Economic Factor

Economic Effect of Goldcorp's Mining Activities

[Goldcorp can set up a project to help smaller mining companies who can’t afford sophisticated technologies and strategies. This may not be totally applicable to the proposed project from last week but it does make sense introducing something like this. Most, if not all of Goldcorp’s CSR goes to the communities in which it operates.]

Economic buoyancy fluctuates and this is attributed / associated with booms and slumps. Almost all businesses benefit from booms and quite a lot are also affected by the downturn too (slumps). Gold will definitely depreciate during a slump, as will other minerals.
Other changes that affect businesses include interest rate, wage rates and inflation rates (increase in prices against decrease in wages or increase in prices against decrease in wages). If the economic conditions are favourable, then businesses will thrive better because there will be more money to toss around. Lower interest rate means more disposable income to spend on Gold.

Developing countries often see the mineral resources they are endowed with as liberation out of poverty. “According to some, mineral wealth is part of a nation’s natural capital and the more capital a nation possesses the richer it becomes (Davis and Tilton, 2003).”
“Although mineral exports may make up a significant share of a country’s exports, mineral development does not always boost a country’s economic growth and may, in some cases, contribute to increased poverty (Sideri and Johns, 1990; Auty, 1990; Ross, 2001a; Gelb et al., 1988). The reasons for the lack of economic growth in oil- and mineral dependent states are not entirely conclusive (Ross, 1999). However, low levels of employment in the sector, use of mostly imported technology, high market volatility of minerals, competition with agricultural sectors, and institutional corruption and mismanagement may be contributing factors (Sideri and Johns, 1990; Gelb et al., 1988; Auty, 1990). 

In addition, lack of full cost accounting can result in overestimating the benefits if subsidies offered to the mining sector are not taken into account. For example, a study of the economic contributions of mining in Canada found that in 2000-2001 Canadian taxpayers subsidized the industry by C$13,095 per job created (Winfield et al., 2002).
Even when mineral development results in national economic growth, the benefits are
not always equitably shared, and local communities closest to the source of mineral development can suffer the most".
Mining often times provides jobs in communities in which these mines are located but the jobs are short timed and limited. Economies/communities that base their sustenance solely on the revenue generated by these mines are very vulnerable as this income cannot be guaranteed, for example if the mine shuts down. 

Goldcorp is particularly involved in ensuring that the communities in which it operates are helped through economic contributions thus improving the economic status of such communities. It does this by “improving their social and economic circumstances through economic contributions, community involvement, community consultation, support and development of school programs and special events“. Goldcorp strives to ensure that these communities are actively involved in these initiatives in order to make them self reliant and less dependent on their mines for their future and sustenance. 

Examples of their initiatives and engagements include: Recycling Workshops in Pedra Branca (Brazil), Delivery of Educational Assistance to Carrizalillo, Fundación Sierra Madre, Guatemala (with the goal of facilitating locally based development which will help provide sustainable economic development), and the Stope School which was established in 2005 in Northern Ontario to train underground miners.

References

"PEST Analysis". Available from http://www.thetimes100.co.uk/theory/theory--pest-analysis--166.php
[Accessed: 31st October 2010]

"Environmental and Social Impacts of Mining". Available from http://pdf.wri.org/mining_background_literature_review.pdf
[Accessed: 31st October 2010]

Goldcorp website. Available from http://www.goldcorp.com/corporate_responsibility/
[Accessed: 31st October 2010]