Federal Encouragement of Mining Investment in Developing Countries Has Been Only Marginally Effective

ID-82-38: Published: Sep 3, 1982. Publicly Released: Sep 3, 1982.

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To assist Congress and Federal agencies in formulating and implementing a strategic minerals policy, GAO assessed the Government's efforts to encourage mining investment in developing countries as one method of assuring that long-term supplies of strategic and critical minerals will be available for domestic industry and defense.

Recent U.S.-supported initiatives to encourage mining investment in developing countries have been only marginally helpful as a means of securing adequate and economic supplies of strategic and critical minerals. The initiatives were not designed to meet specifically defined minerals needs and cannot be counted on to acquire the needed minerals. Individual differences among minerals are significant and affect strategies to assure access. By carefully analyzing these differences, policymakers can define levels of need more precisely and develop strategies tailored to the geological and market characteristics of an individual mineral. Further, the initiatives have not been implemented as part of a coherent, clearly directed, long-term investment strategy that has considered and weighed the costs and benefits of a variety of domestic and foreign options. The administration's policy pays only passing attention to two untested overseas initiatives, deep seabed mining and the U.S. Trade and Development Program, and is silent on those which are already operating. Consequently, the administration's level of interest in foreign investment initiatives and the importance and expected contribution of those undertaken during the past 5 years are unclear. Significant funding and operational changes would be required to increase the effectiveness of some U.S. efforts to encourage mining investment in developing countries as a means of securing strategic and critical minerals resources.

Recommendations for Executive Action

  1. Status: Closed - Not Implemented

    Comments: Because GAO does not have any specific suggestions to clarify its general position, it does not believe that it would be useful to carry this as an open recommendation.

    Recommendation: The Secretary of the Interior, as Chairman pro tem of the Cabinet Council on Natural Resources and Environment, should require that acquisition initiatives be based on a clear demonstration of individual minerals needs.

    Agency Affected: Department of the Interior

  2. Status: Closed - Not Implemented

    Comments: Recognition of the GAO position constitutes acceptance; there is no need to continue to carry this recommendation as open.

    Recommendation: The Secretary of the Interior, as Chairman pro tem of the Cabinet Council on Natural Resources and Environment, should clarify the roles that the Overseas Investment Corporation's minerals and energy program, U.S. support for the multilateral development bank programs and the United Nations Revolving Fund for Natural Resources Exploration, and the Export-Import Bank are to play in securing strategic and critical minerals supplies.

    Agency Affected: Department of the Interior

 

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