This chapter discusses the practical possibilities of achieving increased downstream processing i... more This chapter discusses the practical possibilities of achieving increased downstream processing in extractive industries and the policies that are commonly used for this purpose. It reviews the reasons why forward vertical integration is not always an optimal choice for extractive industry companies. It finds little support for the argument that differences in market power dictate the geography of downstream processing. The degree of vertical integration appears to be mainly driven by production economics. Market-determined processing margins fluctuate, which raises the risks of investing in downstream processing capacity. Industrial policy for downstream processing is discussed based on experiences in India, Indonesia, Zambia, and Tanzania. Results so far seem to indicate that unintended consequences dominate the outcomes.
Local content policies for extractive industries have attracted increased interest. Local content... more Local content policies for extractive industries have attracted increased interest. Local content requirements are often included in legislation or contracts. Such efforts may be constrained by low capacity of potential suppliers, low skills, and the general business environment. A number of extractive industry companies have introduced supplier development programmes that attempt to reduce the constraints and skill gaps. Government industrial policies on local content vary: some prescribe quantitative targets for local content, while others focus on improving skills and raising the capacity of domestic industry. Infrastructure built for extractive industries can often be used by other economic activities. Difficulties in finding suitable financing arrangements have, however, limited the number of successful multi-user extractive industry-related infrastructure projects.
The paper reviews the debate about transparency in extractive industry commodities trade. It exam... more The paper reviews the debate about transparency in extractive industry commodities trade. It examines the obstacles to improved transparency. A critical review of the experience with estimating losses from a lack of transparency concludes that many of the published estimates of losses from transfer mispricing and misinvoicing suffer from methodological deficiencies and appear to be exaggerations. The role of finance in extractive commodities trade is briefly discussed and it is noted that lending to companies owned by the state may affect the government’s standing with donors and investors. The most important transparency and responsible sourcing initiatives are reviewed. The initiatives appear to have had some positive effect on public financial management, investment climate, and economic growth. The experience of government-initiated responsible sourcing, including for conflict minerals, concludes that initiatives must include all or almost all market participants and that the co...
94482 Comparative study of the mining tax regime for mineral exploitation in Kazakhstan This asse... more 94482 Comparative study of the mining tax regime for mineral exploitation in Kazakhstan This assessment has been carried out by Oxford Policy Management in the framework of the Joint Economic Research Program in Kazakhstan. The project manager is Samantha Dodd. The remaining team members are Olle Ostensson and Bob Parsons. For further information contact Samantha Dodd [Samantha.dodd@opml.co.uk] The contact points for the client are Gary McMahon [gmcmahon@worldbank.org] and Yerlan Akishev [yakishev@worldbank.org]. Kazakhstan is rich in both minerals and hydrocarbons. While the hydrocarbons sector is relatively successful, the minerals sector has failed to achieve its potential. Despite large mineral reserves, very little investment has gone into the development of new mining projects and few foreign investors have been willing to invest in the sector. Almost all mines currently operating in Kazakhstan were already in operation in the 1990s, leaving a two decade gap in new mine develo...
This chapter discusses the practical possibilities of achieving increased downstream processing i... more This chapter discusses the practical possibilities of achieving increased downstream processing in extractive industries and the policies that are commonly used for this purpose. It reviews the reasons why forward vertical integration is not always an optimal choice for extractive industry companies. It finds little support for the argument that differences in market power dictate the geography of downstream processing. The degree of vertical integration appears to be mainly driven by production economics. Market-determined processing margins fluctuate, which raises the risks of investing in downstream processing capacity. Industrial policy for downstream processing is discussed based on experiences in India, Indonesia, Zambia, and Tanzania. Results so far seem to indicate that unintended consequences dominate the outcomes.
Local content policies for extractive industries have attracted increased interest. Local content... more Local content policies for extractive industries have attracted increased interest. Local content requirements are often included in legislation or contracts. Such efforts may be constrained by low capacity of potential suppliers, low skills, and the general business environment. A number of extractive industry companies have introduced supplier development programmes that attempt to reduce the constraints and skill gaps. Government industrial policies on local content vary: some prescribe quantitative targets for local content, while others focus on improving skills and raising the capacity of domestic industry. Infrastructure built for extractive industries can often be used by other economic activities. Difficulties in finding suitable financing arrangements have, however, limited the number of successful multi-user extractive industry-related infrastructure projects.
The paper reviews the debate about transparency in extractive industry commodities trade. It exam... more The paper reviews the debate about transparency in extractive industry commodities trade. It examines the obstacles to improved transparency. A critical review of the experience with estimating losses from a lack of transparency concludes that many of the published estimates of losses from transfer mispricing and misinvoicing suffer from methodological deficiencies and appear to be exaggerations. The role of finance in extractive commodities trade is briefly discussed and it is noted that lending to companies owned by the state may affect the government’s standing with donors and investors. The most important transparency and responsible sourcing initiatives are reviewed. The initiatives appear to have had some positive effect on public financial management, investment climate, and economic growth. The experience of government-initiated responsible sourcing, including for conflict minerals, concludes that initiatives must include all or almost all market participants and that the co...
94482 Comparative study of the mining tax regime for mineral exploitation in Kazakhstan This asse... more 94482 Comparative study of the mining tax regime for mineral exploitation in Kazakhstan This assessment has been carried out by Oxford Policy Management in the framework of the Joint Economic Research Program in Kazakhstan. The project manager is Samantha Dodd. The remaining team members are Olle Ostensson and Bob Parsons. For further information contact Samantha Dodd [Samantha.dodd@opml.co.uk] The contact points for the client are Gary McMahon [gmcmahon@worldbank.org] and Yerlan Akishev [yakishev@worldbank.org]. Kazakhstan is rich in both minerals and hydrocarbons. While the hydrocarbons sector is relatively successful, the minerals sector has failed to achieve its potential. Despite large mineral reserves, very little investment has gone into the development of new mining projects and few foreign investors have been willing to invest in the sector. Almost all mines currently operating in Kazakhstan were already in operation in the 1990s, leaving a two decade gap in new mine develo...
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Papers by Olle OSTENSSON