nickel
- Negotiating licences with mining TNCs that required ore processing within Indonesia
- Encouraging the development of processing industries
- Ensuring fairer profit returns and a greater share of the 'higher value' exports
Result: This ban resulted in reduced supplies of nickel and bauxite entering world markets, which drove prices upward for these minerals.
China's impact on mineral ores
China's role in global mineral trade carries significant geopolitical weight for countries worldwide. Chinese actions to secure access to mineral reserves have affected both lower-income countries producing ores and TNCs from other countries competing for similar reserves. This particularly applies to the iron, steel and copper industries.
China possesses substantial mineral resources including iron ore and copper. However, rapid industrial growth meant that domestic metals production could not keep pace with demand. To secure sufficient mineral ores, China has pursued two parallel strategies: increasing domestic production and importing huge quantities from overseas.
Chinese investment in developing countries
China's mining industry operates through large state-controlled corporations functioning as TNCs. Companies such as Chinalco and Jiangxi Copper invest heavily in establishing mining operations in developing countries, particularly across Africa.
Examples of Chinese Investment in Africa
Resource exploitation has brought infrastructural benefits to host countries:
Angola:
- Restoration of the Benguela railway required substantial investment, which China provided
Zambia (African copper belt):
- New technologies enabled the restoration of old copper mines
- The China Nonferrous Mining Corporation (CNMC) purchased the Baluba mine in 2018 to maintain control of copper supply and rare earth elements (REEs)
Trade with other developing countries
China's demand for steel drives trade agreements with other emerging economies. For instance, China negotiated deals with Brazil to import iron ore, worth millions of dollars to the Brazilian economy. However, the slowing of China's economic growth has created problems for Brazil due to over-reliance on exports to China.
Impact on developed countries
China manufactures large amounts of steel economically through cheap labour and state support. The slowdown in the Chinese economy reduced demand, and from 2015 onwards, excess production meant China supplied the world market with finished steel products more cheaply than other producers.
Major Impacts on Global Steel Industry
Steel manufacturers in many developed countries could not compete, causing major impacts:
- Major consumers (vehicle manufacturers in the USA, South Korea and Europe) could import Chinese steel at lower prices than purchasing from domestic steel producers
- USA steel belt (Pennsylvania and Ohio) experienced cheap steel imports resulting in closure of remaining steelworks, causing further economic decline and rising unemployment in regions where the industry was already struggling
- UK steelworks such as Redcar faced closure or closure threats (Port Talbot), causing increases in unemployment and devastation of communities
- Protectionist responses - China's flooding of the world market with cheap steel prompted some countries to adopt protectionist measures such as increased tariffs, leading to an ongoing trade war with the USA
Important: Resource Curse
The resource curse describes a situation where countries with abundant non-renewable resources, such as minerals, tend to experience lower economic growth and development compared to resource-poor countries. Poor resource management can lead to economic instability, social conflict and lasting environmental damage.
Understanding the resource curse
The resource curse affects many poorer countries, particularly in Africa, preventing them from maximising their mineral wealth. However, the problem is not universal - some developing countries have responded by introducing measures to expand income from their mineral deposits.
Several interconnected factors contribute to the resource curse:
Over-dependence on narrow resource exports - when countries rely heavily on producing and exporting a limited range of resources, they generate low financial returns and remain vulnerable to falling global prices.
Neglect of other economic sectors - particularly manufacturing sectors do not receive the investment required for growth when focus remains on resource extraction.
Dependence on mining TNCs - developing countries often lack the investment and technical expertise needed to develop resources and build infrastructure for extraction, processing and transport. This forces reliance on foreign corporations.
TNC profit leakage - large TNCs control the resources, and only a limited share of profits remains in the country where extraction occurs.
Limited job creation - mining is increasingly mechanised, so job creation is limited and often low-skilled. Many higher-income positions go to foreign workers rather than local people.
Dutch disease - higher wages in the mining sector drive up the value of the local currency, negatively impacting the competitiveness of exports in world markets.
Government corruption and poor regulation - authoritarian rule and government corruption often result in unfair regulation of the industry and unfair distribution of wealth gained from it.
The term "Dutch disease" originated from the Netherlands' experience in the 1960s when natural gas discoveries led to currency appreciation, making other Dutch exports less competitive. This same mechanism affects mineral-rich developing countries today, creating a paradox where resource wealth can harm other sectors of the economy.
Role of transnational corporations
Mining became 'global' before most other industry branches, and the distribution of mineral ores remains largely controlled by transnational mining corporations. Whilst these companies compete, they frequently collaborate through joint ventures to combine exploration efforts and develop mine operations.
Most major mining TNCs operate as multivariant companies, meaning they extract multiple materials (in some cases including coal and oil).
Major transnational mining corporations
Several dominant corporations control global mineral ore extraction:
BHP Billiton (headquartered in Australia) operates some of the world's largest mines, mainly in South America and Australia. The company extracts copper, iron ore, uranium, aluminium, manganese and nickel.
Rio Tinto (UK/Australia) operates mainly in Africa, South America and Australia, producing a wide range of minerals including iron ore, bauxite, copper and uranium.
Zijin Mining Group Co. Ltd (China) is a state-owned corporation operating predominantly in China and Africa, focusing on gold mining and smelting, plus copper, lead, zinc, silver and iron.
Glencore (UK/Switzerland) operates globally, producing copper, nickel, zinc/lead, aluminium and iron ore.
Vale (CVRD) (Brazil) primarily operates in Brazil as the largest iron ore and nickel producer. The company also runs nickel mines in New Caledonia, Indonesia and Canada, plus copper production in Chile and Zambia.
TNC criteria and responsibilities
These corporations set criteria for reserves that interest them, typically targeting projects offering a lifespan of at least 20 years. They provide the expertise, technology and capital investment needed to explore and extract ores in developing countries.
TNCs are usually responsible for:
- Negotiating exploration rights and leasing land from national governments
- Establishing subsidiaries or entering joint ventures with mining companies from the host nation
- Developing infrastructure such as access roads and nearby accommodation to support projects
Impacts of TNC operations
Transnational corporations can bring economic benefits through jobs and skills to local communities. However, they have also faced criticism for negligence regarding environmental damage and social impacts of their operations.
Environmental and Social Concerns
Local disasters such as tailings dam failures have devastated communities and environments. Corporate social responsibility has become a more important consideration for many of these companies, meaning mining operations should be managed more sensitively by operators in the future.
Remember! Key Points to Remember:
-
Geopolitics of mineral ores involves complex issues including international interdependency, potential trade conflicts, environmental concerns, and the dominant roles of China and large TNCs.
-
The resource curse explains why many resource-rich developing countries fail to benefit fully from their mineral wealth due to over-dependence on exports, TNC profit leakage, limited job creation, and government corruption.
-
China's geopolitical impact on mineral ores operates through three main channels: investment in developing countries (especially Africa), trade with other emerging economies, and impact on developed countries' steel industries.
-
Transnational mining corporations control global mineral ore distribution and operate through joint ventures, providing expertise and capital but also requiring careful management to ensure local communities and environments benefit.
-
Trade patterns in mineral ores flow predominantly from developing to developed countries, but countries like Indonesia show how strategic policies (such as banning unprocessed ore exports) can increase benefits to producing nations.