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Capabilities, sustainability, and innovation
in mining value chains
Carlo Pietrobelli
1,2,* Gabriel Casaburi3 and Michiko Iizuka4
1UNESCO Chair at the United Nations University UNU-MERIT, Boschstraat 24, Maastricht 6211 AX, The
Netherlands. e-mail: carlo.pietrobelli@uniroma3.it,2Department of Economics, Roma Tre University, Via
Silvio d’Amico 77, Rome 00145, Italy. e-mail: carlo.pietrobelli@uniroma3.it,3Inter-American Development
Bank, Esmeralda 130, Buenos Aires, Argentina. e-mail: GABRIELCA@iadb.org and 4National Graduate
Institute for Policy Studies (GRIPS), 7-22-1 Roppongi, Minato-ku, Tokyo 106-8677, Japan.
e-mail: mi-iizuka@grips.ac.jp
*Main author for correspondence.
Abstract
The original research presented in this Special Section analyzes different aspects of the potential offered
to mining rms in developing countries by new demands for solutions to face environmental, social and
technological challenges. The evidence is drawn from extensive eldworks and comparative econometric
research on Latin America, and suggests that the existing opportunities will need to be pursued with rm-level
efforts and active regulatory and innovation policies.
JEL classication: O13, O32, O43
© The Author(s) 2024. Published by Oxford University Press in association with Oxford University Press and the
Industrial and Corporate Change Association.
This is an Open Access article distributed under the terms of the Creative Commons Attribution License (https://
creativecommons.org/licenses/by/4.0/), which permits unrestricted reuse, distribution, and reproduction in any
medium, provided the original work is properly cited.
The mining industry is at the crossroads. The mining value chains span globally and enable
to trace mineral products back to their origin of production, mainly in developing countries,
and make the global issues of climate change and human rights increasingly relevant to local
production sites and communities. The demand for sustainable practices in production inuences
the behavior and strategy of multinational corporations and their suppliers. In parallel, the local
communities are increasingly aware of the environmental and social impacts of mining activity
and take powerful local initiatives (Tetreault, 2020; Haslam, 2021). The growing pressures from
both ends of global value chains are transforming the mining industry and opening new spaces
for product and producer upgrading in the value chain.
Many diverse actors are being incorporated into the sector consequently. It is not anymore
mainly multinational mining corporations but also many different actors that play a central role
in the industry. These include local communities demanding fairer and more sustainable activities;
local suppliers offering local and context-specic solutions; regulatory institutions governing the
exploration and exploitation of resources, their production and trade, and the ensuing practices;
and innovation and technology agencies supporting the increasingly technology-intensive stages
of the value chain.
The global-value chain framework, by focusing on the global–local production and trade link-
ages, facilitates detecting these emerging signals and processes of transformation in the mining
sector and illustrates new development routes for resource-rich developing countries.
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2C. Pietrobelli et al.
This Special Section presents original research that analyzes different aspects of the potential
offered to rms in developing countries by new demands for mining solutions to face environ-
mental, social, and technological challenges. These developments are especially relevant also
because the mining sector contributes greatly to the economies of many developing and emerg-
ing countries. This is especially true for the Latin-American region, where mining represents a
high share of gross domestic product (GDP) and exports. Chile and Peru are major players in
copper mining—rst and fourth world producers—while Brazil is the third producer of iron in
the world. Moreover, Latin America has been the recipient of an important portion of global
investment ows, both for exploration and for exploitation of mineral resources. In addition, the
requirement of low-carbon technologies, such as for example those employed in electric vehicles
and telecommunications, generates new demands for metals such as copper, lithium, nickel, and
aluminum among others (Hund et al., 2020).
Still, the mining industry has had limited success in sparking processes of economic trans-
formation and diversication spreading to other activities, and in some instances, it has been
considered a “curse” for economic development. This has been the object of a traditional debate
in development economics: are natural resource endowments a curse or a blessing for a devel-
oping economy (Sachs and Warner, 2001)? As the experience of fast industrializers shows,
economic transformation and development are intrinsically related to the process of innovation
and spillovers leading to the creation of value in existing sectors, as well as to the emergence of
new sectors in the economy. Unlike what happened in the mining sector in advanced countries, in
Latin America the local provision of intermediate inputs and services is still limited and conned
to the second and third lower value-added tiers of the mining value chains.
Moreover, also the mining industry has been transforming its organization in the direction
of global value chains (Korinek, 2020). A tendency toward vertical disintegration and local out-
sourcing has been growing since the 1970s, with opportunities for local outsourcing and learning
increased. Indeed, large mining houses began to concentrate on their core capabilities and out-
source the rest of the activities (Fessehaie, 2012), opening new opportunities for intermediate
goods and services suppliers. However, in mining Global Value Chains (GVCs) hierarchical forms
of governance tend to prevail (Morris et al., 2012), due to the complexity of information involved
in the transactions between the lead rms and their suppliers, the often tacit local knowledge
involved, and the huge size and related economies of scale enjoyed by the lead mining rms, which
often produce asymmetric power relations in the chain. Such hierarchical governance prevailing
in most mining GVCs appears to seriously limit suppliers’ learning opportunities (Pietrobelli
et al., 2018), and the provision of intermediate inputs is often dominated by rst-tier providers
that follow mining companies in their activities overseas, and that tightly control access to these
niches.
However, new interesting opportunities appear to be emerging for local suppliers, and are
related to: (i) the continued need that mining companies face to outsource and make produc-
tion more efcient; (ii) the emergence of new solutions to extracting and manufacturing activities
derived from advances in relevant branches of science and technology, such as biotechnology
and Information and Communication Technologies; (iii) the search for local solutions required
to address technological, environmental, and social challenges that are increasingly local; (iv)
the rising demands for environmentally and socially sustainable arrangements and practices.
Still, these opportunities for domestic suppliers and local content can only be exploited provided
that some underlying conditions are fullled. These conditions are related, for example, to the
development of local technological competences, and the availability of an institutional setting
that allows encompassing the social, environmental, and production-related demands within a
coherent framework.
Innovation is also central in this approach, but it also faces important constraints (Marin
et al., 2015; Pietrobelli et al., 2018). Commodity prices are volatile and determined exogenously,
leaving no scope for differentiation; mining rms have low incentive to invest in knowledge due
to low appropriability and risk aversion; mining rms tend to operate in enclaves, with limited
backward and forward linkages (Calzada Olvera and Iizuka, 2020). However, at the same time,
new solutions of local environmental and technological problems are also called for, requiring
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Capabilities, sustainability, and innovation in mining value chains 3
original adaptive and multidisciplinary responses, with the combined use of various technologies
(e.g., chemical, digital, biotechnology).
In the rst paper, Pietrobelli et al. (2024) study whether the mining sector can represent a true
engine of growth for selected Latin American countries through the suppliers’ entry and upgrad-
ing within mining value chains. The participation of Latin American countries in copper value
chains, while highly relevant worldwide, is still conned to the upstream segment. Their share
of innovation relevant for the sector remains very limited, although new data on patenting and
publications show that the sector is becoming increasingly innovative worldwide. The authors
exploit new microeconomic evidence from case studies in Latin America to analyze the specic
opportunities and obstacles faced by mining suppliers in entering the value chain and upgrading
within it, and how the regulatory and innovation systems have inuenced this process. The main
barriers appear to be related to the contractual practices, lead rms’ attitudes, and the hierarchical
industrial organization of the sector, coupled with the countries’ weaknesses in local innovation
and regulatory systems This has often hampered suppliers’ entry into mining value chains and
upgrading.
Although Peru is one of the main producers of copper worldwide, the domestic industry has
not yet fully taken advantage of this potential. Bamber et al. (2024) adopt a mixed-methods
approach, combining quantitative and qualitative primary and secondary sources, including semi-
structured interviews with key actors in the Peruvian mining sector. Their ndings suggest that
the weak presence of Peruvian suppliers in a sector dominated by few foreign rms is due to
global industry dynamics as well as the underdeveloped capabilities of local rms operating in
a fragile local institutional setting. However, the few integration opportunities open primarily
in areas where new solutions are required, which places a demand on the suppliers’ innovative
capacity.
The paper on Argentina focuses on the opportunities for innovation in the mining sector that
are leveraged by local knowledge-intensive mining suppliers (KIMS) in mineral-rich developing
countries (Stubrin et al., 2024). Argentina has a relatively small mining sector but an outstand-
ing mineral potential with substantial unexplored and unexploited geological resources, and
local communities very vocal in favor of sustainability and human rights. Therefore, supplier
development faces challenges and opportunities that differ from those identied in the existing
studies conducted in more advanced mining countries. This paper highlights these differences,
and focuses on metal mining, including the stages of exploration, construction, and operation.
The authors identify three types of innovation approaches that local KIMS can pursue, each
associated with the main sources of innovation opportunities, the type of inputs supplied, and
the prevailing market structures and entry barriers. The empirical analysis is based on the novel
data collected in 2019 and 2022, with in-depth eld research on a selection of local strategic
mining suppliers. The authors conclude with several considerations on industrial and innovation
policies for this sector in Argentina in the current technological and market context.
All the papers in this Special Section acknowledge that innovation in the mining sector plays
a crucial role. The paper by Calzada Olvera and Iizuka (2024) contributes to better understand
the factors that stimulate innovation to upgrade productivity and growth in the mining sector,
where innovation is driven by prots, which in turn depend strongly on commodity prices. In
their theoretical model and subsequent empirical analysis, they nd two different innovation
responses to prices: exploration and in-house research and development (R&D) investments by
mining companies increase as commodity prices rise, while the use of suppliers’ innovation inten-
sies when prices decrease. They conclude that policies should provide long-term support for the
Mining Equipment, Technology and Services (METS) sector so that they can continuously invest
in R&D and offer innovative solutions for mining rms, often applying digital and low-carbon
solutions.
Although evolutionary economics has extensively analyzed the evolution of industries in
relation to innovation and technology lifecycles, the interplay between industry lifecycles and
evolutionary patterns of knowledge networks has not been fully explored yet. Fusillo et al. (2024)
aim to bridge this gap by analyzing the coevolutionary patterns of knowledge and trade ows in
the mining industry, using social network tools in combination with the Schumpeterian tradition
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4C. Pietrobelli et al.
of analysis. The study focuses on Brazil, Chile, and Peru and suggests that the innovation net-
work and the global value chain–trade network display divergent coevolutionary patterns; while
the former tends to be stable and concentrated, the latter shows increasing fragmentation and
turbulence. The analysis also shows remarkable evolutionary evidence at the country level.
All the papers in this Special Section argue that innovation and sustainability are bound to play
a central role in the development of the mining industry. The emerging demands for solutions to
face new mining environmental and technological challenges represent a powerful inducement
for innovation in rms in developing countries. The evidence presented is original after long
eldworks and comparative econometric research, and it has been analyzed within a consistent
and structured framework. The results on the various countries collectively contribute to further
research in this area, and they are accompanied by studies that intentionally take a more global
perspective to offer a comprehensive and comparative reading of the evidence.
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Industrial and Corporate Change, 2024, 00, 1–4, DOI: https://doi.org/10.1093/icc/dtae026, Original Article
© The Author(s) 2024. Published by Oxford University Press in association with Oxford University Press and the
Industrial and Corporate Change Association.
This is an Open Access article distributed under the terms of the Creative Commons Attribution License (https://
creativecommons.org/licenses/by/4.0/), which permits unrestricted reuse, distribution, and reproduction in any
medium, provided the original work is properly cited.
Downloaded from https://academic.oup.com/icc/advance-article/doi/10.1093/icc/dtae026/7688234 by guest on 08 June 2024
