Lesson 7: Resource Extraction
Part 1: The Economics of Global Resource Extraction
This section is a brief introduction to the economic importance of resource extraction, both
globally and in Canada. Trade in natural resources is significant; it makes up about 20% of
global trade. Canada is actually the 3 largest expert of natural resources, who makes up about
5.5% of the total global trade. The Russian Federation the second, and Saudi Arabia is the first
largest expert of natural recourses. Canada has attributed 39% to resources.
The value of resources changes over time because of price volatility. For example, when the
price of oil goes up, the exporters gain profit, but when the price of oil goes down, places such as
Alberta suffer. It also raises the question of control and power, in a less diversified economy that
is in power of the resources?
In Canada, mining makes up about 50 billion dollars of our entire economy, we receive 71 billion
in taxes and royalties and 20.4% of the value of Canadian goods exports.
Companies have not shared enough of their profits with the host countries; therefore, mining
companies profit more than governments. Average profits for the top 40 mining companies grew
156%, whereas government’s intake only rose 56%. Governments need “developmentled”
• Increased royalties
• More transparency and accountability
• Governments need to stop relying on companies for exploration and mapping of
• Need forward and backward linkages to benefit people
Resources can be a blessing and a curse, since they have a lot of value but if you are overly
dependent on them, you are more prone to shifts in crises, as well as the issue of power and
control. The link to economic development in the lesser developed countries, where most of the
resources we want are in the developed world. The role of companies is an issue in terms of
thinking about Canada overall
Part 2: Canadian Resource Extraction Activities Abroad
Canada is one of the most important mining nations in the world. We look at Canadian activity
and how the Canadian government supports Canadian companies abroad. Since mining is a
capitalintensive activity, it does not employ a large amount of people for a long time. Mining
also has an impact on the environment and fishing, which displaces people from the land, as well
as environmental degradation. Mining can produce significant changes, such as health risks,
affects local populations, and often has environmental impacts, making the land less useful.
CIDA’s goal is to help prosperity and help those in lesser developed countries develop the
necessary legislative and regulatory frameworks to allow the private sector to lead growth in the
economy. Resource development is not only important economically, It's about jobs, better education, and
training. It's about greater access to healthcare services for mothers and children—a Canadian
priority. And it's about better revenue and wealth distribution among all individuals so everyone
can reap the rewards. That is why Canada is focused on increasing transparency and
Canada is the leading contributor to African Minerals Development Center. This center is
designed to allow countries to work with local and regional groups to increase social and
economic linkages and make sure that Africa’s interests and concerns are respected for the
benefit prosperity of all.
• Define in your own words the nature of Canada’s activity in global resource extraction.
How would you describe Canadi