Adding value to extractive production has become an important item on the agenda of many resource rich countries. The idea of increasing benefits for producer countries and their citizens by keeping more production stages in-country, also known as beneficiation or value addition, aims to increase job creation, tax and export earnings, and lead to spillover benefits for related industries, for example through knowledge and technological transfer.
Policies to increase benefits from extractive industry commodities attempt to tackle the challenge of producing countries, whose trade is often restricted to exporting primary goods in form of ores and concentrates, generating returns that are insufficient to transform their economies. Value addition policies build on a longer history of policy interventions, such as industrialisation, diversification, local content or improving terms of trade.
Traditionally, the term ‘beneficiation’ has two meanings. First, in a technical sense, it describes the physical processing of resources. Second, it describes the economic process of adding value to resources by further processing before export. This paper discusses underlying concepts, key policy considerations and case studies relating to the latter definition.
This topic material covers the following areas: