The oligarchy in mining is bad for all of us – 1

In the first of two articles, retired mining engineer Laurence Morris looks at how the oligarchy in mining is constituted, and, in the second article, how it operates.

Cover image: Yanacocha gold mine, Cajamarca, Peru. Photo: Wikimedia

---

Part I: Who are the ‘mining oligarchy’?

Introduction

A Canadian company had spewed toxic tailings across the countryside, burying bush and farmland in a white sludge that had dried to a fine, wind-borne powder. A few anorexic cows sought shelter from the hot sun under stunted papaya trees that had managed to poke through the sediment.

Noranda, now part of Glencore, owned the Nicaraguan Sepentrion mine, currently known as the El Limón mine, before it was nationalised in 1979 ¹⁾The author’s own experience. He worked for the Nicaraguan Mines Ministry (INMINE) from 1981 to 1989.. For the previous 40 years, it had dumped its entire tailings output onto the landscape and into the watercourses.

The old tailings remain at El Limón to this day, although the mine has been profitable for a succession of owners since its return to private ownership and modern tailings storage facilities were installed. Untreated gold mine tailings contain hazardous materials such as cyanide, mercury and arsenic ²⁾Khodadadi-Darban, 2018). Khodadadi-Darban, A. &. (2018). Environmental Impact Assessment (EIA) of a gold mine tailing through the multi-criteria decision making tool. Journal of Civil Engineering and Environmental Sciences.

Mining is notorious for its human rights abuses and environmental degradation. Early last year, police in Peru opened fire on protesters, killing 16 and wounding over 100 others ³⁾New York Times, M. T. (2023, May 24). As protestors die, a nation’s security forces face little scrutiny. The demonstrations were part of a long-running struggle for social and economic fairness, following decades of neglect and underdevelopment in education, healthcare, and infrastructure.

The Ministry of Health has alleged that more than 10 million Peruvians (nearly a third of the population) ingest heavy metals from drinking water. In Cajamarca the Ministry estimated that 70 per cent of water consumed by people had been process water used by the mining company Yanacocha Newmont.

Demonstration against Colpayoc mining project, Cajamarca, Peru, July 2024. Colpayoc is a gold mine, acquired recently by Canadian mining ‘junior’ Level 14 Ventures, based in Vancouver. Level 14 has now renamed itself Copper Standard Resources Inc. Video: Radio Victoria, Arequipa, July 2024.

The ‘Big Five’

My goal is to highlight why the largest mining companies have formed an oligarchy, and how it is harmful to human rights, the environment, and even the mining sector itself. In a second article I will examine in more detail how this oligarchy operates.

I briefly examine four aspects of oligarchic behaviour:

1. Influencing metal prices and supply by exerting control over the metals market.
2. Influencing regulators and governments, particularly in developing countries.
3. Increasing social inequalities.
4. Limiting the growth of ‘junior’ miners and using them as a ‘bank’ to upgrade their own mining resources.

The three most traded minerals are copper, iron ore, and gold, where the big mining companies, especially the Big Five, dominate mineral production and processing across the world. However,  most of the geographical examples in this article will be from Latin America.

The oligarchy: The Big Five

The global mining industry is dominated by five multinational corporations: Glencore, Rio Tinto, BHP, Vale, and Anglo American.

The Big Five are listed by total revenue (Information from 2023 company reports):

Name	Total revenue in USD billions (2023)	Where headquartered	Minerals produced	Notes
Glencore	256	Switzerland	Copper, cobalt, nickel, zinc, lead, ferroalloys, aluminium, iron ore, coal, petroleum	Large diversified global commodities trader
Rio Tinto	64	United Kingdom	Iron ore, copper, gold, aluminium, uranium, diamonds	A significant producer of industrial minerals (e.g. borates, salt)
BHP	54	Australia	Iron ore, copper, nickel, petroleum
Vale	43	Brazil	Iron ore, copper, nickel, manganese, coal	Major fertiliser producer
Anglo American	41	United Kingdom	Platinum, diamonds, copper, iron ore, manganese, coal	Controls world supply of diamonds through its ownership of De Beers

Glencore stands out because global commodities trading accounts for much of its revenue, and a significant part of Anglo American´s revenue is generated by De Beers, its diamond distribution subsidiary.

There are other big players such as China Shenhua Energy, which has a market value of USD 58 billion (2023) putting it ahead of BHP, although it is primarily an energy and infrastructure firm. Nonetheless, Shenhua has global interests, and it is willing to cooperate – and compete – with the Big Five. Other major mining companies such as Freeport-McMoRan, Tech Resources and Newmont, are closely associated with the Big Five.

The three most important metals

The most traded metals in 2024 were iron ore, gold and copper ⁴⁾FXSSI. (2024). The Top 10 most traded commodities in the world, 2024. Forex Market Sentiment which together account for about two-thirds of the total value of metals mined globally ⁵⁾Humphreys, D. (2015). The remaking of the mining industry. London, UK: Palgrave Macmillan, Kindle edition.

Iron ore

2023, five countries accounted for more than 80 per cent of the global iron ore production: Australia, Brazil, China, India, and Russia. Australian production was dominated by BHP, Rio Tinto, and Fortescue Metals, and Vale dominated output in Brazil ⁶⁾company reports and Statista.

Gold

In 2023, China, Australia, Russia, Canada and the USA lead the pack of gold producers ⁷⁾World Gold Council. (2024, June 25). Global mine production (2023).. The largest producers are the Big Five plus Newmont, Barrick, Agnico Eagle, Polybus and AngloGold Ashanti.

Copper

In 2023, the major producers were Chile, Peru, and the Democratic Republic of the Congo (DRC).  Chile is the largest producer, and major copper miners operating in Chile were Freeport-McMoRan, Codelco (the Chilean state-owned mining company), BHP, Glencore, Grupo México and the Chinese-owned Zijin Mining ⁸⁾Venditti, B. (2024). Visualising copper production by country in 2023. Elements.

Market Control and Price Setting

The mining economist David Humphreys asserts that metal prices are largely beyond the control of producers and there is ‘no scope to achieve premiums from branding or clever marketing, [hence] the profitability of producers is almost entirely a function of their costs’ ⁹⁾Humphreys, D. (2015). The remaking of the mining industry. London, UK: Palgrave Macmillan, Kindle edition.

But that’s not quite the whole story: big producers can influence pricing, for instance by adjusting output levels, dominating supply chains, leaning on governments for strategic advantages, and by disruptions to production, whether accidental or by design. In 2021, Rio Tinto cut mine production to stem a drop in aluminium, copper, iron ore and bauxite prices, in large part a defensive reaction to global condemnation caused by the company´s destruction of Aboriginal sacred sites in Western Australia and the effects of the Covid epidemic ¹⁰⁾Neil Hume, P. W. (2021, October 15). Rio Tinto cuts iron ore output guidance after ‘difficult’ third quarter. Financial Times.

Disruptions in production from the Big Five´s operations can depress world metal prices. In 2017, a 44-day strike at the world´s largest copper mine, BHP’s Escondida in Chile, disrupted global copper supplies, causing a sharp rise in copper prices ¹¹⁾Mining.com. (2024, July 29). Union at bhp´s Escondida mine urges rejection of contract offer, strike possible. Following the 2019 tailings dam disaster at Brumadinho, Brazil, Vale reduced its iron ore output, causing a sharp increase in global iron ore prices ¹²⁾Collins, D. (2019, March 30). Life after a devastating mining disaster, BBC. Anglo American’s subsidiary De Beers once controlled the lucrative diamond market by rigorously controlling the number of diamonds released ¹³⁾Ashlyayev, A. (2024). How diamond giant De Beers owned all the world´s diamonds for over 100 years. OhMyEcon.

Economic dependencies

Countries rich in mineral resources but lacking the capacity to exploit them independently often become economically dependent on the large extractive corporations. This dependency can result in unequal economic ties and cede to these companies huge influence over a country’s economy and politics.

After the Spanish conquered Latin America in the early 16th century, the European powers unleashed a brutal campaign of resource exploitation with devasting consequences for the defenceless indigenous populations ¹⁴⁾Galeano, E. (1971). Open veins of Latin America: Five Centuries of the Pillage of a Conitinent. Uruguay: Monthly review press.. The arrival of multinational corporations has allowed the patterns of colonialism to persist into the 21st century.

Chile is one of the world’s leading producers of copper. Nationalisation of the copper industry in the early 1970s under President Salvador Allende was a crucial step toward economic independence. However, following the military coup in 1973, the industry was partially privatised and foreign companies regained a strong presence.

Copper mining has contributed approximately ten per cent of Chile’s GDP in recent decades.  ¹⁵⁾International Copper Association. (2018). The impacts of copper mining in Chile.  The Chilean copper industry is dominated by a few large companies: Codelco, the state-owned company, and the Escondida operation, a joint venture between BHP, Rio Tinto and JECO. Collahuasi is jointly owned by Anglo America and Glencore (see table below).

Mining corporations can exert considerable influence over a country’s economic policies, yet cosy contact and regular lobbying of regulators and governments by the large mining corporations are unlikely to be disclosed outside of boardrooms and ministries, let alone made public ¹⁶⁾In the 1990s, I was present at such a conversation between the defunct Enron Corporation and an Asian government official to grant favourable treatment to a mine. The talks (and bribes) were successful from Enron´s point of view.

Leading copper producers in Chile in 2022, by production volume (in 1,000 metric tons) Statista 2024.

The dominant producers are in red, the second tier in green. The biggest three are Codelco (1,553 Mt), Escondida (1,054 Mt) and Collahuasi (571 Mt).

Like Chile, Peru is heavily dependent on mining, as it is a major gold producer. Newmont Corporation operates the Yanacocha gold mine, which is one of the world’s largest gold mines. While the mine has generated substantial revenues for the government, it has also caused social unrest, environmental deterioration, and a reliance on foreign expertise and investment. The Peruvian government frequently protects the interests of multinational companies by using the police, judiciary, and even the army against protestors and indigenous people ¹⁷⁾Wafmag. (2016, February 28). The fight against mining in Peru. Women across frontiers.

---

Laurence Morris is a chartered engineer and has spent nearly 50 years in the mining industry, working throughout the world in exploration, production and in senior roles, although he is currently retired and living in Latin America. His interests lie in researching and writing about the environmental, social, economic and political impacts of mining and energy extraction, especially in Latin America, and in the role of mining in global development.